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Iroquois Capital Delivers Open Letter to PharmaCyte Biotech Board of Directors

Iroquois Capital Delivers Open Letter to PharmaCyte Biotech Board of Directors

Iroquois Capital Delivers Open Letter to PharmaCyte Biotech Board of Directors

PR Newswire

NEW YORK, May 11, 2022

Expresses Disappointment in the Board's Failure to Articulate a Plan to Maximize Shareholder Value Amid Prolonged Product Development Efforts Despite the Company's Strong Cash Position

Criticizes the Company's Dismal Efforts to Communicate with Shareholders Including its Failure to Hold Quarterly Conference Calls

Questions the Board and Management's Alignment with Shareholders Given Minimal Stock Ownership and Failure to Purchase Shares in the Open Market

Calls on the Company to Actively Enlist Shareholder Participation in a Process to Refresh a Majority of the Directors on the Board with Highly Qualified Candidates to Fill Gaps in the Existing Leadership's Skillset and Bring Fresh Perspectives and an Ownership Mentality to the Boardroom

NEW YORK, May 11, 2022 /PRNewswire/ -- Iroquois Capital Management, LLC (together with its affiliates, "Iroquois"), one of the largest shareholders of PharmaCyte Biotech, Inc. ("PMCB" or the "Company") (NASDAQ:PMCB) with beneficial ownership of approximately 5.1% of the outstanding common stock of the Company, today announced that it has delivered a letter to the Company's Board of Directors.

The full text of the letter follows:

May 11, 2022

PharmaCyte Biotech, Inc.
23046 Avenida de la Carlota, Suite 600
Laguna Hills, California 92653
Attn: Board of Directors

Dear Members of the Board of Directors:

Iroquois Capital Management, LLC ("Iroquois Capital," "us," or "we") is one of the largest stockholders of PharmaCyte Biotech, Inc. ("Pharmacyte" or the "Company"), with ownership of approximately 5.1% of the Company's outstanding shares.

We invested in Pharmacyte because of our belief in the promise of its proprietary cellulose-based live cell encapsulation technology known as "Cell-in-a-Box®" and the potential for its use as a platform upon which cellular therapies for several types of cancer and diabetes can be based upon. However, much to our disappointment, the Company has failed to create meaningful value for stockholders or articulate any plan to do so despite its envious assets and the patience its stockholders have extended to the Board of Directors of the Company (the "Board") and management to date in connection with the development of its product portfolio.

Iroquois has substantial experience and a successful track record of working constructively with the boards of directors and management teams of our portfolio companies to enhance stockholder value.  Over the past six months, we have had multiple constructive discussions with the Chairman of the Board, Chief Executive Officer, President and General Counsel, Kenneth L. Waggoner. We are appreciative of our engagement with Mr. Waggoner to date, but with the Company's stock price trading almost 50% lower than the price at which our initial investment was made in August 2021, and at a significant discount to the cash on Pharmacyte's books, we feel it is necessary at this time to raise our concerns directly to the Board as the stewards of stockholder capital.1

To that end, we are writing to express our serious concerns with the Board and management's (i) failure to articulate any plan to maximize stockholder value in parallel with ongoing efforts in the Company's product development pipeline despite the Company's strong cash position, (ii) lack of capital markets experience and failure to hold a single quarterly earnings or other conference call with stockholders and (iii) minimal stock ownership, poor incentive structures and failure to purchase a single share of the Company's common stock in the open market.

We have made it clear to management that we are supportive of the process set forth by the Company earlier this year to have the Food and Drug Administration's clinical hold lifted so that the Company may commence its planned Phase 2b clinical trial for the use of its Cell-in-a-Box® platform in locally advanced, inoperable pancreatic cancer ("LAPC"), for which an Investigational New Drug Application was first submitted almost two years ago in September 2020. Regrettably, the timeline for the lifting of this clinical hold continues to drift further into the future and we understand from discussions with management that the Company is now targeting sometime this fall for the hold to be lifted and the LAPC trial to begin.

According to Mr. Waggoner, if and when the clinical hold is lifted, the Phase 2b clinical trial would take approximately six months to begin. Assuming no further delay stemming from a resurgence in the COVID-19 pandemic, we estimate that the trial will take at least two more years thereafter to be completed and require a maximum outlay of $30 to $35 million. With approximately $87 million in cash reported by the Company as of January 31, 2022, and a burn rate of approximately $3.9 million over the trailing 12 months,2 we see no plausible reason for the Company to have not already taken concrete steps to enhance stockholder value in the interim by announcing a share repurchase program, issuing a dividend to stockholders, exploring additional opportunities to expand drug licensing, or some combination of the foregoing, all of which are suggestions we have already shared with management in the past. We believe the Company's stockholders, its true owners, deserve more than an expectation to sit idly by for the upcoming two years.

Further, we find the Company's lack of consistent communication with stockholders apart from issuing press releases to be extremely problematic. Following its uplisting to the Nasdaq Stock Market, we believe the holding of quarterly earnings conference calls is the bare minimum insofar as the investing public's expectations of proper investor relations practices are concerned. While we applaud the Board's technical skillset, we believe this gap is yet another example of a leadership team that appears to be lacking sufficient capital markets experience. As mentioned earlier, we believe the Company's story is a compelling one, and the Board and management should be taking all appropriate opportunities to regularly extol its promise to others and demonstrate its commitment and accountability for the Company's performance and forward progress. 

Finally, as a large investor with millions invested as "skin in the game," we are dismayed by the failure of the Board and management to have ever purchased a single share of the Company in the open market, despite the average tenure of 5.6 years for the members on the Board. We believe this signals to the market a lack of confidence in the Company's prospects by those at the top and understandably invites questions as to why they collectively own less than 0.5% of the Company's outstanding shares. To that end, we believe the Company ought to, at minimum, enter into well-incentivized employment agreements with each of its named executive officers and otherwise establish a stock option incentive plan that closely links pay with performance.

Accordingly, in an effort to provide the Company with the best opportunity to create meaningful value for stockholders at this critical juncture, we hereby call on Pharmacyte to immediately consider reconstituting a majority of the directors on the Board with highly qualified candidates who would bring fresh perspectives and an ownership mentality to the boardroom and fill gaps in the existing leadership's skills and experience.

We hope and expect that the Board will consider seriously our constructive input and actively enlist the voices of stockholders, the Company's real owners, in every step of this process to reconstitute the Board with representatives that will serve the best interests of all stockholders and unlock the Company's true potential. While it is our sincere desire to work collaboratively with Pharmacyte's Board and management team to help improve the Company and drive value, based on the Board's response and actions, we are fully prepared to pursue all options available to us to unlock value for the benefit of all stockholders.

Best Regards,

/s/ Richard Abbe

Richard Abbe
Managing Member
Iroquois Capital Management, LLC

1 Source: Company filings. Percentage decline based on the price of the Company's shares at which Iroquois Capital's initial investment made in the Company's offering at $4.25 per share announced on August 9, 2021.
2 Company's Quarterly Report on Form 10-Q for the third quarter ended January 31, 2022.

About Iroquois Capital Management, LLC
Iroquois Capital Management, LLC is a New York-based investment adviser that provides investment advisory services to Iroquois Master Fund Ltd., a privately pooled investment vehicle.

Investor Contact
Richard Abbe
Managing Member
Iroquois Capital Management, LLC
(212) 974-3070

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SOURCE Iroquois Capital Management, LLC