While facing a mutiny led by ex-Chief Financial Officer Christopher Riley, Nymox Pharmaceutical is claiming that Riley attempted to swindle the company of 100,000 stock shares and tried to promote one of the “very worst offers” the company has seen.
Nymox is airing its dirty laundry via a July 31 company release, sharing details of Riley’s short stint at the company and the terms of his forced exit.
Riley, who was fired in June after serving three months as CFO, was awarded an unauthorized and undisclosed Treasury Issuance Request for 100,000 shares of Nymox stock in March, according to Nymox. The action was executed by Nymox’s former legal counsel Randall Lanham without the knowledge, disclosure or approval of independent board members or CEO Paul Averback, M.D., the biotech said.
Nymox said it has completed all the proper steps to protect its shareholders from the unauthorized request.
But that’s not all—not even close.
According to Nymox, Riley lied on his resume when applying for the CFO position, falsely claiming to have secured $62.5 million at another company. Later, it was discovered that the other company was founded by Nymox’s ex-legal counsel, Lanham, of which Riley is the CEO, and Nymox’s ex-board member Richard Cutler serves as general counsel—information that was unbeknownst to Nymox.
Nymox said it had believed Riley’s resume to be true and had relied on Lanham’s recommendation when deciding to hire Riley. The false resume claim was later confirmed in writing by Lanham, according to Nymox.
Right after the company learned of the resume deception, Riley introduced Nymox to Pennsylvania-based AscellaHealth, a pharmaceutical solutions provider, with whom it was later discovered that Riley has an ongoing business association with.
The distributor, unnamed in Nymox’s release, exchanged business information with Nymox under a nondisclosure agreement and extended a partnership offer.
The proposal was set up so AscellaHealth wouldn’t pay any cash for the Nymox rights it would receive. Instead, the potential business partner would loan cash to Nymox, creating debt for the biotech.
Under the proposition, Riley and Lanham would have immediately been awarded up to 18 million shares of common stock and future shares of the company, according to Nymox.
The distributor’s preliminary offer included a proposed fee of $1,500 dollars per unit of treatment for distribution services provided—a fee Nymox called “astounding.” Comparable services typically cost a fraction of that figure, according to Nymox.
Nymox said the terms of the deal—including manufacturing control for the distribution company and outright change of control of Nymox’s board of directors—weren’t in the best interests of Nymox shareholders.
“To Nymox’s knowledge, the distributor has no well-known past accomplishments of any regulatory successes, nor has it invented or developed any new treatments,” Nymox shared July 31. “Nymox has received far better offers in the past that have always included real cash investment offers and real expertise in gaining approvals (with established pharma companies and not with relatively recently founded distributors).”
The biotech said the proposal was “amongst the very worst offers that Nymox and its advisers have seen in the past ten years or longer” in the view of Nymox management and board.
After the “very unattractive” and “one-sided” offer, Nymox said it stopped engaging with the distributor.
Nymox then fired Riley “to protect the company,” according to the July 31 release. Riley’s alleged attempt at nabbing 100,000 Nymox shares was discovered after his termination, along with other breaches of confidentiality and fiduciary duty, according to the company.
Since Riley was let go in June, he and Lanham have launched a campaign against Nymox.
The campaign stems back to Nymox’s Nasdaq delisting in early July. The removal came after the Irvine, California-based biotech failed to get its shares above the minimum $1 price within a six-month window.
The stock value dropped after last year’s FDA refusal to consider the approval of Nymox’s Nymozarfex, a drug designed to be administered in-office for patients with benign prostatic hyperplasia, a condition that causes an enlarged prostate gland.
Expected European approvals for the treatment weren’t enough to pull back the investors who had fled after the FDA rejection. Once Nymox’s shares were booted from the Nasdaq, Riley emerged leading “The Committee to Restore Nymox Shareholder Value,” lashing out at the biotech for turning down the proposed partnership with AscellaHealth.
The group claimed that the deal would have provided the company with much-needed revenue as it awaits a potential Dutch approval of Nymozarfex. The group posted a letter penned by Riley in which he described his work to set up what he described as the “company-saving deal” with AscellaHealth. Another letter posted by the group was written by Lanham, who was also involved in setting up the proposal.
Nymox has dubbed the effort as a “campaign of disinformation and slander against the company.”
Riley has said publicly that he is still supported by AscellaHealth. According to Nymox, the distributor has received communications from its legal team that it breached the nondisclosure agreement. Nymox said it will hold the distributor responsible for any damages that arise from its connection to Riley that harm the relationship between Nymox and its shareholders.