Lots of very good discussions here on the PhaseFive report. Wanted to share my musings too:
It’s a 60-page report, but only the first 22 pages are worth focusing on. The sections on internet bloggers supposedly being paid by NWBO to promote the stock and recruit people for trials, manufacturing facility in the UK, and the science (which even a science-dummy like me can see is utterly contrived) are at best the worst kind of speculation and at worst, utter nonsense.
I’ll comment a bit on those sections that may be cause for legitimate concern. The payment of $5 million to Navid Malik does raise serious issues of integrity and corporate governance. As somebody speculated, it’s quite possible that Linda and NW were hooked-up by Malik. After all, he is a star bio-tech analyst in Europe and NW being a prominent healthcare investor are very likely to be familiar with each other. In that sense, yes, it’s possible that Malik might have arranged financing for Toucan/Cognate in 2012 for which he might have been paid. Which investment banking house on Wall Street does not write favorable research reports on companies that use them for financing? Moreover, if this was a shady deal between Linda and Malik, why would it be on the public domain for Phase Five to discover? It could be an ethical issue between his then-employer and Malik, and Malik being a NWBO director should raise concerns for us. I think this is why he has been suspended (with pay) by his current employer until details can be sorted out.
The points regarding the Conversion Price Agreement and payments to Cognate for manufacturing services are fair questions to ask. I have pointed out before that external audits (which NWBO is subject to as a public company) must and do look into related-party transactions to ensure that they are at arms-length. Nevertheless, I’m glad that we now have Elliott Leary who will for sure also dig into these transactions. I agree that this is a good development for us and is in NWBO’s best interests given Linda’s conflicting interest in Cognate. Elliott will for sure tighten corporate governance. By the way, I’ll point out again that the accumulated losses of NWBO are less than half of what Dendreon accumulated at the same stage of development (Pyrr and I have dueled over this).
As for the questions on patents, I’m just wondering, would NW have looked into the science and clinical trial developments as part of his due diligence? I’m sure he did. Would he have known about Linda’s relationship to Cognate/Toucan as part of his due diligence? I’m sure he did. Given Linda’s relationship to Cognate, and NWBO being a clinical stage company, as part of his due diligence, would he have made sure that the patents were in the right hands? What do you guys think?
One final thought. NW did not choose an individual. He chose a firm. Why didn’t he just go to an audit firm or a law firm to dig into these allegations? Why do you need former FBI agents for this? I believe NW and Linda have already spoken at length about these allegations. I believe his motives are two-fold: he wants to get to the bottom of the related-party transactions and the payment to Malik. Then he also wants to get to the bottom of who are the individuals behind these allegations and their motivations. This second part will require former FBI-agents and the favors they can call in to their current FBI pals in order to use the vast surveillance and tracking resources of the FBI (okay, this last part is wishful thinking, but I hope it’s true).
