In a ruling delivered on September 21, 2020, Chancellor Andre Bouchard of the Delaware Court of Chancery, denied, in substantial part, the defendants’ motion to dismiss a putative class action asserting breach of fiduciary duty claims in connection with the 2019 merger between clinical-stage biotech companies Asterias Biotherapeutics, Inc. and BioTime, Inc. (now known as Lineage Cell Thereapeutics, Inc.).
Plaintiff Neil Ross, represented by Wolf Popper, had alleged that BioTime, which owned nearly 40% of Asterias’s common stock, controlled Asterias’s board as well as the stockholder vote on the merger, and used this control to effectuate a transaction on economic terms grossly unfair to unaffiliated Asterias stockholders. The Chancellor found that Plaintiff’s complaint adequately established that BioTime constituted Asterias’s, “controlling stockholder,” thereby invoking “entire fairness,” the most onerous standard of review in Delaware, which mandated denial of BioTime’s motion.
The Court also found that certain Asterias directors were “plainly” conflicted given their ties to BioTime, and, notwithstanding their recusal from the board vote to approve the merger, the complaint sufficiently demonstrated that they “participated in crucial discussions that occurred immediately before the other members of the board voted,” requiring denial of their dismissal motions as well.
The case is Neil D. Ross v. Lineage Cell Therapeutics, Inc., Case Number 2019-0822-AGB, in the Delaware Court of Chancery.