Patrick Soon-Shiong’s NantCell could lose its controlling stake in Precision Biologics through a legal settlement. The proposed settlement would effectively erase NantCell’s investment to clear up a case alleging Soon-Shiong improperly withdrew $47 million from Precision Biologics.
The case, details of which were reported by Law360, dates back to October 2015. That month, NantCell revealed it had paid $50 million to take a controlling stake in Precision Biologics, a startup working on antibodies to treat solid tumors.
Soon-Shiong framed the investment as part of the growing portfolio of programs intended to treat and diagnose cancer operating under his NantWorks umbrella. The investment has become better known for the legal case it triggered, though.
The case centers on the allegation that Soon-Shiong, NantCell and two related people on the board of Precision Biologics withdrew $47 million within 30 days of the $50 million investment. A Precision Biologics shareholder argued the withdrawal breached an investor rights agreement and the fiduciary duties of Soon-Shiong and his co-defendants.
Aspects of the case against Soon-Shiong fell away last year, but he is yet to escape the breach-of-duty claims. To resolve those outstanding allegations, the two sides have have spent more than a year discussing a potential settlement.
Now, details of the agreement have emerged. The settlement would effectively wind back the clock to before the NantCell investment. NantCell would return its stake in Precision Biologics, which, in turn, would hand back all the money it has left from the investment. NantCell would put $2.5 million into a fund shared by certain Precision Biologics shareholders.
The shareholders and defendants filed the settlement in the belief that “the terms contained in this stipulation are fair, adequate and in the best interests of plaintiff, the class and defendants, and it is reasonable to settle the action.” The defendants are not admitting wrongdoing.
Controversy has dogged Soon-Shiong in recent years. NantCell’s acquisition of Altor BioScience spawned lawsuits, including a case brought by Cher, and accusations of “looting.” Another part of the Nant portfolio, NantHealth, faces lawsuits alleging it made “material misstatements and omissions in violation of the federal securities laws” in relation to its IPO and could be delisted from Nasdaq.