On Thursday, a case was filed in the Southern District of New York by Nancy Miller-Rich against Altum Pharmacuticals Inc., Betterlife Pharma Inc. Ahmad Doroudian, and Stephen Dattels. The case is regarding fraud and violations of the Securities Exchange Act.
The complaint explained that the plaintiff was hired by the defendants to be the Executive Chairman of the Board of Directors of Altum. Alutm was focused on the creation of a biosimilar drug to Merck’s Intron-A for the purposes of treatment of HPV, known as IFN a2b, as well as other cancer treatment products in the clinic testing phase.
As part of the compensation for this position and for assisting the defendants in obtaining investor funding, the plaintiff was to a $50,000 signing bonus payable in immediately exercisable stock options, as well as $180,000 in salary, $80,000 in stock and $100 ,000 in options , each payable in equal quarterly installments, per the complaint. However the defendants allegedly directly diluted the value of the stock and stock options provided to the plaintiff by issuing shares as compensation for other consultants, as well as issuing shares to themselves and other parties for no consideration.
The complaint also explained that the defendants were involved in a separate company, Betterlife Pharma, involved in the creation and distribution of cannabis products including consumables, lubricants, and direct capsules.
When the Altum inhaler version of the IFN a2b began being used in China for treatment of COVID-19, the defendants sought to divert the product and the proceeds to the Betterlife company instead of Altum, the complaint alleged. They allegedly did this by executing a letter of intent authorizing the sale of the IFN a2b to Betterlife in exchange for stock in Betterlife.
The plaintiff states that this letter of intent was signed by defendant Doroudian who was conflicted due to his position with Betterlife and without consulting the plaintiff or the other non-conflicted board members. The plaintiff and the other non-conflicted board members parted ways from the company as a result. The defendants then proceed with a merger agreement between the two companies and sought approval from the Altum shareholders, including the plaintiff. Plaintiff alleges that the defendants required documentation was materially false and misleading regarding the status of the two companies and the deal was not in accordance with the 2L disclosures required under the SEC Act.
Plaintiff is suing for securities fraud, aiding and abetting securities fraud, and breach of contract. Plaintiff is represented by McCarney Law PC.
