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IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
| IN RE NUVATION BIO INC. | ) | C.A. No. 2023-____-___ | ||
| ) |
VERIFIED PETITION FOR RELIEF PURSUANT TO 8 DEL. C. 205
Petitioner Nuvation Bio Inc. ( Nuvation or the Company ), by and through its undersigned counsel, brings
this petition pursuant to 8 Del. C. 205, seeking to have this Court validate a corporate act as follows:
1. The Company petitions this Court seeking relief similar to that which several other public entities have recently
sought and obtained from this Court to create certainty regarding its capitalization following this Court s recent decision in Garfield v. Boxed, Inc., 2022 WL 17959766 (Del. Ch. Dec. 27, 2022). In particular, the Company seeks to
validate its Amended and Restated Certificate of Incorporation, dated February 10, 2021 (the New Certificate of Incorporation ), adopted in connection with its business combination with the former Nuvation Bio Inc. ( Legacy
Nuvation ) in February 2021, which, among other things, increased the aggregate number of authorized shares of Class A Common Stock from 500,000,000 to 1,000,000,000 and increased the number of authorized shares of Class B common
stock from 20,000,000 to 60,000,000. While a majority of the then-outstanding shares of Class A Common Stock and a majority of the then-
outstanding shares of Class B Common Stock voted in favor of adoption of the New Certificate of Incorporation, a separate vote of the Class A Common Stock was not expressly sought, and
this Court s decision in Boxed creates uncertainty as to the validity of the New Certificate of Incorporation, and thus the shares issued, or to be issued pursuant thereto, threatening the Company with irreparable harm as described more
2. Pursuant to its proxy statement dated January 20, 2021 (Exhibit A, 2021 Proxy Statement ), the Company
solicited stockholder approval to amend and restate its Amended and Restated Certificate of Incorporation, dated June 30, 2020 (Exhibit B, the Old Certificate of Incorporation ), among other things, to increase the number of shares
of the Company s Class A Common Stock from 500,000,000 to 1,000,000,000 (the Class A Increase Amendment ) and to increase the number of shares of the Company s Class B Common Stock from 20,000,000 to 60,000,000
(the Class B Increase Amendment and together with the Class A Increase Amendment, the Share Increase Amendments ). The 2021 Proxy Statement stated that the affirmative vote of (i) holders of a majority of
the outstanding shares of Panacea common stock, voting together as a single class, and (ii) holders of a majority of the outstanding [Class B Common Stock], voting separately as a single class is required to approve each of the Charter
Proposals, including the Share Increase Amendments. Ex. A at 8.
3. Following its approval, the New Certificate of Incorporation became effective upon filing
with the Delaware Secretary of State on February 10, 2021 (Exhibit C, New Certificate of Incorporation). The business combination with Legacy Nuvation also closed on February 10, 2021. Since the business combination, the Company s
Class A Common Stock has traded on the New York Stock Exchange (the NYSE ) under the ticker symbol NUVB.
At the time of the filing of the New Certificate of Incorporation, the Company held the view that the New Certificate of Incorporation had received the requisite stockholder votes and thus was validly adopted under the terms of the Old Certificate
of Incorporation and Section 242(b)(2) of the General Corporation Law of the State of Delaware ( DGCL ). Section 242(b)(2) provides in relevant part:
The holders of the outstanding shares of a class shall be entitled to vote as a class upon a proposed amendment, whether or not entitled to
vote thereon by the certificate of incorporation, if the amendment would increase or decrease the aggregate number of authorized shares of such class . . . or alter or change the powers, preferences, or special rights of the shares of such class so
as to affect them adversely. The number of authorized shares of any such class or classes of stock may be increased or decreased . . . by the affirmative vote of the holders of a majority of the stock of the corporation entitled to vote irrespective
of this subsection, if so provided in the . . . certificate of incorporation . . . .
Section 242(b)(2) thus provides that an amendment to change the
number of authorized shares or to adversely affect the powers, preferences or special rights of a class of stock requires a separate vote of such class unless, in the case of a share
increase amendment, the certificate of incorporation contains a
so-called Section 242(b)(2) opt-out provision. Despite not having a Section 242(b)(2) opt-out
provision, the Company believed that the New Certificate of Incorporation was effective because under the unambiguous language of the Old Certificate of Incorporation, the Class A Common Stock and Class B Common Stock were not
separate classes of Common Stock but series of the class of Common Stock.
5. On December 27, 2022, this Court issued an opinion in
Garfield v. Boxed, Inc., that calls into question whether the Class A Common Stock and Class B Common Stock were series of the same class of Common Stock or separate classes of stock, and, as a result, the vote required to
adopt the Share Increase Amendments and the New Certificate of Incorporation. The Court held, in the context of a fee application, that the plaintiff s demand based on the claim that Section 242(b)(2) required a separate vote of the
holders of the Class A common stock to increase the number of authorized shares of Class A common stock was meritorious when made. Id.
6. As a result of Boxed, the validity of the New Certificate of Incorporation and the shares of capital stock issued, or to be issued,
in reliance on the effectiveness of the New Certificate of Incorporation has become and will remain uncertain absent relief from this Court. The Company therefore brings this action pursuant to 8 Del. C. 205, seeking this
Court s assistance in validating the New Certificate of Incorporation and the shares of capital stock to be issued in reliance on the validity and effectiveness thereof.
7. The Company is a Delaware corporation originally formed as a special purpose acquisition company (a SPAC ) under the name
Panacea Acquisition Corp. ( Panacea ) on April 24, 2020. On October 20, 2020, the Company entered into an Agreement and Plan of Merger ( the Merger Agreement ), pursuant to which Legacy Nuvation would become a
subsidiary of Panacea (the Business Combination ). The Company, now named Nuvation Bio Inc., is a clinical-stage biopharmaceutical company tackling some of the greatest unmet needs in oncology by developing differentiated and novel
therapeutic candidates.
8. On January 20, 2021, the Company filed the 2021 Proxy Statement identifying six proposals to be voted on at a February 9, 2021
special meeting of stockholders (the Special Meeting ), including Proposal No. 2 with respect to the adoption of the New Certificate of Incorporation. In addition to the Class A Increase Amendment, the New Certificate of
Incorporation would effect several changes to the Old Certificate of Incorporation, including:
Ex. A at 109. The New Certificate of Incorporation would also authorize the Company to issue new and additional shares of Class B Common
Stock i.e., New Class B Common Stock. Id. at 110.
9. The 2021 Proxy Statement did not specifically require or
solicit separate votes of the holders of Class A Common Stock on the New Certificate of Incorporation.
10. There were 18,456,250 shares of Common Stock outstanding and entitled to vote at the Special Meeting. See Ex. A at 96. Of
the outstanding Common Stock, there were 14,862,500 shares of Class A Common Stock and 3,593,750 shares of Class B Common Stock. Id. As disclosed in the Company s February 9, 2021 Form 8-K (Exhibit D, the Voting
Results Form 8-K ), the Share Increase
Amendments received the affirmative vote of 14,842,544 shares of
a majority of the 18,456,250 shares of Common Stock entitled to vote. Ex. D at 4. As a result of this affirmative vote, the Company believed that the New Certificate of Incorporation had received
the requisite stockholder approval.
11. Moreover, despite not expressly seeking a separate class vote of the Class A Common Stock,
the New Certificate of Incorporation was approved by a majority of the Class A Common Stock. Assuming that every single share of Class B Common Stock voted in favor of the Share Increase Amendment, 11,248,794 Class A Common Stock
shares voted in favor of Proposal No. 2 out of the 14,862,500 outstanding Class A Common Stock shares, constituting a majority of Class A Common Stock shares outstanding.
Closing of the Business Combination
12. As disclosed in a Form 8-K dated February 12, 2021 (Exhibit E, the Business Combination
Closing Form 8-K ), believing the New Certificate of Incorporation had received the requisite stockholder approval, the Company proceeded to file the New Certificate of Incorporation with the Delaware
Secretary of State and to consummate the Business Combination on February 10, 2021. Immediately prior to the closing of the Business Combination, each of the then issued and outstanding Class B Common Stock automatically converted on a one-for-one basis into a share of Class A Common Stock. Pursuant to the Merger Agreement, each share of Legacy Nuvation Class A and each share of Legacy
Nuvation Series A preferred stock were converted into approximately 0.196 shares of the Company s Class A Common Stock. Each share of Legacy Nuvation Class B Common Stock was
cancelled and converted into approximately 0.196 shares of the Company s Class B Common Stock and, immediately following the closing of the Business Combination, all but 1,000,000 shares of Class B Common Stock were voluntarily
converted into shares of Class A Common Stock. In connection with the signing of the Merger Agreement, the Company entered into subscription agreements with certain investors (the PIPE Investors ), whereby it issued 47,655,000 shares
of Class A Common Stock upon closing of the Business Combination. As a result of the foregoing, immediately following the Business Combination, there were 216,650,055 shares of Class A Common Stock, 1,000,000 shares of Class B Common
Stock, 5,787,500 warrants (each exercisable for one share of Class A Common Stock), and 9,571,976 shares of Class A Common Stock issued upon exercise of exchanged options. As of February 27, 2023, there were 217,803,722 shares of
Class A Common Stock and 1,000,000 shares of New Class B Common Stock issued and outstanding. The number of shares of Class A Common Stock issued and outstanding immediately following the closing of the Business Combination was and at
all times through the date hereof has remained less than the 500,000,000 authorized shares of Class A Common Stock originally provided for under the Old Certificate of Incorporation.
The Court s Authority to Validate Defective Corporate Acts Under Section 205(a)
13. Under Section 205(a)(3), this Court may [d]etermine the validity and effectiveness of any defective corporate act not ratified .
. . pursuant to 204 and under Section 205(a)(4), this Court may [d]etermine the validity of any corporate act or transaction and any stock, rights or options to acquire stock. 8 Del. C. 205(a)(3), (4). A
defective corporate act is defined, in pertinent part, as any act or transaction purportedly taken by or on behalf of the corporation that is, and at the time such act or transaction was purportedly taken would have been, within
the power of a corporation . . . but is void or voidable due to a failure of authorization. 8 Del. C. 204(h)(1). Finally, a failure of authorization is defined, in pertinent part, as the failure to authorize or
effect an act or transaction in compliance with (A) the provisions of this title, (B) the certificate of incorporation or bylaws of the corporation, or (C) any plan or agreement to which the corporation is a party or the disclosure set
forth in any proxy or consent solicitation statement, if and to the extent such failure would render such act or transaction void or voidable. 8 Del. C. 204(h)(2).
14. Here, if a separate class vote of the Class A Common Stock was required to approve the New Certificate of Incorporation under
Section 242(b)(2), it was not expressly disclosed to stockholders and, even though it was in fact obtained,
could constitute a failure of authorization for purposes of Sections 204 and 205. As a result of this potential failure of authorization, the filing of the New Certificate of
Incorporation and any shares of the Company s capital stock issued in reliance on the effectiveness thereof may be invalid and would therefore constitute defective corporate acts and/or putative stock under Sections 204
15. Thus, the Court has the power under Section 205 to ratify and validate the New Certificate of Incorporation and the
shares of the Company s capital stock issued in reliance on the validity and effectiveness of the New Certificate of Incorporation.
Consideration of Statutory Validation Factors under Section 205(d)
16. Section 205(d) sets forth certain factors that the Court may consider when determining whether to ratify and validate a defective corporate
In connection with the resolution of matters pursuant to subsections (a) and (b) of this section, the Court of Chancery may
consider the following:
(1) Whether the defective corporate act was originally approved or effectuated with the belief that the approval
or effectuation was in compliance with the provisions of this title, the certificate of incorporation or bylaws of the corporation;
Whether the corporation and board of directors has treated the defective corporate act as a valid act or transaction and whether any person has acted in reliance on the public record that such defective corporate act was valid;
(3) Whether any person will be or was harmed by the ratification or validation of the defective corporate act, excluding any harm that would
have resulted if the defective corporate act had been valid when approved or effectuated;
(4) Whether any person will be harmed by the failure to ratify or validate the defective
(5) Any other factors or considerations the Court deems just and equitable.
in the New Certificate of Incorporation s Validity. With respect to the factor set forth in Section 205(d)(1), the Company demonstrated its good faith belief that the New Certificate of Incorporation had been properly approved through
its actions taken in connection with the closing of the Business Combination. In the Voting Results Form 8-K, the Company disclosed that the New Certificate of Incorporation had been approved by the requisite
vote of its stockholders and, as disclosed in the Business Combination Closing Form 8-K, the Business Combination was closed on February 10, 2021 in reliance on having received that approval. On the same
day, the New Certificate of Incorporation was filed with the Delaware Secretary of State based on the belief that it had been duly adopted in accordance with Sections 242 and 245 of the DGCL. In connection with the Business Combination, the Company
issued shares of Class A Common Stock and New Class B Common Stock to its stockholders based on the belief that the New Certificate of Incorporation was valid and effective. The Company also agreed to issue 47,655,000 shares of