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NOTICE OF SHAREHOLDER
DERIVATIVE LITIGATION,
PROPOSED SETTLEMENT, AND SETTLEMENT HEARING
| TO: | ALL CURRENT RECORD HOLDERS AND BENEFICIAL OWNERS OF COMMON STOCK OF ASSERTIO HOLDINGS, INC. (EXCLUDING DEFENDANTS) AND THEIR SUCCESSORS-IN- INTEREST. |
| PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS NOTICE RELATES TO A PROPOSED SETTLEMENT AND DISMISSAL OF SHAREHOLDER DERIVATIVE LITIGATION AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR RIGHTS. YOUR RIGHTS MAY BE AFFECTED BY LEGAL PROCEEDINGS IN THIS ACTION. | |
| PLEASE NOTE THAT THIS ACTION IS NOT A "CLASS ACTION" AND NO INDIVIDUAL SHAREHOLDER HAS THE RIGHT TO BE COMPENSATED AS A RESULT OF THE SETTLEMENT OF THIS ACTION. |
NOTIFIED, pursuant to an order of the Superior Court of the State of California for the County of Alameda, Complex Civil Litigation Division
(the "Court") that a proposed Settlement has been reached between and among the Parties to a consolidated shareholder derivative
action styled In re Depomed, Inc. Derivative Litigation, Master File No. RG17877280 (the "Consolidated Action")
and two related shareholder derivative actions pending in federal court: (1) Ross v. Fogarty, et al., Case No. 4:17-cv-06592-JST
(N.D. Cal.); and (2) Lutz v. Higgins, et al., Case No. 1:18-cv-02044-CFC (D. Del.) (together with the Consolidated Action,
the "Actions"). This Notice is not an expression of any opinion by the Court with respect to the truth of the allegations
in the Actions or the merits of the claims or defenses asserted by or against any party. It is solely to notify you of the terms of the
proposed Settlement, and your rights related thereto. The terms of the proposed Settlement are set forth in a Stipulation of Settlement
and Release Agreement dated October 26, 2021 (the "Agreement").1 This summary should be read in conjunction
with, and is qualified in its entirety by reference to, the text of the Agreement, which has been filed with the Court and is attached
1 All capitalized terms herein
have the same meanings as set forth in the Agreement.
be affected by the Settlement of the Actions. The Parties to the Actions have agreed upon terms to settle those matters and have signed
the Agreement setting forth the Settlement terms.
Assertio is a pharmaceutical
company headquartered in Lake Forest, Illinois. The Company engages in the development, sale, and licensing of products focused
on treating pain and other central nervous system conditions.
2017, the U.S. Senate Committee on Homeland Security and Governmental Affairs ("HSGAC") announced a wide-ranging investigation
into opioid manufacturers, seeking marketing, sales, and addiction study material from the manufacturers of the top five opioid products
by 2015 sales in the U.S., including the Company. On March 29, 2017, the price per share of Company stock fell $0.44, or approximately
3.0%, from the previous day's closing price to close at $13.79. By April 5, 2017, the price per share of Company stock at
closing had fallen to $11.92.
August 7, 2017, the Company acknowledged its involvement in the HSGAC investigation and also acknowledged that it was subject
to two additional investigations, having received separate subpoenas from the Office of the Attorney General of Maryland
("OAG-MD") and the U.S. Department of Justice ("DOJ") seeking documents and information regarding the
Company's sales and marketing of opioid products. On August 8, 2017, the price per share of Company stock fell $3.08, or
approximately 33.3%, from the previous day's closing price to close at $6.15.
2017, a federal securities fraud class action lawsuit styled Huang v. Depomed, Inc., et al., Case No. 4:17-cv-04830,
was filed against the Company in the United States District Court for the Northern District of California (the "Securities Class Action").
September 29, 2017, the shareholder derivative action Singh v. Higgins, et al., Case No. RG17877280, was filed
alleging breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and corporate waste. On
January 28, 2019, the related shareholder derivative action Youse v. Higgins, et al., Case No. HG19004409, was
filed alleging the same claims. Both Singh and Youse allege that certain of the Individual Defendants caused the
Company to engage in improper practices in the sale of opioid products and certain of the Individual Defendants caused
the Company to make false and misleading statements regarding its sale of opioid products. Both complaints sought damages, amendment
of corporate governance policies, restitution, and fees and costs. On July 12, 2019, this Court ordered that Singh and Youse be
consolidated for all purposes pursuant to Section 1048 of the California Code of Civil Procedure and maintained under Master
File No. RG17877270 with the caption In re Depomed, Inc. Derivative Litigation. The Court's July 12,
2019 order also appointed co-lead counsel for plaintiffs Micky Singh and Jim Youse and stayed the proceedings in the Consolidated
Action is related to the Securities Class Action. On March 18, 2019, the court in the Securities Class Action granted
defendants' motion to dismiss plaintiffs' first amended complaint without prejudice. On May 2, 2019, the plaintiffs
filed a second amended complaint asserting the same claims arising out of the same and similar disclosures against the Company and the
same individuals as were involved in the original complaint. On March 11, 2020, the court in the Securities Class Action granted
defendants' motion to dismiss plaintiffs' second amended complaint with prejudice. On April 9, 2020, the plaintiffs
in the Securities Class Action filed a Notice of Appeal of the March 11, 2020 order (the "Appeal"). On May 15,
2020, this Court ordered that the Consolidated Action be stayed pending the Appeal.
2017, the shareholder derivative action Ross v. Fogarty, et al., Case No, 4:17-cv-06592-JST, was filed in the United States District
Court for the Northern District of California alleging breach of fiduciary duties, corporate waste, and violation of Section 14(a) of
the Securities Exchange Act (the "Ross Action"). The Ross Action alleges that certain of the Individual Defendants
caused the Company to engage in improper practices in the sale of opioid products and certain of the Individual Defendants caused the
Company to make false and misleading statements regarding its sale of opioid products. The complaint in the Ross Action sought
damages, amendment of corporate governance policies, restitution, and fees and costs. The Ross Action is related to the Securities
Class Action. On May 13, 2020, the court in the Ross Action ordered that the case be stayed pending the Appeal.
December 21, 2018, the shareholder derivative action Lutz v. Higgins, et al., Case No. 1:18-cv-02044-CFC, was filed
in the United States District Court for the District of Delaware alleging breach of fiduciary duties, unjust enrichment, corporate
waste, and violation of Section 14(a) of the Securities Exchange Act and SEC Rule 14a-9 (the "Lutz Action").
The Lutz Action alleges that certain of the Individual Defendants caused the Company to engage in improper practices in the
sale of opioid products and certain of the Individual Defendants caused the Company to make false and misleading statements
regarding its sale of opioid products. The complaint in the Lutz Action sought damages, equitable relief, and fees and costs.
The Lutz Action is related to the Securities Class Action. On May 12, 2020, the court in the Lutz Action
ordered that the case be stayed pending the Appeal.
2018, Depomed, Inc., reincorporated from California to Delaware and changed its name to Assertio Therapeutics, Inc. Subsequently,
on May 19, 2020, Assertio Therapeutics, Inc. implemented a holding company reorganization pursuant to which (i) Assertio
Therapeutics, Inc. became a direct, wholly-owned subsidiary of Assertio Holdings, Inc.; (ii) each issued and outstanding
share of common stock of Assertio Therapeutics, Inc. converted into an equivalent corresponding share of common stock of Assertio
Holdings, Inc.; (iii) Assertio Holdings, Inc.'s shares were deemed registered pursuant to Section 12g-3(a) of
the Securities Exchange Act of 1934, as amended; and (iv) Assertio Holdings, Inc. assumed Assertio Therapeutics, Inc.'s
listing on the Nasdaq Stock Market.
The Parties, through
their counsel, engaged in a months-long, arm's-length negotiation concerning settlement, which included teleconferences and email
exchanges, and several proposals and counterproposals. As a result of these negotiations, the Parties reached an agreement in principle
to settle this matter on the terms set forth herein. After reaching agreement on the terms of Settlement, the Parties also reached an
agreement concerning attorneys' fees. Thereafter, the Parties worked cooperatively to document their agreement as set forth in
the Agreement and supporting settlement documents.
terms, conditions, and other matters that are part of the Settlement are subject to approval by the Court and a number of other
conditions. This summary should be read in conjunction with, and is qualified in its entirety by reference to, the text of the
Agreement, which has been filed with the Court and may be viewed at https://investor.assertiotx.com. As set forth therein,
the terms of the Settlement include Assertio Holdings Inc.'s and the Company's (as applicable) adoption and/or
maintenance of the corporate governance and other business changes listed in Appendix A of the Agreement. Certain of the corporate
governance and other business changes, as outlined in the Agreement, shall be maintained for at least two (2) years after they are
adopted, unless altered in accordance with the mechanisms provided in the Agreement. Below is a summary of the corporate governance
and other business changes listed in Appendix A of the Agreement.
implemented the below Corporate Governance and Other Business Changes relevant to the allegations in the Actions:
divestiture of the Company's remaining rights to Nucynta to Collegium in early 2020 (following the transfer of commercialization
rights to Collegium in January 2018), as described in numerous public filings.
Assertio Board's establishment of an Opioid Matter Oversight Committee, with oversight as to risk exposures and management's
risk monitoring, compliance programs and other mitigation activities in connection with the historical commercialization of opioid drugs
by the Company and investigations, litigations, or other proceedings that may relate thereto.
Company's maintenance of the policies and practices as further described in the Company's September 7, 2018 Report to
restructuring of the Company's workforce for economic reasons that included the elimination of the sales force in December 2020,
as described in Item 2.05 of the Form 8-K filed with the SEC on December 14, 2020.
In addition, Assertio
Holdings Inc. and the Company (as applicable) will implement the below Corporate Governance Changes for at least two (2) years after
they are adopted, unless altered in accordance with the mechanisms provided in the Agreement, as a result of the Actions:
Company shall maintain and distribute Compliance Policies that explain permissible and prohibited conduct of the sales force (if
any) in relation to the commercialization of the Company's products. The Compliance Policies shall fully describe, in