Karyopharm Therapeutics (NASDAQ: KPTI)
DISCLAIMER: This is a private undertaking by Reza Ganjavi, MBA. This page is not sponsored by Karyopharm. This page is not an investment advice. Do your own research.
Trust Issue
Short interest up - over 23 million shares! In my view the problem with demand is because of lack of trust in this management's ability to execute and serve shareholders instead of serving themselves. Without serious institutional buying or short covering the stock's not going anywhere. And neither of those streams seem to be present presently. I bet a new CEO and CFO or removal of some of the dead wood from the BoD could help.
Does Management Really Want To Sell?
I think part of this creepy management team is that they do not want to sell the company because you can be sure that the acquirer will fire the CEO, CFO and the legal counsel. They may keep some of the scientific people.
And these guys’ resume is taking a company with such a high valuation and basically decimating shareholder value, so I think they're going to have a hard time finding another job with that kind of track record especially a job that pays Richard Paulson more than a million dollars a year and Mike Mano and Mike Mason some I don't remember $600,000 a year plus. Plus free daily catered lunches followed by air guitar and digital pinball practice haha (just ask the king of satire Longrigger).
And the same goes with the board of directors. They got it made. It's a ATM machine that keeps giving to them and keeps taking from shareholders. Most of them are the same useless directors who sat there “directing” the company when the stock was in the 20’s.
I don't think they're motivated to sell the company, because the status quo is very profitable for them. And if they're thinking of going-it-alone, they will screw that up to as they have already. Management matters. Good management that has balls even impacts market demand when there is professional organized disparagement. Not the case for this gang who can't shoot straight when it comes to building shareholder value.
All these are just my opinions / impressions.
More Reflections On The Conference Call
It is so moronic for a CEO and CFO to make six figures donations when the company is bleeding cash and losing so much money. It tells you something about how horrible how irresponsible this management team is. And it shows their attitude towards the whole subject of funding and money and shareholders.
It tells me that these guys don't give a damn about shareholders. Just listen to the way Mike Mason was talking on the last call, which gave me the impression of “Is it over yet? I really don't want to do this. I don't like to be accountable to shareholders. Shareholders are not important. As long as we can go to them to raise funds when we need it, like we have done so many times in the past. As long as we can continue feeding our faces with free catered lunches paid by shareholders. And we think money keeps coming, so we can just write six figure checks for donations. We have data coming up that we rely on to be opportunistic to raise more money so we can write more 6 figure donations. And I’m so proud of the cost savings we did which was too little too late. We’re still bleeding cash but that’s the shareholders’ problem.” – of course he didn’t say these things but that’s what I believe he may be thinking.
This is why the stock is so low. It's lack of trust in this management team. Even if they get great data they will still probably blow it because of their reckless attitude towards money and their incompetence in certain areas like countering professional disparagement of their products.
And they are so naive and so incompetent and so arrogant to think that they will get have success in sales if they get more approvals. We saw how they screwed up last approvals, and did nothing to counter the professional disparagement which I believe hurt the sales, because they are weak in certain areas. They’re too naïve and incompetent to see this, in my opinion. They’re a dream come true for short-and-distort cabal who still got the company by its private parts.
Pretty funny to hear Mike Mason talk about being opportunistic in the future. I hope he will look for another job and spare us of his opportunistic maneuvers which will probably be just another screwup. Look at the result of their opportunistic actions of the past. People who believe them by buying their stock in the twenties are holding the bag at a buck. Because this management has been nothing but disaster, in my opinion, as judged by the destruction of shareholder value.
I know several shareholders who feel this way. Somebody that I only know by nickname wrote on a message board recently that he hopes that the company fails so that the horrible management cannot get jobs somewhere else, so that they get they go down with the company. That's how strongly some people dislike this management team.
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I finally had a chance to listen to the call. OMG, Mike Mason's presentation was the worst, as usual. Funny they put the horrible CFO at the end. As usual he sounded like he was hating being on the call and being accountable to shareholders. He sounded like "let me go play my air guitar". Can't believe they're bragging about their cost savings while they're burning cash like there's no tomorrow. And that sales are "profitable". Are you kidding? They're losing money like hell. Ok, I'll give it to Sohanya - her organization is making a profit I guess but the rest of the company is bleeding cash. Mike Mason talked about responsible spending which is total BS. He forgot about all the 6-figure donations they're used to giving and all the free daily catered lunches they feed their faces with. I loved Reshma's presentation and "area of hyper focus" and "eye of the storm". The science is awesome -- in the hands of a horrible CFO and a CEO I do not trust. All the above are in my opinion
Listening to CFO Mike Mason was like pulling teeth as usual
The CFO sounds/looks like he hates shareholders, and accountability to shareholders, and public speaking, and comes across as so arrogant, as though he's managing his dad's private money. Him talking about being opportunistic regarding the huge debt, was a good joke. We saw how miserably they mismanaged the company's assets for years, and lost so much money while giving 6 figure donations, and feeding their faces with free daily catered lunches.
CEO Richard Paulson is just as ineffective in my opinion. He let this nightmare go on, while hiding behind his funny beard, cashing in bigtime salary and bonuses.
His biggest mistake was not to replace Mike Mano (Legal Counsel) and Mike Mason (CFO). So they go on doing the same things and getting the same horrible results for shareholders. The Board is the core of the issue. It endorsed these people and they are also benefiting handsomely meanwhile, with a fat undeserved salary while shareholder value tanked from over $20 to under $1.
People who trusted the company and bought the stock in the 20's are holding the bag at $1 and change because of the mismanagement of the company.
All the above are in my opinion.
Open Letter to Richard Paulson - 13 Feb 2024
Dear Richard
Karyopharm has good science no doubt. And it has horrible management no doubt, at least at the financial, legal and CEO level. And if you would have listened to me a long time ago, and not been so arrogant and so weak, and changed the dysfunctional culture that you inherited including, by keeping some of the representatives of that dysfunctional culture which gave it continuity -- the company would have been in a much better shape.
Looking at what is, you have a negative cash of around 100 million. You're still spending like crazy in line with that organizational habit, the dysfunction, the spending cancer as I call it, and donating six figures and free lunches for you all, everyday, catered.
I wonder if you ever think that the value of your options could be much more than the value of those free lunches you so enjoy, and even bigger than the value of your big undeserved salaries. Undeserved because you have destroyed shareholder value and have been so utterly irresponsible, reckless, with your spending shareholder money by living a plush corporate life as though money will just drop from the trees.
That dysfunctional mindset was punished by investors whom you have consistently betrayed. You should know how those people who bought the stock at about $22 or about $15 or above $10 feel about you having betrayed them and them having been stupid to believe your stories.
So what you got going right now is a poorly selling drug because you so messed up the legal side regarding the disparagement and the political side because you guys are so clueless about that whole area, and your enemies, the huge short interest which is still there standing tall and strong did an amazing job of making sure your drug doesn't succeed. And they succeeded. Look at your weak sales.
The painful part is this is not the first time in the universe that this happens. Some of us long-term biotech investors have seen this happen before. And we warned you. Multiple of us warned you. But you were so complacent and comfortable in your fat salaries and free lunches that you just ignored it.
Selinexor is actually a great drug but very mismanaged, and I'm not blaming your sales organization, it's not their fault, it's your fault and your incompetent executives' fault.
A poorly selling drug, some cash, and a negative 100 million cash position, high interest rate picture, looming debt overhang which is especially scary given the profile of you and your CFO and your Legal Counsel who have consistently screwed up managing shareholder value.
On the other hand, you have some killer data ahead which normally one would think you would screw up just because of your incompetence based on your past horrible performance and mismanagement of other great data, as measured by shareholder value which is the ultimate criteria for measuring management performance. Any management student would understand that concept.
So this is the big picture. Poorly selling drug, a spending cancer syndrome, fat and happy and overpaid management, perhaps short-sighted management to ignore the possibility for their stock options, unless they're totally deceptive and lie to the public about their projections while deep inside they know their stock options will be worthless, I hope that's not the case because that would make you big time crooks.
And hot data coming up. And a huge short interest which has held its ground. But has proven to be vulnerable to any sudden movement in the stock. You can be sure some of the recent rally was due to short covering but they may have gone short again who knows. And you also have a potential for a buyout; Dr. Kauffman said you had overtures in the past. The horrible CEO and Board turned it down saying "not yet" (as per Dr. Kauffman), and that's when the stock was I don't know 20 times higher in price than now.
So what do you do? This is a good case perhaps for a Harvard Business School case that are taught in business schools worldwide
What should prudent Management do?
The first and foremost thing in my view is to change the culture which has gotten you into this hole. This is critical because if you don't, then the same dysfunctional culture is going to mess up future sales potential.
Mike Mano and Mike Mason in my opinion are not at a caliber to handle this. Sadly I told you this when the stock price was 10 times higher, and you arrogantly ignored it, or you were so weak to not be able to stand up to the lousy board and the strong rotten status quo.
I don't think you want to leave so we're stuck with you. But you can uproot the cancer in the culture by cutting the spending meaningfully, and not superficially, and not two years too late, and for this you need a new CFO. And you also need a new CFO who understands that as the company is bleeding cash it's absolutely imprudent, irresponsible, to make six figure donations and spend like crazy and feed yourselves daily catered lunches paid by shareholders. Remember, you're still losing money. It's not just a CFO's fault but it's your fault because the buck stops at the top and this disaster has been your doing Richard Paulson.
But as the Persians say whenever you catch the fish it's fresh. It seems very odd that I would be telling you this after I told you this when the stock was 10 times higher and you ignored it and look at what happened. I hate to tell company management I told you so. This is also the case in my professional career with companies that I consult with: a couple of times when they didn't listen, they came back a couple of years later and said oh you were right.
So you have to tame this spending beast, and this management poor competence issue. You should cut another I don't know 25% of the staff, and replace some key executives.
These actions dovetail with the confidence you give to investors. That you're spending cancer is cured. That you care for shareholder value and you're not giving them the middle finger which you have for years as you destroyed their wealth. These things can lead to higher company value.
But as long as you're the same gang you can't shoot straight doing the same things you will continue to mess up. screw up the best of data, just as you have in the past.
You seem very weak Richard, and a weak CEO likes weak executives who are worse than himself. History books of biotech will not be kind to you unless you change some things as hinted above. If you don't, even the best of data will not be made into success because of management incompetence.
Regards
RG
Also see a new company I'm following that's going after Alzheimer's Disease. If CT-1812 works sky is the limit. A great CEO and great science. https://www.rezamusic.com/health/cognition-therapeutics-cgtx
