In its announcement today, OncoSec said the deal is pivotal to the company’s future. It claimed that South Korea-based Alpha Holdings, which has about 15% of the company’s stock, has been making “false and misleading statements” as it urges shareholders to oppose the deal.
San Diego-based OncoSec Medical scheduled a shareholder meeting for Jan. 17, 2020 to vote on its pending acquisition by Grand Decade Developments Limited, which was announced in October. But, a large shareholder, Alpha Holdings, has aimed to spoil the vote.
This morning OncoSec announced the date of the shareholder meeting and urged support of the deal with Grande Decade, a subsidiary of China Grand Pharmaceutical and Healthcare Holdings Limited (CGP). The company said the deal will bring a $30 million cash infusion into OncoSec’s coffers, which would support two ongoing clinical trials of Tavo (tavokinogene telseplasmid) in combination with Merck’s Keytruda in metastatic melanoma and metastatic triple-negative breast cancer. The company has anticipated the potential filing for accelerated approval of Tavo and Keytruda in checkpoint-refractory metastatic melanoma in the coming year.
In its announcement today, OncoSec said the deal is pivotal to the company’s future. It claimed that South Korea-based Alpha Holdings, which has about 15% of the company’s stock, has been making “false and misleading statements” as it urges shareholders to oppose the deal.
Alpha Holdings, which filed a lawsuit opposing the deal with Grande Decade at the end of October, has already scored one legal victory. At the end of November, a judge in Nevada denied OncoSec’s attempts to dismiss the lawsuit. In the class-action lawsuit, Alpha Holdings claims that the board members have undervalued the stock to prompt the deal and have also failed to “fully and fairly disclose all material information” regarding the acquisition. In a statement, Alpha Holdings accused the company board of directors of attempting to “rig” the approval process of the acquisition by changing the rules to only require a majority of votes cast at the shareholder meeting, as opposed to a majority of shareholder votes.
While that legal skirmish was won by Alpha Holdings, OncoSec countered that its investor is making false claims about the transaction with Grande Decade. OncoSec said the claim that it only needs to raise the capital necessary to carry it through the third quarter of 2020 is false. By relying on that financial formula, OncoSec said that will risk the company’s future and is “akin to gambling with the money of our shareholders.” OncoSec said as of July 31, 2019, its cash position was $25 million and the company has a cash burn of $2.5 million per month. The company would be short $10 million of the $30 million it will gain from the deal. That $30 million infusion from the Grande Decade deal will provide OncoSec with a full-year of necessary capital he company said.
When it comes to the claims that OncoSec’s board members have breached their fiduciary duty by “making incomplete and misleading disclosures” according to the lawsuit, the company countered that Alpha Holdings is “trampling shareholder democracy” by seeking to disenfranchise shareholders due to the lawsuit.
“We are fulfilling our fiduciary duties by proposing this deal – which we are convinced is in the best interest of the Company – and allowing you, the shareholders, to decide whether to take it,” OncoSec said in its announcement this morning.
