Activist Investors Report on Karyopharm Therapeutics

Investigative Report 

This page is under construction

A letter to Karyopharm's (KPTI) Board regarding one of many instances of gross mismanagement and wastage of corporate assets by CEO Richard Paulson, to the detriment of shareholders (and implicitly to the benefit of short sellers); and urgency of change of leadership.

Preface For Web Posting: This is just one of many examples of KPTI leadership breaching its duties and not acting in concert and alignment with company (shareholder) interests, out of negligence and incompetence, or perhaps, being compromised, given the degree of profit certain entities have derived from such misconduct as exemplified herein, e.g., giving away large sums of shareholder funds, and intent to give away large sums in secret so that shareholders do not find out how their assets are being wasted, and how they're being stiffed (98% drop in KPTI price). Again, this all may be due to negligence, poor judgement and incompetence, but it raises questions about their integrity and commitment to their mandate of creating shareholder value.

This one of several letters to the Board (a comprehensive demand letter is in progress) is temporarily shared here. As the status quo is highly profitable for the insiders, short sellers and rogue entities, this post may get attacked by shills / influencers, and defenders of a status quo which has destroyed a $25 stock down to $0.62 in the last 5 years since Richard Paulson has been with the company as Director (2020) and CEO (2021), to the benefit of every stakeholder except shareholders who have consistently footed the bill, and absorbed the cost and burden of other parties getting richer.

Serious, troubling evidence against Karyopharm Board and Richard Paulson which the Board may not be aware of

To: Karyopharm Board Members

KARYOPHARM DONATING $500,000 TO JUST ONE CHARITY, PLUS OTHER DONATIONS WHILE BLEEDING CASH

We have very troubling, concrete, credible evidence that Karyopharm, led by Richard Paulson, has donated at least $500,000 to just one charity within the last two years, plus a lot of other donations, while it has paralyzed the stock (drop of 98%), by negligent mismanagement, or intentionally, and has gotten the company caught in very expensive and risky toxic financing. In summary, the company has absolutely NOT been in a position to make ANY donations, if it were run by a competent CEO who understands he is running a FOR-PROFIT. Read on. It gets much worse...

KARYOPHARM SECRETLY GIVING AWAY $250,000 OF STOCKHOLDER ASSETS

Please note that we have very credible information (first-hand witness statement) that Karyopharm, led by Richard Paulson, intends to donate $250,000 to a single charity -- on top of all the other charity donations it makes because Paulson doesn't recognize that we're a FOR PROFIT business - or he's compromised (read below) -- but unlike the previous years, Karyopharm reportedly does NOT want to be recognized and get publicity which most corporate donors of large sums like to get (the charity provides many publicity perks to large donors), but Karyopharm has decided that in 2025 it wants to donate 250,000 without the publicity (in a year where it's getting a Going Concern, has issued a default risk notice, and is bleeding cash as usual). Any Harvard MBA student reading this case will scream of how ridiculously unfit the CEO is.

We have received a full list of these perks that Karyopharm received the last two years, which of course didn't increase company value by a penny, so the entire donation was a waste of money for shareholders, and even $500,000that it donated is $500,000 straight out of the bottom line and earnings per share which directly impacts company value.

RICHARD PAULSON HAS BEEN SHOOTING THE COMPANY AND THE SHAREHOLDERS IN THE BACK

So Richard Paulson is shooting shareholders in the back by donating their money like this, while much bigger and more profitable companies donate a lot less (even to the same charity) or don't donate at all, until they're profitable.

There's something very strange, just in the fact that the company is even dishing out money while it is bleeding cash, and speaks volumes about the unfitness and incompetence of the CEO, and serious breach of duties by the Board.

SECRETLY GIVING AWAY SHAREHOLDER ASSETS TO THE DETRIMENT OF SHAREHOLDERS RAISES SERIOUS LEGAL AND ETHICAL QUESTIONS

Remember, you are obliged by Delaware law, to abide by your fiduciary duties, and you're required by other statute where applicable to each shareholder's interests and damage suffered as result of your breach of duties.

As stated above, we were told by a very credible source with direct knowledge, that for 2025, Karyopharm intends to donate $250,000 as well, but in a way that does not attract any publicity. This is extremely fishy and raises a lot of questions to say the least -- and the Board should absolutely investigate this, and suspend Richard Paulson from any access to funds and spending during the investigation.

One of the very thoughtful people our team had the immediate reaction that such an action raises a troubling and serious question of whether you (the Board if you're aware of this) -- or Richard Paulson and parties involved in this egregious act of donating such a large sum while bleeding cash, to begin with, and even worse, trying to hide it from public -- whether you and/or Paulson are trying to destroy the company and put it in the hands of parties other than shareholders. 

SERIOUS CONFLICT OF INTEREST OR INCOMPETENCE

The evidence that we have obtained could potentially indicate a serious conflict of interest with Richard Paulson and perhaps the Board if you have endorsed this -- or at a minimum, serious shortcoming in judgement, failure of duties, and incompetence and unfitness to serve the shareholders who have hired you to create value for them. 

RICHARD PAULSON'S CONFUSION ABOUT HIS MANDATE

Apparently, at a minimum, Richard Paulson has his priorities mixed up, and is confused about his mandate. He keeps repeating that his mandate is to cure cancer. His primary mandate, as is the case for every person who runs a FOR-PROFIT organization is to create value, make revenue, control expenses, improve earnings per share, grow the business. Without money, you cannot cure cancer. And you're already engaged in trying to cure cancer and are paid to do so.

Richard's idea of you giving away large sums of our money - while booking a huge loss - to others who are trying to cure cancer, shows a significant, huge defect in his thinking and attitude about his role, mandate, charter, reason he was hired - and it is the duty of the Board to set this straight.

THE REMEDY IS CLEAR

When you're dealing with such a rotten status of anything, the easiest solution is to get rid of it instead of trying to change or solve it. In the case of people, most people do not change - it's a risky bet to think we can change people. Therefore, firing Richard Paulson is the best solution - or at least demoting him as an outside consultant, and tap into him if you think he has something good to offer. As is, he's on record for claiming he spends a significant amount of his time socializing with other CEOs (on our tab, while getting paid $1.2mm ++ per year) and having killed KPTI by his incompetence or if he's compromised.

After KPTI has been destroyed by 98% due to incompetence or corruption (see below), the current shareholders deserve to see the stock appreciate to its fair value, but that is absolutely impossible under Richard Paulson, as illustrated by just one of many examples, in this letter. You have plenty of scientific heavy weights on the payroll. Paulson is not adding any value scientifically. As a business manager he's been an utter disaster.  Any business manager with a clear mandate and commitment to that mandate can come in, clean up the wasteful culture, apply some serious and urgently needed austerity measures (such as travel freeze, salary freeze, etc. which serious CEOs apply but they're a foreign concept to Paulson who's too used to burning and wasting other people's money).

A new CEO will give the level of confidence investors need. And the stock will significantly appreciate. We want you to run Karyopharm as a business, run by a serious business leader, and Paulson has proven to be a failure and a bad fit for the challenges Karyopharm faces.

RICHARD PAULSON SHOULD NOT BE TRUSTED WITH THE REVERSE SPLIT AND THE FUTURE OF THE COMPANY

It would be utmost irresponsible for the Board to give Richard the green light to do a reverse split, because whether it's incompetence or corruption, judged by his past performance, he will cause the stock to be shorted back down significantly post RSS. He's already caused a stock to drop from double-digits to 0.62 cents. He can for sure do it again.

And that's probably why shorts have been upping the ante and the stock is almost at its all time low. And the parties on the other side run circles around Richard Paulson and Mike Mano and the passive Board without you even knowing it. Of course, if Richard is compromised and is trying to destroy the current shares, he'd know it. It's a shame to even speculate this, but it's your own behavior that gives rises to such speculation, e.g. as stated about with a specific example.

HUGE RISKS IN PAULSON'S THESIS WHICH CAN BECOME SERIOUS ISSUES

Paulson's thesis is a simplistic, and perhaps intentionally deceptive thesis that he should be given more time. Almost 4 years, $5million for him, and 98% drop in KPTI is not enough. He wants more time. To do a RSS, and to then raise money, and gets the company through data readouts which will supposedly save the day. His thesis is full of risks that the company should NOT take - first and foremost being Paulson himself. He cannot or does not want to foresee those risks, just as he totally ignored the many risks that we saw 3.5 years ago, and pointed out to him, again and again, by various investors, and you and him totally ignored those calls, and in every case, our prediction of the outcome came true, and that's exactly why the stock is $0.62 cents are the shorts are drooling over a reverse split so they can kill the stock even more, on Paulson's watch. They love Paulson, Mano, and the Board.

Almost every successful reverse split in biotech history has been combined with fundamental change in causes that got the stock to drop - in this case: Richard Paulson's horrific mismanagement, running the company like a vacation club, a charity, wasting huge amounts of assets (one example stated above), being totally ignorant of driving bottom line and creating value, putting some very weak people in key roles, total lack of foresight, repeatedly over-promising and under-delivering, and repeatedly acting contrary to shareholder interest (e.g. the case above). Every sensible shareholder would rather see better earnings/share numbers than having their money given to charity, just because the CEO is incompetent or intentionally wants to run the company like a charity, which will naturally destroy a for-profit company.

There are other risks with Paulson's thesis which can become real issues for shareholders - as though seeing our stock drop 98% wasn't enough. It is the boards responsibility to address these risks, and work to the best interest of shareholders, who hired the board to create value. We did not hire you to run a non-profit organization to cure cancer. Paulson doesn't get this or doesn't want to get it because the status quo is to lucrative for him. No accountability. Blank check. Live it up on our tab. Even shamefully, give away our money after you've destroyed our stock by 98%.

AVAILABILITY OF EVIDENCE

We're of course happy to share the testimony / evidence we've obtained with you, should like to contact us by replying to this email, and we can arrange a call with a Board representative, Brendan Strong, Lori Macomber or an outside Counsel. We will not speak with Michael Mano or Richard Paulson because we do not trust parties who have destroyed 98% of KPTI. Our preference is to avoid litigation if at all possible if the Board starts abiding with its mandate, charter, fiduciary duties.  As a reminder, the above, is just one of many instances where corporate assets are irresponsibly wasted - there are plenty of other cases as well for which we also have evidence.

Four analysts issue very bullish price targets for KPTI. How reliable is their analysis?

15 January 2025

HC, RBC, BARCLAYS, PIPER issue very optimistic price targets. Are they just trying to kiss up to the company so they participate in the next financing? How reliable are their analysis / valuation models? Have any of you seen any of their reports? I guess it would take a lot for all four to be issuing BS analysis to support a valuation / PT that is not realistic, just to kiss up.

HC Wainwright & Co. Reiterates Buy on Karyopharm Therapeutics, Maintains $7 Price Target

In a report released yesterday, Peter Lawson from Barclays reiterated a Buy rating on Karyopharm Therapeutics (KPTI – Research Report), with a price target of $5.00. The company’s shares closed yesterday at $0.67.

Piper Sandler analyst Christopher Raymond maintained a Buy rating on Karyopharm Therapeutics (KPTI – Research Report) today and set a price target of $5.00. The company’s shares closed yesterday at $0.67.

RBC Capital analyst Brian Abrahams maintained a Buy rating on Karyopharm Therapeutics (KPTI – Research Report) on January 7 and set a price target of $3.00. The company’s shares closed last Wednesday at $0.72.