CytoDyn Files Lawsuit Against Rosenbaum/Patterson Activist Group for Misleading Shareholders and Waging an Unlawful Proxy Contest
Download as PDFAugust 05, 2021 9:26am EDT
Suit Details Unlawful Attempts to Solicit Votes on Part of the Activist Group
CytoDyn is Acting to Protect All Shareholders and Prevent Activist Group from Continuing to Violate Federal Securities Laws
VANCOUVER, Washington--(BUSINESS WIRE)-- CytoDyn Inc. (OTCQB: CYDY) (“CytoDyn” or the “Company”), a late-stage biotechnology company, today announced that it has filed a lawsuit in the United States District Court for the District of Delaware against the activist group led by Paul Rosenbaum and Bruce Patterson (the “Rosenbaum/Patterson Group” or the “Activist Group”). The suit seeks to enjoin the Activist Group from misleading shareholders and waging an illegal proxy contest to take over control of the Company’s Board of Directors (the “Board”).
As announced on August 2, 2021, CytoDyn has determined that the director nomination notice submitted by the Rosenbaum/Patterson Group was invalid because it failed to comply with the Company’s bylaws in more than 50 instances. The Activist Group has since then stated that it intends to press on with its proxy contest and has continued with its efforts to make misrepresentations to shareholders. The Company has been left with no other option than to sue to enjoin the Rosenbaum/Patterson Group from further violations of the federal securities laws and misleading shareholders.
Scott A. Kelly, M.D., Chairman of the Board and Chief Medical Officer of CytoDyn, said, “We are taking this step to protect the rights of all our shareholders. We believe the Rosenbaum/Patterson Group has been purposely misleading shareholders and, in the process, has violated securities laws. We are bringing this lawsuit so that we can return our full focus as quickly as possible to what matters most to our company, shareholders and patients: securing approval for leronlimab and bringing its lifesaving potential to market.”
In its complaint, the Company details a number of misleading statements of the activities of the Rosenbaum/Patterson Group. These include but are not limited to the following:
The Activist Group failed to disclose that one of its proponents, Jeffrey Beaty, and one of its nominees, Bruce Patterson, previously proposed that CytoDyn engage in a $350 million transaction through which they and their families would personally benefit to the tune of approximately $123 million. These two individuals have been attempting to replace a majority of the CytoDyn Board and potentially being able to effectuate this plan, yet they have not disclosed any of these details to shareholders as required by securities laws.\
The Activist Group claims that its members consist purely of CytoDyn outsiders, yet the facts are otherwise. Indeed, its members have prior connections with the Company which give them personal and unique motivations for attacking CytoDyn. These include two of the Company’s former directors: former Chief Medical Officer Richard G. Pestell, who was fired for cause, which automatically resulted in his removal from the CytoDyn Board (he then commenced litigation against the Company), and former CytoDyn Executive Board Chair Anthony D. Caracciolo.
The Activist Group falsely claims that there are no “adverse proceedings” between them and the Company. However, while Patterson was a paid consultant for the Company under an agreement providing that he would have no right to proprietary information, he in fact secretly took CytoDyn’s data and caused IncellDx (where he was and remains CEO) to file a patent application with the United States Patent and Trademark Office (“USPTO”) after CytoDyn had already filed its own patent application relating to the same data. CytoDyn soon learned of Patterson’s deception, and filed a successful third party submission with the USPTO to block IncellDx’s later-filed and invalid patent application claims.
As previously announced, the Rosenbaum/Patterson Group’s director nominations will be disregarded, and no proxies or votes in favor of their nominees will be recognized or tabulated at the 2021 annual meeting of shareholders. The 2021 annual meeting has been scheduled to be held on October 28, 2021. The Board will present its director candidates for the 2021 annual meeting in its definitive proxy materials, to be filed with the SEC in due course.
Download as PDFAugust 05, 2021 9:26am EDT
Suit Details Unlawful Attempts to Solicit Votes on Part of the Activist Group
CytoDyn is Acting to Protect All Shareholders and Prevent Activist Group from Continuing to Violate Federal Securities Laws
VANCOUVER, Washington--(BUSINESS WIRE)-- CytoDyn Inc. (OTCQB: CYDY) (“CytoDyn” or the “Company”), a late-stage biotechnology company, today announced that it has filed a lawsuit in the United States District Court for the District of Delaware against the activist group led by Paul Rosenbaum and Bruce Patterson (the “Rosenbaum/Patterson Group” or the “Activist Group”). The suit seeks to enjoin the Activist Group from misleading shareholders and waging an illegal proxy contest to take over control of the Company’s Board of Directors (the “Board”).
As announced on August 2, 2021, CytoDyn has determined that the director nomination notice submitted by the Rosenbaum/Patterson Group was invalid because it failed to comply with the Company’s bylaws in more than 50 instances. The Activist Group has since then stated that it intends to press on with its proxy contest and has continued with its efforts to make misrepresentations to shareholders. The Company has been left with no other option than to sue to enjoin the Rosenbaum/Patterson Group from further violations of the federal securities laws and misleading shareholders.
Scott A. Kelly, M.D., Chairman of the Board and Chief Medical Officer of CytoDyn, said, “We are taking this step to protect the rights of all our shareholders. We believe the Rosenbaum/Patterson Group has been purposely misleading shareholders and, in the process, has violated securities laws. We are bringing this lawsuit so that we can return our full focus as quickly as possible to what matters most to our company, shareholders and patients: securing approval for leronlimab and bringing its lifesaving potential to market.”
In its complaint, the Company details a number of misleading statements of the activities of the Rosenbaum/Patterson Group. These include but are not limited to the following:
The Activist Group failed to disclose that one of its proponents, Jeffrey Beaty, and one of its nominees, Bruce Patterson, previously proposed that CytoDyn engage in a $350 million transaction through which they and their families would personally benefit to the tune of approximately $123 million. These two individuals have been attempting to replace a majority of the CytoDyn Board and potentially being able to effectuate this plan, yet they have not disclosed any of these details to shareholders as required by securities laws.\
The Activist Group claims that its members consist purely of CytoDyn outsiders, yet the facts are otherwise. Indeed, its members have prior connections with the Company which give them personal and unique motivations for attacking CytoDyn. These include two of the Company’s former directors: former Chief Medical Officer Richard G. Pestell, who was fired for cause, which automatically resulted in his removal from the CytoDyn Board (he then commenced litigation against the Company), and former CytoDyn Executive Board Chair Anthony D. Caracciolo.
The Activist Group falsely claims that there are no “adverse proceedings” between them and the Company. However, while Patterson was a paid consultant for the Company under an agreement providing that he would have no right to proprietary information, he in fact secretly took CytoDyn’s data and caused IncellDx (where he was and remains CEO) to file a patent application with the United States Patent and Trademark Office (“USPTO”) after CytoDyn had already filed its own patent application relating to the same data. CytoDyn soon learned of Patterson’s deception, and filed a successful third party submission with the USPTO to block IncellDx’s later-filed and invalid patent application claims.
As previously announced, the Rosenbaum/Patterson Group’s director nominations will be disregarded, and no proxies or votes in favor of their nominees will be recognized or tabulated at the 2021 annual meeting of shareholders. The 2021 annual meeting has been scheduled to be held on October 28, 2021. The Board will present its director candidates for the 2021 annual meeting in its definitive proxy materials, to be filed with the SEC in due course.
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