Detailed responses to ridiculous claims:
(1) doesn't like the name! nano=small size, virus = virus, cide = something which kills. Nanoviricide perfectly describes what the company's drugs do: they dismantle / kill viruses; What's a ridiculous, childish name is "Pump Terminator!"
(2) "worst US reverse merger we have ever seen" - quite a bit of hyperbole without any substance to back it up, typical of the whole article
(3) guilt by association, "offensively similar to the China RTO frauds" because the insiders (company founders) are enriched. Hmm, wonder if Bill Gates' company is a fraud because he, as a founder, was enriched by the stock's success? Inventors and founders have a legitimate right to the success of their inventions.
(4) "with multiple questionable stock promoters" - care to name any more names in particular? I would guess Allan Harris and Patrick Cox? What do you find questionable about these people and the work that they do? I guess authors didn't feel like smearing more people directly.
(5) "pumped the stock +330%" implies that the stock appreciated only because of "questionable stock promoters." Why not discuss the progress the company has made in the last year? Increased cash to $40M. Uplisted. Independent directors. Orphan status. Plant near completion. Pre-clinical work set to be finished by year end with IND soon to follow, with clinical trials less than a year away, if company can stick to the plan.
(6) "heavily diluting shareholders" - all development stage biotech stocks raise money by diluting shareholders in some fashion or another when they need money. Can you name any better way to raise money, or give a better example of a company in a similar situation?
(7) "stealing NNVC out from under public investors" - care to be more specific? It's really hard to respond to general, unfounded statements.
(8) "one of NNVC's top scientists has been dishonest" - care to be more specific about this ridiculous claim? Who is the scientist, and what was the lie? Later on, it appears the author is talking about KM's role at Eli Lilly, and PhD degrees. This is just poor communication, not fraud or dishonesty.
(9) claim that you believe NNVC's technology is not viable - based on what understanding or review of the data? Another baseless, ridiculous claim without any merit whatsoever. The company's lead drug, FluCide, was 1,000 times more effective in clearing the flu virus from lungs of animals than the current best treatment, Tamiflu. If the technology is not viable, why are Viroclinics scientists eager to test the nanoviricides agains highly virulent flu, MERS, and other viruses?
(10) "Fair value is <$1" and "medium-term price target is $0.00 as we believe company will implode once it is unable to raise cash" Do you realize or state the truth anywhere, that NNVC has $40M in cash right now, and could've raised more if they felt they needed the money? Current funds expected to last at least 3 years through Phase II at least for FluCide? Latest 10-Q states they anticipate access to enough capital that they could take FluCide through Phase III on their own if they so chose.
(11) guilt by association again - CEO's previous company went bankrupt, so this once will too. More rubbish, to be repeated again later.
(12) This is an interesting lawsuit from a former spurned fundraiser and current shareholder, which has been dismissed 3 times already! How about including some facts about this lawsuit? How about going over the facts of some of the claims?
(13) "NNVC shareholders seem unaware" - simply not true. Many shareholders are aware and have discussed this before.
(14) "incriminating" document is a set of unproven allegations, which have been dismissed 3 times already as without substance
(15) "abusing shareholders and looting the company" - again broad negative claims without any substance
(16) "If this is how NNVC treats a longtime supporter and associate …" I'm sure you don't know all the details. A judge has reviewed the evidence and found no wrongdoing, 3 times.
"Have NNVC Management [stolen the company]"
(17) "100% of NNVC's technology relies on the IP from Theracour." "If the Theracour relationship were terminated or changed for the worse, there would literally be zero technology or IP left with NNVC." NNVC owns the technical expertise of how to manufacture nanoviricides. Beyond this technicality, the author doesn't understand structure of company, that this unusually complex arrangement is to prevent hostile takeovers of the technology Diwan invented. The author doesn't link to the agreements between Theracour and NNVC. Diwan created 3 levels to best protect his inventions from hostile takeover: Allexcel (Diwan owns) holds the broad patents. Theracour (Diwan owns 70%) was granted use of patents. NNVC was licensed the technology invented by Diwan to be used to kill specific virus targets, in perpetuity. NNVC is thus exclusive owner of the rights for drugs that kill influenza, HIV, HSV, adenoviruses of the eye, dengue, and many others, forever.
(18) Brammel lawsuit alleges that money was raised for NNVC's development of viral targets without official licensing agreements for those targets. The implication is that only Diwan benefited since he owned them at that point. Perhaps the truth is that there was an unofficial agreement or plan to license these targets that hadn't been finalized yet. Kind of like shaking hands with yourself. This was sloppy, but not necessarily illegal. The money raised and preclinical development work has enhanced NNVC shareholders in the end.
(19) Value of Theracour licenses? If the drugs have the ability to bring in tens of billions in sales, $36M is really not that expensive for the rights. What was the deal worth at the time? If big pharma wanted the rights to nanoviricides, I'm sure the price would've been MUCH higher.
Devil in The Details
(20) Granted Theracour 2M (post-split) Series A shares, with 9 votes/share, increasing their voting control from 30% to 54%; Isn't this common to retain control of the company you founded? Allegation - didn't get shareholder vote or disclose any details about this transaction. I'm not sure of the details of this, but it seems like an efficient model to be the majority to get things done at an early stage. However, independent oversight is good, and they have that now in their Board of Directors.
(21) "If you own NNVC shares you quite literally own nothing." Non-insiders (non - D and S) currently own 70% of the company, including profits on potentially billions in sales. The market thinks that's worth something to shareholders, based on their market cap.
(22) "Theracour … receives all the cash and holds all the value"" - "the perfect vehicle to get rich," "Theracour and insiders get the money." If the author bothered to read the Theracour licensing agreement, (s)he would find the rate of royalties to be 15%. This is far from "all the cash"! NNVC shareholders (non insiders) own 70% of the company, and get to keep 85% of the profits. The inventor keeps the proceeds of some of his fantastic invention.
(23) Can't find original articles of incorporation and bylaws … SEC? This may be an administrative oversight that these are not available on SEC web site?
The amended bylaws and articles of incorporation are here:
(24) no evidence CEO Diwan ever elected in shareholder meeting - per the latest 10-K, " Executive officers are elected Biannually by our Board of Directors. Each executive officer holds the office until he/she resigns, is removed by the Board or his/her successor is elected and qualified. Directors are elected annually by our stockholders at the annual meeting. Each director holds his/her office until the successor is elected and qualified or his/her earlier resignation or removal."
Who are these directors? Again, from the 10-K:
|Anil Diwan, PhD.||54||President; Chairman of the Board|
|Eugene Seymour, MD, MPH||73||Chief Executive Officer; Director|
|Stanley Glick, CPA||76||Director, Independent|
|Mukund S. Kulkarni, MD||65||Director, Independent|
|Milton Boniuk, MD||80||Director, Independent|
|Meeta Vyas||54||Chief Financial Officer|
(25) no shareholder meetings first 7 years - common for early stage biotech? Sloppy governance, could use cleaning up. Have held annual shareholder meetings the last 2 years.
(26) Brammel quote - Further allegations, not found by courts to be of merit thus far.
(27) Again with the allegation the Theracour licensing was unfair. Lack of production of "independent consultant" review of agreement. … Not sure of the details here.
(28) Opinion that Theracour license terms are "egregious" and "not in line with industry standards" - Theracour can charge 30% of direct cost additional fee … Not sure if this is egregious or not, but seems reasonable to pay up to license this revolutionary technology.
(29) Termination of license by Theracour for material breach. Claim that D and S could purposefully cause the breach and give the IP back to Theracour after NNVC shareholders paid to develop it. - This is a hypothetical situation about possible criminal action by insiders… this is simple fear mongering.
(30) D hires wife; sloppy governance, could use cleaning up. While she is an accomplished executive and valued member of the team, she is a relative of the CEO. More outsiders would be better. Perhaps that is why she is listed as the interim CFO.
Absurd Manufacturing Facility
(31) Claim that NNVC paying millions to build out Diwan owned building. This is partially true, NNVC paid $1.1M, and seems to have put up $2M collateral for Inno-Haven to secure a loan. In fact, D sold some of his NNVC shares to raise capital for upgrades ($Millions personally invested), and takes on risk if NNVC fails, his investment for renovations are lost. NNVC will lease from Inno-Haven, D's real estate holding company. This PROTECTS the shareholders from need for further dilution (while also bleeding stock price some and perhaps causing some dilution when NNVC was looking to raise money at the same time). It was judged by managment to save shareholders from dilution this way, and probably is correct.
From 10/1/13 PR: "Inno-Haven has raised substantial amount of capital for this project through various sources, and it is expected that they will be able to raise all of the necessary funding for this project, with minimal capital expenses to be borne by NanoViricides, Inc."
Please note that if FluCide goes to market, the new cGMP plant could be estimated to produce ~200,000 doses of FluCide at an estimated price of $10K per dose, or $2B a year in sales! Not a bad return on investment.
(32) No lease yet; Lease terms will matter, no agreement yet until the final tally of costs are completed upon completion of the plant. NNVC now says may purchase the building outright from Inno-Haven.
(33) Claim again that NNVC is paying for renovation - seems to be mostly false.
(34) Criticism of "not using a reputable big 4 auditor." - Too expensive?
NNVC Science verification by Krishna Menon (KM) / Kard Scientific; Latest 10-Q reveals KM no longer an officer of NNVC, since so busy with CTIX and some health issues.
(35) Overall attempts to libel KM to imply that NNVC science is fraudulent; Ignores other party testing of drugs (US Army -Ebola, Eva Harris - Dengue; NEOUCOM - HSV), including WORLD CLASS facilities / British government, Viroclinics (MERS discoverer) sought out NNVC! Screams of scientific validity. Author ignores the science in attempts to distort the truth.
(36) "KM has more discrepancies than any public executive we have ever seen" - again more hyperbole.
(37) India New England Article - misunderstanding about roles in drug development, full of anonymous quotes; rescinded for inaccuracies
(38) NNVC web site KM bio - sloppy
(39) Claims Dr. V Boniuk is non independent; She seems to have been independent at the time of studies, but liked the technology so much, she became the first investor! She also brought her brother into the fold as an investor, Dr. Milton Boniuk. Her brother has invested $7M into the company, and is now on the board of directors.
This is nearly exactly the OPPOSITE of the absurd claim of insiders taking money OUT of the company. Dr. Boniuk and Dr. Diwan have BOTH put their OWN MONEY INTO the company! See Dr. Diwan's latest purchase of 50,000 shares on the open market after this hit piece came out.
(40) "Where are the big pharma companies knocking down their door …" NNVC prefers to keep the blockbuster drugs to themselves until further developed, and maybe not even then.
(41) "Is it really impossible to find and independent lab to test your drugs that is not owned and run by a company insider?" IGNORANCE, see above #35.
(42) "Fed a steady diet of 'imminent news'" but gives one example from 2009. "Turned out to be nothing." Seems to be true, but author wanted more disclosure, and now upset that he gets it? Big Pharma is interested, but NNVC is choosing to go it alone for now.
(43) Statsure went bankrupt. Doesn't necessarily say anything about Seymour or Ehrlich's capabilities in current capacities, or prospects of current companies (NNVC, CTIX).
(44) "We find it hard to believe anything these people say is true." Seems like libel.
NNVC Insiders Are Getting Rich
(45) Insiders paid $8M in salaries for 8.5 years of work… seems pretty reasonable / typical salary $500K/year each; Reverse merger 2005, listed on OTCBB 6/28/2007. Again, the two principal officers have accomplished quite a bit with very little money, considering they have 6 drugs ready for clinical trials in the next 1-5 years: IV Flucide, DengueCide, Oral FluCide, HIVCide, HerpeCide, EKCCide, to be followed by EbolaCide, MERSCide, RabiesCide, and HepCCide.
(46) Dilution / nice graph of shares outstanding; again, TYPICAL for biotech, 30 M shares in 2005, now 56M shares.
Use of RDOs
(47) Describes capital raise as "toxic" and atypical for small cap biotech; Company didn't have many other options at the time. Did raise $10M in RDO, including $3M from insider Dr. Milton Boniuk (total $7M invested now) on 9/17/13, and $20M from 1/27/14! Not mentioned about insider purchase!
(48) "If NNVC stock stays this elevated, we expect continued RDOs to provide insiders cash." - Company turned down more money!
(49) "any connection between the company needing money and all the conferences attended and stock promoters" implies paid to promote - FALSE.
(50) Again with the lawsuit - dismissed 3 times!
(51) "God knows how bad it really is inside NNVC and there could be many more lawsuits of increasing severity that could result in the end of this company in our view." AGAIN with the lawsuit and fear mongering.
(52) "Taking drugs through the required FDA stages can easily cost hundreds of millions of dollars which NNVC does not have." FluCide Phase I and II studies will cost <$10M. Could get breakthrough therapy then, and go right to market …; Could license to partner at that time, or raise more money and keep all the profits for NNVC (I think current preference). Latest 10-Q states have enough cash to get FluCide through Phase III, if needed.
(53) "We" think this or that, and "We had an investor contact NNVC on the phone …" Who is "We" and why hide behind anonymity?
(54) Comparison to BIND; BIND = PSMA (prostate and NSCLC) targeted nanoparticle delivery of cancer drugs, like docetaxel (BIND-014); v. similar concept to TheraCour, except has controlled release polymer matrix = payload; BIND IS promising. Will take longer and be more costly to do cancer drug development. Burn rate is ?
(55) "NNVC should trade for less than cash given egregious dilution and cash burn" - Never mentioned relatively low cash burn of company (<$2M/quarter) and availability to fund operations for 3-4 years…
(56) Repeating same old story - "done essentially nothing" since inception!!! Wow, ignores quite a bit of progress here, again!
Disclosure: I am long NNVC.