Delaware Court Agrees with CytoDyn that Activist Group’s Nominations are Invalid
Oct. 14, 2021 7:00 AM ETCytoDyn Inc. (CYDY)
Affirms that Nomination Notice Failed to Comply with Company’s By-laws
Proxies and Votes in Favor of the Activist Group’s Nominees Will be Disregarded
Company Will Immediately File Its Definitive Proxy Statement
VANCOUVER, Wash.--(BUSINESS WIRE)-- CytoDyn Inc. (CYDY) (“CytoDyn” or the “Company”), a late-stage biotechnology company developing leronlimab, a CCR5 antagonist with the potential for multiple therapeutic indications, today announced that the Delaware Court of Chancery found that CytoDyn’s Board of Directors properly rejected a nomination notice presented by an activist group led by Paul Rosenbaum and Bruce Patterson (the “Rosenbaum/Patterson Group” or the “Activist Group”). All of the Activist Group’s claims were denied and judgment was entered for CytoDyn and its Board.
Specifically, the Court found that the Activist Group’s nomination notice failed to comply with the Company’s by-laws, finding that they “ultimately went wrong” by “playing fast and loose in their responses to key inquiries embedded in the advance notice bylaw…” The Court also noted that, among other things, the Activist Group’s nomination notice “fell short of what was required,” omitted required information about supporters, and “failed to provide information regarding an obvious conflict involving a nominator and a nominee.”
The Court determined that the nomination notice was deficient in at least two key respects:
CCTV and Supporters: “The Board rejected the Nomination Notice, in part, because it failed to disclose the existence of CCTV, which was founded by Rosenbaum and collected donations to support the proxy fight… Plaintiffs were obliged to identify their supporters. This was vitally important information; the Board was not nitpicking when it flagged the omission as material and ultimately disqualifying. … Yet Plaintiffs elected to say nothing of supporters, preferring instead to withhold the information….”
IncellDx: “The Board legitimately suspected that Patterson and others were keen on revisiting the failed attempt to combine IncellDx and CytoDyn. … For Plaintiffs not to appreciate the presence of that elephant in the room reflects either reckless indifference or deliberate gamesmanship… [E]vidence clearly reveals that such a transaction was at least being contemplated by the IncellDx insiders and Rosenbaum. [An] email chain reveals that Patterson continues to believe that a merger would be in the best interests of both companies; he writes: “it HAS to happen solely because of our IP. We haven’t made a big deal about it because we view the 13D as an opportunity to bring this together in a 1+1=3 scenario.” In yet another email, Patterson declares, “The takeover is starting!,” and then explains, “Yes this is the beginning of getting the deal I sent to you consummated!!”
The Court therefore concluded that the nomination notice was “fatally incomplete” and that the Board of Directors was “justified in rejecting” it. Unless the Activist Group appeals and the decision is reversed, the Company will disregard the Group’s director nominations, and no proxies or votes in favor of its nominees will be recognized or tabulated at the 2021 Annual Meeting.
Scott A. Kelly, M.D., Chairman of the Board of CytoDyn, stated, “Our by-laws are in place to ensure that all shareholders are treated equally. We consider it vital that shareholders have the appropriate information to make informed decisions when voting on issues that could affect the future of their investment. The Company believes that today’s ruling upholds this standard. We look forward to continuing to focus on bringing leronlimab to market as expeditiously as possible to benefit patients and create shareholder value.”
The Company will file its definitive proxy statement today and intends to mail its definitive proxy materials to all shareholders within the next week.
The 2021 Annual Meeting remains scheduled for October 28, 2021. Shareholders of record as of September 1, 2021, will be entitled to vote at the Annual Meeting.
CytoDyn is represented by Sidley Austin LLP.
About CytoDyn
CytoDyn is a late-stage biotechnology company developing innovative treatments for multiple therapeutic indications using leronlimab, a novel humanized monoclonal antibody targeting the CCR5 receptor. CCR5 plays a critical role in the ability of HIV to enter and infect healthy T-cells and appears to be implicated in tumor metastasis and immune-mediated illnesses, such as NASH.
CytoDyn successfully completed a Phase 3 pivotal trial using leronlimab combined with standard antiretroviral therapies in HIV-infected patients who were heavily treatment-experienced individuals with limited treatment options. CytoDyn is working diligently to resubmit its BLA for this HIV combination therapy since receiving a Refusal to File in July 2020. In July 2021, CytoDyn announced that it had submitted a dose justification report to the FDA, an integral step in the resubmission process for its BLA, which it expects to complete by the first quarter of calendar 2022. CytoDyn also completed a Phase 2b/3 investigative trial with leronlimab used as a once-weekly monotherapy for HIV-infected patients. CytoDyn plans to initiate a registration-directed study of leronlimab monotherapy indication. If successful, it could support a label expansion approval. Clinical results to date from two trials have shown that leronlimab can maintain a suppressed viral load in a sub-population of R5 HIV patients who chose to switch from their daily pills regimen to once-a-week subcutaneous dose of leronlimab. Several patients on leronlimab’s Phase 2b extension arm have remained virally suppressed for almost 7 years and many patients in our Phase 2b/3 investigative trial are passing two and some four years of monotherapy with suppressed viral load.
CytoDyn recently completed a Phase 2 clinical trial with leronlimab in mTNBC and a Phase 2 basket trial in solid tumor cancers (22 different cancer indications) A Phase 2 investigative trial for post-acute sequelae of SARS COV-2, also known as COVID-19 long-hauler’s, and a Phase 2 clinical trial for NASH are continuing. CytoDyn has already completed a Phase 2 and Phase 3 trial for mild-to-moderate and severe-to-critical COVID-19 patients, respectively, for which CytoDyn did not meet its primary or secondary endpoints, except for the secondary endpoint in the critically ill subpopulation. More information is at www.cytodyn.com.
Oct. 14, 2021 7:00 AM ETCytoDyn Inc. (CYDY)
Affirms that Nomination Notice Failed to Comply with Company’s By-laws
Proxies and Votes in Favor of the Activist Group’s Nominees Will be Disregarded
Company Will Immediately File Its Definitive Proxy Statement
VANCOUVER, Wash.--(BUSINESS WIRE)-- CytoDyn Inc. (CYDY) (“CytoDyn” or the “Company”), a late-stage biotechnology company developing leronlimab, a CCR5 antagonist with the potential for multiple therapeutic indications, today announced that the Delaware Court of Chancery found that CytoDyn’s Board of Directors properly rejected a nomination notice presented by an activist group led by Paul Rosenbaum and Bruce Patterson (the “Rosenbaum/Patterson Group” or the “Activist Group”). All of the Activist Group’s claims were denied and judgment was entered for CytoDyn and its Board.
Specifically, the Court found that the Activist Group’s nomination notice failed to comply with the Company’s by-laws, finding that they “ultimately went wrong” by “playing fast and loose in their responses to key inquiries embedded in the advance notice bylaw…” The Court also noted that, among other things, the Activist Group’s nomination notice “fell short of what was required,” omitted required information about supporters, and “failed to provide information regarding an obvious conflict involving a nominator and a nominee.”
The Court determined that the nomination notice was deficient in at least two key respects:
CCTV and Supporters: “The Board rejected the Nomination Notice, in part, because it failed to disclose the existence of CCTV, which was founded by Rosenbaum and collected donations to support the proxy fight… Plaintiffs were obliged to identify their supporters. This was vitally important information; the Board was not nitpicking when it flagged the omission as material and ultimately disqualifying. … Yet Plaintiffs elected to say nothing of supporters, preferring instead to withhold the information….”
IncellDx: “The Board legitimately suspected that Patterson and others were keen on revisiting the failed attempt to combine IncellDx and CytoDyn. … For Plaintiffs not to appreciate the presence of that elephant in the room reflects either reckless indifference or deliberate gamesmanship… [E]vidence clearly reveals that such a transaction was at least being contemplated by the IncellDx insiders and Rosenbaum. [An] email chain reveals that Patterson continues to believe that a merger would be in the best interests of both companies; he writes: “it HAS to happen solely because of our IP. We haven’t made a big deal about it because we view the 13D as an opportunity to bring this together in a 1+1=3 scenario.” In yet another email, Patterson declares, “The takeover is starting!,” and then explains, “Yes this is the beginning of getting the deal I sent to you consummated!!”
The Court therefore concluded that the nomination notice was “fatally incomplete” and that the Board of Directors was “justified in rejecting” it. Unless the Activist Group appeals and the decision is reversed, the Company will disregard the Group’s director nominations, and no proxies or votes in favor of its nominees will be recognized or tabulated at the 2021 Annual Meeting.
Scott A. Kelly, M.D., Chairman of the Board of CytoDyn, stated, “Our by-laws are in place to ensure that all shareholders are treated equally. We consider it vital that shareholders have the appropriate information to make informed decisions when voting on issues that could affect the future of their investment. The Company believes that today’s ruling upholds this standard. We look forward to continuing to focus on bringing leronlimab to market as expeditiously as possible to benefit patients and create shareholder value.”
The Company will file its definitive proxy statement today and intends to mail its definitive proxy materials to all shareholders within the next week.
The 2021 Annual Meeting remains scheduled for October 28, 2021. Shareholders of record as of September 1, 2021, will be entitled to vote at the Annual Meeting.
CytoDyn is represented by Sidley Austin LLP.
About CytoDyn
CytoDyn is a late-stage biotechnology company developing innovative treatments for multiple therapeutic indications using leronlimab, a novel humanized monoclonal antibody targeting the CCR5 receptor. CCR5 plays a critical role in the ability of HIV to enter and infect healthy T-cells and appears to be implicated in tumor metastasis and immune-mediated illnesses, such as NASH.
CytoDyn successfully completed a Phase 3 pivotal trial using leronlimab combined with standard antiretroviral therapies in HIV-infected patients who were heavily treatment-experienced individuals with limited treatment options. CytoDyn is working diligently to resubmit its BLA for this HIV combination therapy since receiving a Refusal to File in July 2020. In July 2021, CytoDyn announced that it had submitted a dose justification report to the FDA, an integral step in the resubmission process for its BLA, which it expects to complete by the first quarter of calendar 2022. CytoDyn also completed a Phase 2b/3 investigative trial with leronlimab used as a once-weekly monotherapy for HIV-infected patients. CytoDyn plans to initiate a registration-directed study of leronlimab monotherapy indication. If successful, it could support a label expansion approval. Clinical results to date from two trials have shown that leronlimab can maintain a suppressed viral load in a sub-population of R5 HIV patients who chose to switch from their daily pills regimen to once-a-week subcutaneous dose of leronlimab. Several patients on leronlimab’s Phase 2b extension arm have remained virally suppressed for almost 7 years and many patients in our Phase 2b/3 investigative trial are passing two and some four years of monotherapy with suppressed viral load.
CytoDyn recently completed a Phase 2 clinical trial with leronlimab in mTNBC and a Phase 2 basket trial in solid tumor cancers (22 different cancer indications) A Phase 2 investigative trial for post-acute sequelae of SARS COV-2, also known as COVID-19 long-hauler’s, and a Phase 2 clinical trial for NASH are continuing. CytoDyn has already completed a Phase 2 and Phase 3 trial for mild-to-moderate and severe-to-critical COVID-19 patients, respectively, for which CytoDyn did not meet its primary or secondary endpoints, except for the secondary endpoint in the critically ill subpopulation. More information is at www.cytodyn.com.
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