Clovis Oncology CEO, Patrick Mahaffy (Pat) has been long rumored to have colluded with convertible note holders, notably with Highbridge capital, suppressing the stock price for almost 4 years and for removing any chance of return for the shareholders. Shareholders were used like ATM and have funded ~2.7B dollars till date to develop and commercialize their lead drug Rubraca and several others in pipeline. 

As a reminder, CEO is no stranger to security fraud. He falsified the efficacy of Rociletinib to raise $300M and was later caught and fined by SEC for $20M. Shareholders had to foot the bill. Instead of firing him, BOD rewarded him with compensation increase every year  and showered him with RSUs and options. 

The fundamental responsibility of BOD is the provide leadership and oversight so the organization can reach its goals and maximize value for all stakeholders. For Clovis, it has been exact opposite. BOD members led by Ginger Graham have simply rubber-stamped CEO’s decisions while collecting $250K+ cash compensation every year along with RSUs and other perks. Their criminal negligence and fiduciary failures is a criminal case on its own and has costed shareholders billions of dollars in losses. 

It is rumored that Pat has orchestrated a SHORT COLLUSION FRAUD scheme with convertible note holders, backstopping their short positions with step down valuation rounds (raising money at lower equity prices) resulting in destruction of equity value. Pat and BOD have diluted from ~55 million to ~145 million shares in the last 3 years without any increase in institutional ownership. The shares from equity raises have been used to backstop short positions thereby eliminating note holders need to cover their short in the open market and handing them millions of dollars in profits. And the cycle repeats with more shorting of shares by note holders until Pat offers them more shares via secondary or convertible conversions at even depressed share prices. It is rumored that one of the institutional equity investors, Palo Alto Investors (4.3M shares ownership) found out about the illegal naked shorting with Highbridge capital and privately settled with the management and have stayed silent since.

Clovis Oncology has recently applied Chapter 11 petition with a stalking horse bid from Novartis for one of their Ph1 assets for $50M upfront and after securing $75M Debtor in Possession (DIP) financing. The irony of this DIP arrangement is that the funding is being provided by same convertible note holders that destroyed the share price via illegal naked shorting. And when company completes sale of assets they will be first ones to dip their hands into the jar!!  Their short positions have been recently disclosed in the BK filing under “other economic interests”.  

·       Antara Capital– 8.7m shares short

·       Highbridge Capital – 3.9m shares short

·       DE Shaw – 800K shares short

·       Others – 600K shares short

It is also rumored that the company received several acquisition offers prior to Chapter 11 filing

1)    $2.1B in May/June 2022 timeframe translating to ~$11 per share. Pat prevented the offer from reaching shareholders and proceeded with proxy voting to reverse split and dilute shareholders shortly thereafter. 

2)    $3.1B in early 2020 translating to ~$30 per share. Pat prevented the offer from reaching shareholders with ridiculous counter proposals that angered the suitor.

Bankruptcy route was chosen by Pat and appears to have been at least 2 years in the making to cover up the short collusion fraud. No sane CEO and BOD with an approved cancer drug making $120M+ in revenues and awaiting approvals for first line indications would prefer a BK route without exploring a full sale of the company. As noted in the recent 10Q, the management team has only tried to sell ex-US rights and have sought partnership for their Ph1 FAP asset. And CEO has already packed his bags and moved to Florida, a state that offers protection to criminals like him

While shareholders have lost 90%+ of their investments, the management team have summoned 3 separate advisors (legal, investment bankers and restructuring consultants) using cash from company’s dwindling cash reserves. On the other hand, retail shareholders have to self fund to hire law firms to stand up against these criminals!!!

Please sign the petition to initiate a federal investigation into the rumored securities fraud and collusion of CEO, the Board of Directors and Note Holders, immediately!