MARCH 23, 2020

Dear Shareholders,

I want to update you on the conclusions of an independent review (the “Independent Review”) led by Douglas H. Bache, Audit Committee Chair, focused on the allegations contained in a New York based short seller’s report issued on March 2nd.

Based on the findings of the Independent Review, we are of the view that the bulk of the allegations set out in the short seller report are highly misleading or exaggerated to directly benefit the short seller at the expense of PharmaCielo Ltd.’s (“PharmaCielo” or the “Company”) shareholders.

The Independent Review determined with the benefit of a comprehensive legal and forensic accounting support, that the authors of the Hindenburg Research report (who by their own admission are short PharmaCielo stock) created a short sale thesis by construing a set of allegations based on faulty research and interpretation. The misleading report was actively promoted to investors and in the media as part of a “short and distort” campaign. The objective of such campaigns is not just to profit from a short position if the thesis proves correct, but to ensure the position pays off by spreading malicious rumours from “anonymous sources”, or worse (as in PharmaCielo’s case), presenting loosely aggregated bits of information as connected facts and presenting these “facts” in a negative light. While short selling is a counter trading strategy, campaigns such as the one waged against PharmaCielo are actively investigated by both the Securities and Exchange Commission in the U.S. and the Ontario Securities Commission, given their tendency to distort markets and cause unwarranted damage to shareholders.

To continue reading the full letter and response to the short seller report, click here to download the PDF.