Item 8.01 Other Information.
Proposed Settlement of Derivative and Class Actions
As previously disclosed, on July 9, 2019, Hedgepath, LLC ("HPLLC"), a
significant minority stockholder of Inhibitor Therapeutics, Inc., a Delaware
corporation (the "Company"), filed a civil action in the Delaware Court of
Chancery (the "Court") captioned Hedgepath, LLC v. Magrab, et al., C.A.
No. 2019-0529-JTL (the "Action") against certain of the Company's current and
former directors, and its President and Chief Executive Officer (the "Individual
Defendants"), as well as the Company's majority stockholder, Mayne Pharma
Ventures Pty Ltd. ("Mayne Pharma", and collectively with the Individual
Defendants, the "Defendants"). The Company was named as a nominal defendant
given the derivative nature of the claims. On December 3, 2019, HPLLC filed its
Verified Amended and Supplemental Complaint (the "Complaint"). As previously
disclosed in further detail by the Company, the Complaint asserts various
claims, either directly on behalf of HPLLC or derivatively on behalf of the
Company, for alleged breaches of fiduciary duty, violation of Delaware statute,
waste, fraudulent misrepresentation, declaratory judgment, and dilution of
stockholder equity arising out of transactions previously entered into between
the Company and Mayne Pharma and Mayne Pharma's relationship with the Company
generally. The Complaint seeks unspecified damages and other relief.
Additionally, on March 23, 2020, a Stockholder Class Action Complaint was filed
in the Court by Company stockholder and purported class representative Samuel P.
Sears purportedly on behalf of a class of certain holders of the Company's
common stock. That lawsuit, captioned Sears v. Magrab et al., C.A. No.
2020-0215-JTL (the "Putative Class Action"), asserts claims against the same
Defendants (with the exception of the Company), and the facts underlying the
claims largely mirror those alleged in the Action. On December 10, 2020, the
Court entered a stipulated Order coordinating the Action and the Putative
Class Action (together, the "Coordinated Actions").
The Defendants have denied, and continue to deny, the allegations of wrongdoing
or liability asserted in the Coordinated Actions. Nevertheless, to eliminate the
uncertainty, risk, disruption and expense of further litigation, HPLLC, Sears,
the Company, the Individual Defendants and Mayne Pharma have entered into a
Stipulation and Agreement of Compromise, Settlement, and Release, dated and
filed with the Court on September 9, 2022 (together with the exhibits thereto,
the "Settlement Stipulation").
The Settlement Stipulation includes as an exhibit thereto a Notice of Pendency
of Derivative and Class Actions, Proposed Settlement and Settlement Hearing (the
"Notice"). The material terms of the proposed settlement of the Coordinated
Actions are summarized in the Notice and include, without limitation, that
(i) the Defendants will cause $14,250,000 in cash (to be funded via Mayne
Pharma's director and officer insurance) to be paid to the Company (the "Cash
Consideration"); (ii) Mayne Pharma will surrender all equity securities in the
Company for cancellation, and will forgive certain debts it is owed by the
Company; (iii) stock options and warrants held by the Individual Defendants will
be cancelled; (iv) certain intellectual property licenses to and from the
Company, on one hand, and Mayne Pharma, on the other, will be converted or
terminated, with only certain obligations remaining in place; (v) each of the
Individual Defendants will retire from their positions with the Company,
including as members of the Company's Board of Directors and management;
(vi) the previously-disclosed Third Amended and Restated Supply and License
Agreement between the Company and Mayne will be cancelled, with the Company
retaining a royalty on future net sales of SUBA-Itraconazole BCCNS in the United
States subject to certain contingent payment obligations; and (vii) various
releases will be exchanged among the parties to the Coordinated Actions.
Also as described in the Notice, HPLLC and Sears intend to petition the Court
for approval of an award of attorneys' fees and expenses in connection with the
Coordinated Actions in an amount not to exceed $2,000,000 in the aggregate, to
be paid out of the Cash Consideration.
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As set forth in the Notice, the proposed settlement is subject to and
conditioned on approval by the Court, and no assurances can be given that such
Court approval will be obtained. If approved, the proposed settlement will,
among other things: (i) fully resolve the Coordinated Actions by dismissing all
asserted claims with prejudice, and (ii) bar all claims released through the
settlement.
A hearing date for the Court's review of the proposed settlement and the
applications for an award of attorneys' fees and expenses has been scheduled for
November 10, 2022, at 9:15 a.m. (EST) at the Leonard L. Williams Justice Center,
500 North King Street, Wilmington, Delaware 19801 (or remotely by such means as
the Court may order).
A copy of the Notice is attached hereto as Exhibit 99.1, and a copy of the
Settlement Stipulation, including the Notice, will be available on the Company's
website at https://investors.inhibitortx.com. The foregoing description of the
terms and provisions of the proposed settlement of the Coordinated Actions as
seth forth in the Notice is a summary only, does not purport to be complete, and
is qualified in its entirety by reference to the full text of the Settlement
Stipulation, which text is incorporated herein by reference. Interested parties
are encouraged to read the entire text of the Settlement Stipulation and the
Notice carefully for further information.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are being filed with this Current Report on Form 8-K:
Exhibit No. Description
99.1 Notice of Pendency of Derivative and Class Actions, Proposed
Settlement and Settlement Hearing, dated September 9, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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