A bitter boardroom battle has erupted at MediPharm Labs, considered one of Canada’s main pharmaceutical hashish firms, as investor Apollo Capital strikes to unseat your entire board amid allegations of economic misconduct, mismanagement, and self-enrichment.
With damning and heated allegations levelled on either side in varied investor updates over the previous few weeks, the way forward for the corporate’s management now rests on an upcoming vote on the firm’s Annual and Particular Assembly of Shareholders on June 16, 2025.
The continuing and really public dispute centres on whether or not present CEO David Pidduck and his management crew are appearing in shareholders’ greatest pursuits, or as Apollo claims, plotting a ‘hearth sale’ of the corporate’s property to money out their very own holdings.
What’s the dispute about?
On Might 08, Apollo Know-how Capital Company, a Toronto-based funding agency and considered one of MediPharm’s largest shareholders with a 3% stake, issued a sharply worded letter to fellow shareholders alongside the submitting of a ‘dissident proxy round’.
It is a formal doc issued by a shareholder or group of shareholders (the ‘dissidents’) who’re looking for to problem the prevailing administration or board of a public firm throughout a shareholder vote.
Within the letter, Apollo accuses MediPharm’s board of ‘catastrophically’ mismanaging the corporate and presiding over a protracted interval of worth destruction, operational failure, and extreme govt compensation.
“Regardless of this abysmal efficiency, the administration crew has continued to be rewarded excessively,” Apollo writes. It accuses the Board of constructing ‘ill-advised dilutive investments’ resulting in over $54 million in working losses over the previous three years.
“We will not stand idly by and watch this do-nothing board and administration crew drive this once-great firm additional into the abyss,” the letter states.
As such, Apollo put ahead plans to exchange all six of the incumbent administrators with six of its personal nominees, all of which had been promptly slated in a retort from MediPharm which claimed they do ‘not have the combo of {qualifications} essential to run a fancy worldwide enterprise like MediPharm.’
Weeks later, following the launch of a devoted web site for the marketing campaign to oust the present management, Apollo issued a collection of great allegations towards the corporate.
Within the salvo, printed on Might 29, Apollo accused MediPharm’s board of ‘deliberate, systematic monetary misfeasance and misleading accounting practices,’ alleging that the corporate engaged in ‘schemes to deliberately overstate Firm revenues.’
Chris Taves, Chair of the Board and Audit Committee and a CPA, is called immediately within the claims. Apollo states that ‘it’s curious’ Taves holds each roles and requires ‘quick, sturdy investigation by regulatory authorities together with the OSC, TSX, and SEC.’
“These allegations paint a profoundly troubling image of calculated company conduct to overstate revenues and in flip mislead shareholders,” Apollo stated, calling on every director to ‘publicly handle these allegations brazenly and transparently.’
In a subsequent letter to shareholders this week, Apollo alleged that Pidduck is ‘trying to promote the Firm to money out his shares,’ citing conversations with a present MediPharm board member and different ‘credible sources.’
“In 2025, a present Board member informed Apollo Capital immediately that CEO Pidduck was trying to promote the corporate to set off his change in management awards,” Apollo claimed in an announcement.
Apollo says it made a $6.9 million funding provide to bolster MediPharm’s development, together with a $3.4 million personal placement and $3.5 million to accumulate shares from Pidduck and President Keith Strachan, however that the provide was rejected with out engagement.
Apollo CEO Regan McGee stated: “Our provide represented a manner for MediPharm to capitalize the corporate with out promoting key property… We might already be nicely on our manner towards attaining our aim of a 10x improve within the inventory worth.”
What does MediPharm say?
MediPharm Labs has strongly denied the accusations, calling them ‘patently false’ and a part of a ‘marketing campaign of misinformation’ designed to ‘distract and mislead the corporate’s shareholders.’
“The Firm complies absolutely with Worldwide Monetary Reporting Requirements and its steady disclosure obligations pursuant to Canadian securities legislation,” MediPharm stated, highlighting its clear audit from MNP LLP as of March 2025.
In an in depth response, the Board accused Apollo of trying a hostile takeover with solely a minimal possession stake.
“Apollo’s marketing campaign to grab management of MediPharm is nothing lower than an assault towards your organization,” it wrote in a Might 28 shareholder letter.
MediPharm claims that Apollo is concealing its true intent to ‘use MediPharm as a beachhead to roll-up or purchase a number of hashish firms,’ referencing Apollo’s personal April proposal to show the corporate right into a ‘platform for consolidating 4 worthwhile personal hashish firms in Canada and Australia.’
The corporate dismissed Apollo’s five-pillar restoration technique, aimed toward boosting worldwide gross sales, lowering bills, halting asset gross sales, changing the CEO, and growing transparency, as obscure and by-product.
“The Dissident Plan is missing in specifics. A lot of it’s a plan to make a plan,” MediPharm stated, arguing Apollo was merely repackaging present initiatives: “The worldwide medical market now represents greater than half our revenues, and it grew by 87% year-over-year in Q1 2025.”
On monetary efficiency, the Board acknowledged: “The Firm’s Q1 2025 year-over-year outcomes included a ten% improve in income, a 53% improve in gross margin, and the primary quarter of constructive Adjusted EBITDA in over 5 years.”
