The complaint – filed in the Supreme Court of the State of New York – alleges, among other things, that Protein Sciences (PSC) and its senior management engaged in fraudulent conduct during the proposed transaction and that PSC breached the terms of its agreements with Emergent. Emergent is presently evaluating whether additional legal filings or courses of action are appropriate.
In connection with the negotiation of the acquisition, PSC requested, and Emergent provided, a $10 million senior secured line of credit to PSC to fund its continuing operations pending closing of the transaction. PSC has drawn down the full $10 million, which is secured by all assets of PSC, including its intellectual property.
Repayment has been accelerated as a result of PSC’s material breaches of the loan agreement, and in the event that PSC is unable to repay the loan, Emergent may foreclose on all PSC assets securing the loan. The lawsuit alleges fraud and material breaches of the asset purchase agreement and seeks compensatory and punitive damages and injunctive and declaratory relief.
Daniel Abdun-Nabi, Emergent’s president and COO, said: “We have not terminated any of our agreements with Protein Sciences, and we are willing to continue a dialogue with the non-management members of the Protein Sciences board to establish a path forward to complete this acquisition.”