I have a couple follow-on comments to Tom D. and Greg's. Recently, someone intimated to me in a direct email that we have poor corporate communications from company management because a number of shareholders, ostensibly including myself, will 'never be satisfied." [with management's performance]. Hence, there is no reason for ACEL management to expend its resources to address issues raised by shareholders whom current management deems as malcontents. Alternately, it has also been made clear to me that ACEL management, as well as a small number of other shareholders, firmly believe that the continued demands for better shareholder information and management accountability are "doing real damage" to the company's ongoing efforts to meet objectives. Therefore, I wanted to take a moment to raise what I believe are the major issues that shareholders and management need to jointly address.
1. Who's running the company?
In November 1996, the company's long time consultant and business mentor, Mike Lowe, was invited to assume the role of President of Alfacell Corp. At the '96 annual meeting, Tina introduced Mike, extolling their working relationship and his long familiarity with the company. She welcomed him as just the right man for the job, at this juncture in ACEL's development. He was, she indicated, THE PERSON who was going to take us to the finish line with the filing of the NDA with the FDA. Mike, himself, indicated that with the relisting on NASDAQ (announced at the same meeting), the road ahead for ACEL was finally going to improve for shareholders.
Fast forward. In less than one-year, Mike resigns for undisclosed reasons. Neither he nor the company offers any public explanation. To this day, the company has never, to my knowledge, ever addressed the issue of who or when someone is going to take the top job at ACEL. At the '97 annual meeting, there were some unclear remarks made that led attendees to believe that somehow Gail, Tina and the Board members were somehow going to divvy up the top job responsibilities for the interim period.
Moving past "Why did Mike quit?" for the moment, my questions are these: What is duration of this 'interim period'? When can we expect a new President to be named? If Gail is to be the new President, then why not just say so? Who exactly is running the show at ACEL? How are the President's responsibilities being allocated and managed?
As we are continually told by those 'close' to management, the management team at ACEL is working heroically hard. They are putting together private placements, completing the Panc Phase III testing, monitoring other ongoing trials, and preparing for the NDA filing. Presumably, they are also engaged in other significant activities as well. However, it would seem to me that at this admittedly crucial point in time, more than ever, the need to have a strong, well-respected President at the helm would be a no-brainer. Yet, we do not.
As I have expressed to ACEL management on more than one occasion, seating a credible President would (a) demonstrate to shareholders, investors and brokerages that someone was willing to take the job after getting an inside look at the company, (b) add critical management expertise that even the new Board members acknowledged as presently "thin", and (c) provide additional manpower to assist with achieving the aforementioned objectives. I would attribute some of the institutional investor's disinterest when the share price was still above $5 to caution due to lack of a President. As I said last fall after ACEL failed to immediately launch a search for Mike's successor, as long as this goes unaddressed, shareholder value will suffer. I am sure that there are naysayers who would argue that the steady slide in share price since that time is unrelated. Sooner was better than later, but now is better than never!
2. What is ACEL management's strategic vision for the company?
It occurs to me that everything I have ever read that has been put out by the company since I first invested back in '86 has consisted of performance objectives or milestones to be achieved. Likewise, when advocates of ACEL management's performance chastise me on the subject, they always remind me of those specific objectives that management has accomplished, or are working to achieve. Yet, this is analogous to saying that my objective for today is to drive to Denver, and for tomorrow, Salt Lake City. While goal achievement is important, as an investor, I for one am less interested in whether or not ACEL management meets specific objectives than I am in where they are ultimately going!
I have yet to hear anyone mention having a strategic plan for the company. If you will review the annual reports, and other published information made available by the company, this is conspicuously absent. In any conventional business financing arrangement, such as through a venture capitalist firm, the #1 question is "Where do you do want to go with this company, if I give you the money?" That question has been largely unasked by ACEL's shareholders, and the answer has not been alluded to by the company. We, ourselves, are to blame for our laxity in this area. We, therefore, have a company that effectively appears to the investment community to be making it up as they go along, whether in fact this is true or not.
I think that a fair answer to the above question should include what ACEL's manufacturing and distribution plans are for oncologic applications of Onconase? Where does development of the anti-viral properties of Onconase figure in the company's development? How is the company planning to capitalize on its purported lead in Rnase technology? How do product licensing, joint ventures, and acquisitions figure into the company's future development plans? Remember, passive shareholders content with forward progress reports who don't demand answers to strategic planning questions that shouldn't have to be asked are akin to lemmings marching towards the sea. Forward progress isn't always the most important aspect; it's where your headed that counts!
I have two more questions to pose at a later time; one on the need for improved corporate communications and investor relations, and the other on the importance of shareholder value. However, this represents a long-enough post, and besides, it's late. Regards. --John
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