A lawsuit filed against Checkmate Pharmaceuticals Inc. and its board of directors last Friday in the Eastern District of New York alleges that the transaction must be stopped until the company discloses financial and conflict of interest information critical to shareholders. The proposed transaction, a roughly $250 million purchase by Regeneron Pharmaceuticals Inc., is set to close on May 31.
The lawsuit explains that Checkmate is “a clinical-stage biotechnology company that focuses on developing and commercializing novel therapeutics for the treatment of cancer.” Its prospective purchaser Regeneron, self-describes as “a leading biotechnology company that invents life-transforming medicines for people with serious diseases.”
In mid-April the companies announced the proposed transaction for an all-cash price of $10.50 per share of Checkmate common stock. In her complaint, the shareholder asserts that the solicitation statement Checkmate filed with the Securities and Exchange Commission (SEC) on May 2 lacks transparency.
In particular, the plaintiff contends that the solicitation statement omits or misrepresents Checkmate’s financial projections, the financial analyses performed by financial advisor Centerview Partners LLC (Centerview) in connection with its fairness opinion, and potential conflicts of interest involving Checkmate insiders.
Without certain inputs underlying financial transactions, the complaint asserts that shareholders cannot accurately assess the company’s future financial performance or fully understand the financial analyses performed by Centerview in support of its fairness opinion.
Similarly, without disclosing employment- and compensation-related discussions and negotiations concerning Checkmate officers and directors, shareholders are left without meaningful opportunity to understand potential conflicts of interest on part of management or the motivations that would prevent fiduciaries from acting in the best interests of shareholders, the complaint says.
The plaintiff seeks to halt the transaction until the missing information is made available, or in the event that it is consummated, unwinding the purchase and rescissory damages. The plaintiff also requests attorneys’ fees on part of her counsel Halper Sadeh LLP.
