April 4, 2017
By Alex Keown, BioSpace.com Breaking News Staff
LOS ANGELES – Patrick Soon-Shiong, dubbed the world’s richest doctor, is facing increased scrutiny over allegations he attempted to force tronc Inc., parent company of the Chicago Tribune and Los Angeles Times, to invest in NantHealth , following his $70 million investment in the media company.
According to reports, after Soon-Shiong made the investment into the beleaguered media company, he urged tronc to invest in the initial public offering of NantHealth, which tronc declined to do, Stat News reported, citing a letter filed with the U.S. Securities and Exchange Commission filed by tronc attorneys.
“tronc properly declined to invest in that company, since such an investment would have had no logical connection to its business operations in the publishing industry,” the attorneys said in the letter.
The legal team also said that Soon-Shiong approached individuals on the tronc board, particularly Chairman Michael Ferro, make a personal investment into NantHealth, or an investment through is firm, Merrick Ventures. According to the letter, the attorneys said there was an implied threat that if Ferro did not make an investment in NantHealth, then Soon-Shiong would not make his investment in tronc.
“Mr. Ferro disclosed these interactions to the board at the time and told the Board that Merrick would make the requested $10 million investment in NantHealth so that tronc did not have to. I understand that since its IPO, NantHealth’s stock price has declined by approximately 66 percent,” the letter said.
The letter filed by the attorneys was in response to a letter submitted by Soon-Shiong, who accused tronc of marginalizing him and demanding that the media company allow him to acquire more shares. Stat reported that tronc looks to be pushing Soon-Shiong out. The company removed him from the list of board members up for re-election and also capped the number of shares available to him. Soon-Shiong’s investment in tronc allowed the company to fend off a takeover by media giant Gannett.
But it’s not just Soon-Shiong’s troubles with tronc that have kept the doctor under the gaze of media companies. Earlier this year, Stat published a scathing report that alleged a charitable donation he provided the University of Utah was self-dealing in order to benefit one of his companies. Soon-Shiong’s $12 million donation to the university was written so that his company, NantHealth Inc., received $10 million in order to conduct the research, as well as “reams of patient data” that allowed the company to inflate numbers provided to investors regarding its GPS Cancer product. Soon-Shiong told the L.A. Times, a division of tronc, that Stat’s report was “maliciously false.” Soon-Shiong said the money was provided to the University of Utah out of “a desire to make this knowledge available to scientists throughout the world,” the Times said. Soon-Shiong also said he was “befuddled” that anyone could misconstrue his intentions.
Shares of NantHealth are up slightly this morning, trading at $5.42 per share, as of 9:50 a.m. NantHealth’s stock prices have been in a steady decline for the past year. Since the stock went public in June 2016 at a price of $8.54 per share, the stock has done little but go down.
