Meeting Report: Part 2
I am posting my impressions in several parts for several reasons.
1) I have some pretty roudy neighbors who were making a lot of noise around 1:30 last night, so I didn't get a great night's sleep. I don't think I am awake enough to write one long, organized, coherent report. Please forgive me if I babble.
2) It would probably take me at least 4 or 5 hours to write a thorough report. This way I can do it in sections and you don't have to wait for everything at once.
3)Being able to write whatever short chunks just pop into my head is just plain easier.
So this section just covers a few facts about the meeting and claims made in the meeting, as well as one opinion.
First the opinion: for those of you who want the bottom line on whether I would recommend for you to buy or sell this stock, based on what I heard at the meeting. The bottom line is-- I don't know and I won't make a recommendation. Some people left the meeting feeling there was a chance the company could survive, some left thinking it was doomed. I think the company will fall apart if Rhodes and the other current board members remain in power. I do not see anything in the near future that can shake them out of power. I think there is a chance he could be forced out eventually by Campbell's lawsuit. I can't prove it, but I am thoroughly convinced that there is merit to the charge against him of giving away 200,000 shares of stock for a test of Indian herbs that was never performed. (More on this later) And if Rhodes and other Board members leave, then PRLN has a chance. It is still a long shot, because financing would still be needed and PRLN's credibility amongst financiers has been damaged. But who knows? Perhaps under different management they might have a chance of obtaining it. I still think the basic screening technology is good. I have no idea if Babish and Campbell will rejoin the company if the current directors leave, but I can't rule the possibility out. So even if the current board leaves, PRLN still has some mighty obstacles to hurdle. But at least if Rhodes & the others resign, the company might stand a chance.
Now to some random facts:
1) There were about 50 stockholders in attendance.
2) Rhodes said that the company currently has $1.15 million in cash and that they reduced the burn rate drastically so the company can go
6 - 9 months before declaring bankruptcy. He said that this was how much money the company had today, but perhaps he meant that the company had this much as of the last quarterly report. I had thought that the company was going to go bankrupt by September. Maybe they will last past September, but my own personal opinion is that the 6 - 9 months is a wildly optimistic figure. I'll be surprised if they make it to January.
3) They were looking for a strategic partner to help them out, but I heard nothing today to indicate that they are any closer to finding someone than they were 2 months ago.
4) The FDA met with company officials in Oct. 1996 and March of 1997 about AndroVir. In April 1997 the FDA informed PRLN that they could not make any health claims or target any groups if they launched AndroVir. In response to this, PRLN formed an advisory panel to determine whether they could launch AndroVir successfully. I think I heard 6 or 7 names of people on the panel, but the only two that I remembered was Steven Dentali, who is on the Board of Directors, and either the President or Vice President of East West Herbs. If I remember right, Rhodes said that the Board recommended against AndroVir's launch because they did not think it was safe enough for use in the general population. I don't know if there were divisions of opinion on the Board or if this opinion was unanimous. I don't know, for example, if East West Herbs is officially against launching AndroVir for the general population, or if the EWH representative was outvoted by the other panel members.
The company is trying to find something safer than AndroVir for marketing to the general population. They have screened through their entire library of 2764 Chinese herbal extracts and found 158 compounds of interest: 10 of these compounds have never been studied before.
Of course, even if the company found a super compound in this library which they thought would be good for product launch, I do not know if they would have access to a ready supply of the compound. As far as I know, Colin Campbell was PRLN's main contact with China and now he is gone. I have my doubts that they have access to an ongoing supply of herbs. Perhaps they will be able to synthasize a new chemical of interest from scratch, but how long it will take them to analyze the chemical's molecular structure and figure out how to synthesize it is something I am unqualified to comment on.
5) A questioner asked Mr. Nikolis (A board member up for reelection) a very simple question: The company had issued 200,000 shares worth $375,000 to consultants in order to screen Indian herbal extracts. The 1995 Annual report said that they found nothing of interest in these compounds. Dr. Campbell's suit alleges that no such screenings took place. The question posed was simple: Either "yes" or "no". Were any Indian compounds screened? Mr. Nikolis refused to answer this question because it was under litigation. He also said that the company was investigating what had happened. Mr. Nikolis was then asked how long the company's investigation into what happened has been going on. Nikolis replied that he wasn't sure, but he thought about 5 months.
This is mind boggling to me. If they had screened any Indian herbs and if Mr. Nikolis was positive of this fact, I don't see how he could get into legal troubles by answering the question "yes". And I have no idea why an investigation into whether or not screenings took place should take 5 months. My gut feeling is that there is probably something to the charges. But again, it is just a gut feeling and nothing I can prove.
I'm sorry, but I am very tired now. Noisy neighbors are a pest. I'll try to post some more tonight after I have some dinner and take a nap.
Robin |
