Cellceutix Admits Krishna Menon Never Received PhD from Harvard University, SEC Notified
· Cellceutix has admitted that Krishna Menon never attended Harvard.
· It is a serious violation of Sarbanes-Oxley to make false claims in SEC documents. Cellceutix management signed SEC documents with false information.
· The SEC has been notified of these violations.
· CTIX's founder and Dana Farber were involved in a failed cancer treatment that killed thousands of people and cost billions.
In a series of ludicrous and rambling press releases that failed to refute the substantive claims of my first report, "Cellceutix: Empty Office, Unviable 'Science', Misleading Disclosures, 96% Downside," CTIX has admitted that Krishna Menon did not attend Harvard. The first was released on August 7th, 2015 and the second was released August 10th, 2015. There was a third press release this morning that did nothing as the market recognized it as inconsequential.
The press releases also touted CTIX's involvement with Emil Frei, a cancer researcher with connections to the Dana Farber Cancer Institute. Later in this report I discuss a cancer treatment that was the "brainchild" of Mr. Frei at Dana Farber that is estimated to have killed thousands and cost billions of dollars. Bulls resting on Dana Farber's involvement are mistaken.
Little of substance was said in these rambling press releases beyond the admission that Menon's credentials have been misstated, which has important implications regarding Sarbanes Oxley. Below is an excerpt from the press release:
"There was an administrative error stating that Dr. Menon earned his PhD from Harvard… This error was corrected years ago." [emphasis mine]
As far as I can tell, this administrative error goes back to at least 2007, around the time the CTIX shell began trading - and this error has persisted for years. Has anyone ever heard of an administrative error lasting this long for something as important as where the President of the company earned his PhD (let alone an error of this magnitude at a company with only 9 employees - no actually, 8 now after the COO just awkwardly left)? Let's investigate.
How likely is it that an administrative error as unbelievable as this went unnoticed by Krishna Menon or Leo Ehrlich for years? I believe it's extremely unlikely that Krishna Menon was unaware of the false statements made over these time frames. After all, this is not some mere clerical error - this is someone allegedly receiving one of the most prestigious degrees in the world from the single most prestigious university in the world. You don't just make a mistake about that type of claim. Furthermore, SEC documents with this information were signed by the CTIX management team, including Ehrlich and Menon.
As a reminder, it is a serious violation of securities law to sign SEC documents containing false information. According to Sarbanes Oxley, it is the duty of insiders to verify all information contained within SEC documents prior to signing them - in fact, insiders who sign these documents have legal liability that includes up to 20 years in prison and $5 million in fines for falsifying statements in these documents. Given the nature of the error and the severity of the penalties (which all public company management teams are no doubt aware of), this is extremely unlikely to be a mere administrative error that persisted for years.
At what point over a multi-year history if you were facing these types of penalties would you correct the administrative error including issuing a press release to clear up any confusion? This would have of course conflicted with the Cellceutix investor narrative.
I believe this is an extremely serious error on the part of Cellceutix and its management team, and the SEC has been contacted. This "error" demands action to preserve the integrity of our capital markets. I intend to supply information as necessary to the SEC about Cellceutix and its management team should I find continued questions regarding CTIX and US securities laws.
False Claim Spans Years and Countless Documents
The reference to Menon attending Harvard is in so many places, including in different written formats, that it is simply not credible in my view to call this an administrative error.
A form 8-K from Econoshare, Inc. filed in December of 2007 states that Krishna Menon earned a PhD in Pharmacology from Harvard University.
This is not a one-time occurrence, below are links to SEC filings that contain statements that Krishna Menon received academic credentials from Harvard University.
- 8-K filed in January of 2008
- 10-K dated October of 2009 (Menon and Ehrlich signed)
In Krishna Menon's CrunchBase profile, different verbiage is used, suggesting that this was not just an administrative error caused by copying and pasting from a prior error - the verbiage of the error has evolved over time and across sources. I am not suggesting Menon is responsible for the CrunchBase profile, but how is it that this would have gone undetected by Menon? I'm certain that I would know if someone were saying I received a PhD from Harvard when in fact I have not.
"Thereafter he came to the Dana Farber Cancer Research Institute and obtained a PhD in Pharmacology in 1984 from Harvard University." [emphasis mine]
Bloomberg's website also states that Krishna Menon obtained a PhD in Pharmacology from Harvard University.
The Wall Street Journal's website also uses different language to restate the false claim. "He received his graduate degree from the University of Wisconsin, a doctorate degree from Harvard University, and a doctorate degree from the University of Kerala." [emphasis mine]
The IndUS Business Journal published an article on Cellceutix that includes several direct quotes from Krishna Menon and this article also includes text that claims Krishna Menon received a degree from Harvard University:
"In 1982, he took a job with the Dana Farber Cancer Research Institute. In 1984, he earned a doctoral degree in pharmacology from Harvard University and became a research scientist at Dana Farber, a job that lasted until 1990. From 1991 to 1993 he was a senior research scientist focusing on cancer at Bayer Pharmaceuticals." [emphasis mine]
In another article published by the IndUS Business Journal, Krishna Menon is said to have earned a degree from Harvard University.
Did all of these writers make multiple different administrative errors? How is it that Cellceutix never contacted these publications to correct the error? After all, the error was supposedly corrected, yet it remains?
How likely is it that Krishna Menon did not read any of these easily available public documents and articles either before or after they were published?
Even if it was an administrative error, Menon would have clearly seen that these documents contained blatantly false information and could have asked that the information be corrected. What's even more disturbing is that arguably millions of dollars were raised for Cellceutix over a multi-year period in which SEC documents signed by Cellceutix management contained false and misleading information about Krishna Menon's educational achievements. Are these investors going to pursue damages?
Bulls Point to Dana Farber, Which has Made Mistakes Before: 4,000-9,000 Died, $3 Billion Wasted
CTIX bulls have repeatedly pointed to the involvement of Dana Farber as validating the potential of Cellceutix's drug Kevetrin. Dana Farber is clearly a respected cancer institute, no doubt about that. But it is far from perfect. In fact, starting in the early 1980s, Dana Farber was the epicenter of a failed cancer treatment that according to respected scientific publication Discover Magazine, ultimately ended up killing between 4,000 and 9,000 women, "not from the cancer, but from the treatment." This fiasco ended up costing an estimated $3 billion and impacting an estimated 30,000 patients.
To be clear, not all of these patients were treated at Dana Farber (the treatment was conceived at Dana Farber and then spread from there). And the article cited in Discover has nothing directly to do with Kevetrin, Cellceutix, or Cellceutix's current management team. It does, however, pull the rug directly out from under the legion of shareholders who own CTIX stock based on the premise that Dana Farber is infallible. This is simply not true.
The story should be read in detail. It's a sad tale of poor science combined with enriching financial incentives (sounds familiar) that led to lethal cancer treatments. Perhaps most shockingly of all, the treatment was the "brainchild" of Emil Frei, who at the time was a director at Dana-Farber. In fact at one point, Emil Frei is said to have claimed, "We've got a cure for cancer."
By all appearances, this is the same Emil Frei that CTIX has touted as being the founder of CTIX, a supposed "legend in the field of oncology" according to a recent CTIX press release. If only the 4,000 - 9,000 needless deaths at the cost of $3 billion were only a legend instead of a reality.
Is Kevetrin the next bomb to come out of Dana Farber? Time will tell. Personally, I don't think Kevetrin will even get off the ground, so it's probably moot.
If Krishna Menon commits administrative errors about where he went to school, how good could his cancer science be?
If Dana Farber has succumbed to bad cancer science because of financial motives before, who's to say it couldn't happen again?
Reward for Information
I am speaking with counsel about offering a reward for anyone with additional insight into potential wrong doing by Cellceutix or its management team. The share price has hit a recent low as management has continued to fumble around and the market is losing patience. Thank you for your ongoing support.
Price Target: $0.09
If Cellceutix has such blatant "administrative errors" that persist for years in which they signed SEC documents containing such obviously false information, what else are they wrong about?
I reiterate my price target of $0.09 for CTIX stock.
Disclosure: I am/we are short CTIX.