Biotech billionaire Patrick Soon-Shiong is facing a shareholder derivative lawsuit alleging he misled investors about the prospects of ImmunityBio Inc.’s flagship cancer drug, Anktiva, to personally profit at their expense, Bloomberg reports.
The lawsuit, filed in Delaware Chancery Court by shareholder Douglas Carlson, claims Soon-Shiong, the company’s executive chairman and global chief scientific and medical officer, downplayed Anktiva’s chances of regulatory approval, creating a misleading picture in public filings. It alleges he then capitalized on the subsequent stock price decline by engaging in transactions that benefited him and his affiliated companies, ultimately enriching himself as the stock rebounded.
The suit contends that Soon-Shiong, with the apparent acquiescence of other board members named in the complaint, orchestrated debt financing and debt-to-equity conversions that diluted the holdings of ordinary shareholders while benefiting himself and his related entities. The 72-year-old entrepreneur, who also owns the Los Angeles Times and holds a minority stake in the Los Angeles Lakers, holds a controlling stake in ImmunityBio.
The lawsuit centers on manufacturing issues discovered by the US Food and Drug Administration (FDA) at a contractor producing Anktiva. Following an ImmunityBio filing that the suit alleges exaggerated the severity of the FDA’s findings, the company’s shares plummeted by over 50%. The lawsuit claims that while Soon-Shiong privately remained confident in Anktiva’s eventual approval, given that the FDA did not raise concerns about the drug’s clinical data, safety, or efficacy, he did not convey this confidence to other investors.
This is not the first legal action against Soon-Shiong regarding Anktiva; another lawsuit filed in California federal court in October alleges he and other company officials concealed production problems.
Carlson’s suit seeks damages for ImmunityBio, alleging breaches of fiduciary duty and unjust enrichment. Derivative lawsuits, where any recovery goes to the company, are common in Delaware Chancery Court, a venue frequently used for corporate litigation. The case is Carlson v. Soon-Shiong, 2024-1185, Delaware Chancery Court (Wilmington).
