Dear Threaders,
What follows is the text of a letter; I sent individualized copies to each member of the Board of Directors on 24 August 1997. Surprise, surprise: despite providing a mailing address, telephone number, fax number, and e-mail address, I have not gotten any response from anyone. (This was originally written in WordPerfect 5.1; I have had to re-type it, and the format/attributes have not been preserved. Please imagine italics and boldface in the appropriate places.)
As you will note, I make no reference to the Indian herbs scandal. This was quite deliberate; I wanted them to know the extent of their demonstrated incompetence or evil, in addition to that very specific wrongdoing.
Dear Mr. O'Reilly,
I write to you, once again, in your capacity as a member of the Board of Directors of Paracelsian, Inc. And once again, I write as a stockholder who is deeply concerned about the operations of our Company.
It is my considered judgement that the Board has failed to meet minimal standards of competence in operating Paracelsian, and that this lack of competence constitutes misfeasance. These failures can be grouped under three headings.
First, the Board has failed to hire/retain key executives.
1. In a Press Release of 13 December 1996, the creation of the "Office of the Chief Executive" was announced; it was to be filled by Keith Rhodes, John Babish, and Art Koch. This was announced as a temporary measure, in effect only until a Chief Executive Officer could be hired. But John Babish resigned from the Company in March of 1997, and Art Koch resigned soon thereafter. Thus, even the temporary "stopgap" arrangement has failed. Our Company has been operating without a CEO for ten months now. This is unacceptable. As I have said before, a Board of Directors plus various consultants does not constitute a coherent, much less an effective, management structure.
2. As mentioned above, the Chief Science Oficer resigned in March. For the last five months, the Company has been without a person qualified to continue Dr. Babish's research in signal transduction technology, the very essence of the Company's research effort.
3. No Chief Financial Officer has been hired to replace Art Koch.
4. The Board has failed to retain important members of the Board itself.
Second, the Board has failed to come to terms with Dr. John Babish, one of the Company's Founders, and a person essential to the success of the Company.
In all its literature, the Company championed the unique conjunction of the traditional and the scientific: the library of Traditional Chinese Medicines (TCMs), and the cutting-edge science of of Dr. Babish, signal transduction screening. It was this unique combination that attracted me, and so many others, to the Company. Despite this fact, the Board failed to retain the talents of Babish--despite its claims, in Annual Reports, that the Company recognized this as its highest priority.
Third, the Board has failed to launch the Company's first two products, AndroVir and AndroCar.
During the conference Call of August 1996, the Company announced that AndroVir and AndroCar would be launched in the Spring and Summer of 1997. As recently as February's Smith Barney Health Care Conference, the launch of AndroVir was scheduled for Spring, and East West Herbs was highly touted as the company to handle production, distribution and promotion. A delay in that launch was announced in April; the launch was cancelled in June. Both of these announcements had devastating effects on the price of the stock--i.e., on shareholder value.
I have learned from conversations with East West Herbs that they were prepared to go forward with the launch of AndroVir, and were surprised and shocked by the announcement that the launch had been cancelled.
The Company's position regarding the FDA makes no sense. Nothing the Company has published--and I am specifically mindful of the excerpt in the 1996 Annual Report--says that the Company cannot launch AndroVir. These are merely cautions; they are warnings about what Paracelsian can and cannot say about the product, and how the product may and may not be marketed.
The Board's duplicity on this issue was manifested at the recent Stockholders Meeting. One person in attendance complained that he was unable to get Andrographis from the Company. A member of the Board responded that Andrographis was readily available on the open market; the questioner should have no trouble getting it from other sources. If this is true--and I believe that it is--whiy is it not available from Paracelsian? If other companies have have found a way to market Andrographis, why haven't you?
The Company's position that "We are too visible on the FDA's radar screen" is not credible. Is it really your position that we would be marketing AndroVir now, if we thought that the FDA wouldn't notice?
The result of all these failures has been a precipitious drop in the price of shares in the Company, from a recent high (April 1996) of 4 and 11/16 to today's price of less than $.50. At a minimum, this indicates an abysmal lack of competence.
There is an $8 billion market in nutraceuticals; how is it that you have failed to develop and execute a plan to enter that market? If you are not able to penetrate this market, I think you ought to consider most seriously a suggestion that was made at the recent Stockholders' Meeting: resign. Step aside; make way for someone who can market our products.
A stockholder, looking at this record of failure, and its consequences for the Company's stock, cannot help but ask: Does this Board of Directors really intend to make Paracelsian a successful company? Does this Board want to enhance shareholder value, or does the Board have some other agenda? More bluntly: Do the Board's faliures, as discussed above, transcend misfeasence, and constitute malfeasence? Does the Board intend to wreck this Company, putting personal interests ahead of stockholder interests? Is the Board just failing to succeed, or is it in fact succeeding at something quite different, something inimical to stockholder interests?
Not long ago, Paracelsian was a company filled with great promise. Does this Board intend to turn it into an empty shell?
I received no response to my previous letter. As a stockholder, I am entitled to answers to these questions.
Your actions are vastly more important than your words. I hope to see a course of action which shows that this Board has the minimal competence necessary to operate our business successfully.
In any event, your actions will reveal the true intentions of the Board.
Jonathan Schonsheck
cc: Mr. Al Lapins
Office of Investor Assistance
Securities and Exchange Commission
450 5th St., NW
Washington, DC 20549 |
