Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 1 of 17
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`Joel E. Elkins (SBN 256020)
`jelkins@weisslawllp.com
`WEISSLAW LLP
`611 Wilshire Blvd., Suite 808
`Los Angeles, CA 90017
`Telephone: 310/208-2800
`Facsimile: 310/209-2348
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`Attorneys for Plaintiff
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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Case No._______________
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`COMPLAINT FOR VIOLATIONS OF
`THE FEDERAL SECURITIES LAWS
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`JURY TRIAL DEMANDED
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`CATHERINE COFFMAN,
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`Plaintiff,
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`v.
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`ADAMAS PHARMACEUTICALS, INC.,
`MARTHA J. DEMSKI, WILLIAM W.
`ERICSON, SPYRIDON
`PAPAPETROPOULOS, NEIL F.
`MCFARLANE, ANNA S. RICHO,
`MICHAEL F. BIGHAM, JOHN A.
`MACPHEE, and DAVID L. MAHONEY,
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`Defendants.
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`Plaintiff Catherine Coffman (“Plaintiff”), by and through her undersigned counsel, for her
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`complaint against defendants, alleges upon personal knowledge with respect to herself, and upon
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`information and belief based upon, inter alia, the investigation of counsel as to all other allegations
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`herein, as follows:
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 2 of 17
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`NATURE OF THE ACTION
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`1.
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`This is an action brough by Plaintiff against Adamas Pharmaceuticals, Inc. (“Adamas”
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`or the “Company”) and the members of its Board of Directors (the “Board” or the “Individual
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`Defendants”) for their violations of Sections 14(e) and 20(a) of the Securities Exchange Act of 1934
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`(the “Exchange Act”), 15 U.S.C. §§ 78n(e), 78t(a), and to enjoin the expiration of a tender offer (the
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`“Tender Offer”) on a proposed transaction, pursuant to which Adamas will be acquired by Supernus
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`Pharmaceuticals, Inc. (“Supernus”), through Supernus’s subsidiary Supernus Reef Inc. (“Purchaser”)
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`(the “Proposed Transaction”).
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`2.
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`On October 11, 2021, Adamas and Supernus issued a joint press release announcing
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`that they had entered into an Agreement and Plan of Merger, dated October 10, 2021 (the “Merger
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`Agreement”), to sell Adamas to Supernus. Under the terms of the Merger Agreement, Supernus will
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`acquire all outstanding shares of Adamas for: (i) $8.10 per share in cash (the “Cash Amount”), plus
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`(ii) two contingent value rights per share (each, a “CVR”), which each represent the right to receive
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`$0.50 per CVR in cash upon the achievement of certain milestones in connection with the net sales
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`of the Company’s product, GOCOVRI (the “Offer Price”). Pursuant to the Merger Agreement,
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`Purchaser commenced the Tender Offer on October 25, 2021. The Tender Offer is scheduled to
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`expire at 12:00 midnight, New York Time, on November 24, 2021 (one minute following 11:59 p.m.,
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`New York Time, on November 23, 2021). The Proposed Transaction is valued at approximately $400
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`million.
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`3.
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`On October 25, 2021, Adamas filed a Solicitation/Recommendation Statement on
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`Schedule 14D-9 (the “Recommendation Statement”) with the SEC. The Recommendation Statement,
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`which recommends that Adamas stockholders tender their shares in the Tender Offer, omits or
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`misrepresents material information concerning, among other things: (i) Adamas management’s
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`financial projections; (ii) the data and inputs underlying the financial valuation analyses that support
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 3 of 17
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`the fairness opinion provided by Lazard Freres & Co. LLC (“Lazard”); and (iii) Company insiders’
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`potential conflicts of interest. Defendants authorized the issuance of the false and misleading
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`Recommendation Statement in violation of Sections 14(e) and 20(a) of the Exchange Act.
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`4.
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`In short, the Proposed Transaction will unlawfully divest Adamas’ public stockholders
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`of the Company’s valuable assets without fully disclosing all material information concerning the
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`Proposed Transaction to Company stockholders. To remedy defendants’ Exchange Act violations,
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`Plaintiff seeks to enjoin the expiration of the Tender Offer unless and until such problems are
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`remedied.
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`JURISDICTION AND VENUE
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`5.
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`This Court has jurisdiction over the claims asserted herein for violations of Sections
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`14(e) and 20(a) of the Exchange Act pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa,
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`and 28 U.S.C. § 1331 (federal question jurisdiction).
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`6.
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`This Court has jurisdiction over the defendants because each defendant is either a
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`corporation that conducts business in and maintains operations within this District, or is an individual
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`with sufficient minimum contacts with this District so as to make the exercise of jurisdiction by this
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`Court permissible under traditional notions of fair play and substantial justice.
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`7.
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`Venue is proper in this District pursuant to 28 U.S.C. § 1391 because Plaintiff’s claims
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`arose in this District, where a substantial portion of the actionable conduct took place, where most of
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`the documents are electronically stored, and where the evidence exists. Adamas is headquartered in
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`this District. Moreover, each of the Individual Defendants, as Company officers or directors, either
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`resides in this District or has extensive contacts within this District.
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`PARTIES
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`8.
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`Plaintiff is, and has been at all times relevant hereto, a continuous stockholder of
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`Adamas.
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 4 of 17
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`9.
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`Defendant Adamas is a Delaware corporation with its principal executive offices
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`located at 1900 Powell Street, Suite 1000, Emeryville, California 94608. Adamas is a fully integrated
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`company focused on growing a portfolio of therapies to address a range of neurological diseases.
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`Adamas’ common stock is traded on the Nasdaq Global Market under the ticker symbol “ADMS.”
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`10.
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`Defendant Martha J. Demski (“Demski”) has been a director of the Company since
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`March 2014.
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`11.
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`Defendant William W. Ericson (“Ericson”) has been a director of the Company since
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`2005.
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`12.
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`Defendant Spyridon Papapetropoulos (“Papapetropoulos”) has been a director of the
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`Company since November 2020.
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`13.
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`Defendant Neil F. McFarlane (“McFarlane”) has been Chief Executive Officer
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`(“CEO”) and a director of the Company since September 2019.
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`14.
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`Defendant Anna S. Richo (“Richo”) has been a director of the Company since August
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`2020.
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`15.
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`Defendant Michael F. Bigham (“Bigham”) has been a director of the Company since
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`September 2016.
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`16.
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`Defendant John A. MacPhee (“MacPhee”) has been a director of the Company since
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`May 2013.
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`17.
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`Defendant David L. Mahoney (“Mahoney”) has been Board Chair since September
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`2019 and a director of the Company since 2009. Defendant Mahoney previously served as Lead
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`Independent Director from April 2014 until September 2019.
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`18.
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`Defendants identified in paragraphs 10 to 17 are collectively referred to herein as the
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`“Board” or the “Individual Defendants.”
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 5 of 17
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`OTHER RELEVANT ENTITIES
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`19.
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`Supernus is a Delaware corporation with its principal executive offices located at 9715
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`Key West Ave, Rockville, Maryland 20850. Supernus is a biopharmaceutical company focused on
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`the development and commercialization of products for the treatment of central nervous system
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`diseases in the United States. Its commercial products include Trokendi XR, an extended release
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`topiramate product indicated for the treatment of epilepsy, as well as for the prophylaxis of migraine
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`headache; and Oxtellar XR, an extended release oxcarbazepine for the monotherapy treatment of
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`partial onset epilepsy seizures in adults and children between 6 to 17 years of age. Supernus
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`commercial products also comprise APOKYN, a product indicated for the acute intermittent
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`treatment of hypomobility or off episodes in patients with advanced Parkinson’s Disease (“PD”);
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`XADAGO, a product indicated as adjunctive treatment to levodopa/carbidopa in patients with PD
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`experiencing off episodes; and MYOBLOC, a Type B toxin product indicated for the treatment of
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`cervical dystonia and sialorrhea in adults. Supernus’s common stock trades on the Nasdaq Global
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`Market under the ticker symbol “SUPN.”
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`20.
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`Purchaser is a Delaware corporation and a wholly owned subsidiary of Supernus.
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`SUBSTANTIVE ALLEGATIONS
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`Company Background
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`21.
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`Formerly known as NeuroMolecular Pharmaceuticals, Inc., Adamas focuses on the
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`discovery, development, and commercialization of medicines for patients suffering from chronic
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`neurologic disorders in the United States. It offers GOCOVRI, an extended release capsule for the
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`treatment of dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy, with
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`or without concomitant dopaminergic medications, as well as an adjunctive treatment to
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`levodopa/carbidopa in patients with Parkinson’s disease experiencing OFF episodes; and OSMOLEX
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`ER, an extended release tablet to treat Parkinson’s disease and drug-induced extrapyramidal reactions
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 6 of 17
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`in adult patients. The Company is also developing ADS-4101, which has completed two Phase 1b
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`studies for treating partial onset seizures in patients with epilepsy. In addition, it offers NAMZARIC
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`and NAMENDA XR, a memantine hydrochloride extended release and donepezil hydrochloride
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`capsules for the treatment of moderate to severe dementia of an Alzheimer’s type.
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`22.
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`On August 9, 2021, the Company announced its second quarter 2021 financial results.
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`Total revenues were $22.0 million in the second quarter of 2021, an increase of 17% as compared to
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`$18.8 million in the second quarter of 2020. GOCOVRI (amantadine) extended release capsules
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`product sales were $20.1 million in the second quarter of 2021, an increase of 12% as compared to
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`$18.0 million in the second quarter of 2020. New paid prescriptions (“NRx”) of GOCOVRI were
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`approximately 730 in the second quarter of 2021, a 97% increase over NRx of approximately 370 in
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`the second quarter of 2020. Total paid prescriptions (“TRx”) of GOCOVRI were approximately
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`9,400 in the second quarter of 2021, a 19% increase over approximately 7,915 TRx in the second
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`quarter of 2020. Reflecting on the Company’s results and looking to the future, defendant McFarlane
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`commented:
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`We delivered a strong performance in the second quarter, with a robust increase in
`demand set to fuel future growth. We remain on track to achieve our 2021 goals as
`we navigate the fluid macro environment. With the continued momentum of our
`GOCOVRI launch alongside our disciplined approach to capital allocation, we are
`excited about the opportunities ahead for patients and shareholders.
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`The Proposed Transaction
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`23.
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`On October 11, 2021, Adamas and Supernus issued a joint press release announcing
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`the Proposed Transaction. The press release states, in relevant part:
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`ROCKVILLE, MD and EMERYVILLE, CA, October 11, 2021 – Supernus
`Pharmaceuticals, Inc. (Nasdaq: SUPN) and Adamas Pharmaceuticals, Inc. (Nasdaq:
`ADMS), today announced a definitive agreement for Supernus to acquire Adamas
`through a tender offer for $8.10 per share in cash (or an aggregate of approximately
`$400 million), payable at closing plus two non-tradable contingent value rights (CVR)
`collectively worth up to $1.00 per share in cash (or an aggregate of approximately $50
`million), for a total consideration of $9.10 per share in cash (or an aggregate of
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 7 of 17
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`approximately $450 million). The first CVR, worth $0.50 per share, is payable upon
`achieving net sales of GOCOVRI of $150 million in any four consecutive quarters
`between closing and the end of 2024. The second CVR, worth $0.50 per share, is
`payable upon achieving net sales of GOCOVRI of $225 million in any four
`consecutive quarters between closing and the end of 2025. The transaction is expected
`to close in late fourth quarter 2021 or in early first quarter 2022.
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`The transaction will provide Supernus with two marketed products: GOCOVRI®
`(amantadine) extended release capsules, the first and only U.S. Food and Drug
`Administration (FDA)-approved medicine indicated for the treatment of both OFF and
`dyskinesia in patients with Parkinson’s disease receiving levodopa-based therapy; and
`OSMOLEX ER® (amantadine) extended release tablets, approved for the treatment
`of Parkinson’s disease and drug-induced extrapyramidal reactions in adult patient.
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`“This acquisition represents a significant step to further build a strong and diverse
`Parkinson’s disease portfolio, and aligns with our focus of acquiring value-enhancing,
`clinically-differentiated medicines to treat CNS diseases,” said Jack Khattar, President
`and CEO of Supernus Pharmaceuticals. “We have a proven track record of strong
`commercial execution, and look forward to building on GOCOVRI’s growth
`momentum so that more patients can benefit from access to Adamas’ innovative
`neurological therapies.”
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`Strategic and Financial Benefits
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` •
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` Strengthens Parkinson’s disease portfolio with GOCOVRI (amantadine) extended
`release capsules, the first and only FDA-approved medicine indicated for the
`treatment of both OFF and dyskinesia in patients with Parkinson’s disease
`receiving levodopa-based therapy.
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`• Diversifies and increases revenue base and cash flow
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`• Net sales of GOCOVRI were $71.2 million and $37.7 million in 2020 and
`for the first six months of 2021, respectively.
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`• Combined with the acquisition of US WorldMeds CNS products in 2020,
`this transaction significantly reduces the reliance on net sales of Trokendi
`XR®. In the first half of 2021 and on a combined proforma basis
`(including revenue from US WorldMeds and Adamas transactions), net
`sales of Trokendi XR® represent 48% of Supernus revenues down from
`72% (excluding revenue from these transactions).
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`• Potential synergies of $60 million to $80 million in year one due to strong overlap
`with existing infrastructure.
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`• The acquisition is expected to be significantly accretive in 2022.
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 8 of 17
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`“We are pleased that Supernus recognized the value created at Adamas and firmly
`believe this path forward is an excellent outcome for not only our shareholders, but all
`our stakeholders,” said Neil F. McFarlane, Chief Executive Officer of Adamas
`Pharmaceuticals, Inc. “With their shared commitment to helping patients affected by
`neurological diseases and their extensive resources, Supernus can continue to advance
`our mission and reach. I am extremely proud of Team Adamas for their hard work
`and dedication to get us to this point and am confident that partnering with Supernus
`will maximize the potential of our innovative therapies.”
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`Terms and Financing
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`Under the terms of the agreement, Supernus will commence a tender offer to acquire
`all outstanding shares of Adamas Pharmaceuticals, Inc. for a purchase price of $8.10
`per share in cash (or an aggregate of approximately $400 million) payable at closing
`plus two non-tradeable CVRs. All cash consideration will be funded through existing
`balance sheet cash.
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`The CVR entitles Adamas stockholders to receive up to an additional $1.00 per share
`in cash (or an aggregate of approximately $50 million) payable upon GOCOVRI
`achieving certain net sales milestones within specified periods (subject to the terms
`and conditions contained in a Contingent Value Rights Agreement detailing the terms
`of the CVRs). These milestones include (i) $0.50 per share payable if in any four
`consecutive quarters between closing and the end of 2024, net sales of GOCOVRI
`achieving $150 million, and (ii) another $0.50 per share payable if in any four
`consecutive quarters between closing and the end of 2025, net sales of GOCOVRI
`achieving $225 million. There can be no assurance any payments will be made with
`respect to the CVR.
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`Approvals and Timing of Close
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`The transaction, which has been approved by the boards of directors of both
`companies, is expected to close in late fourth quarter 2021 or in early first quarter
`2022, subject to customary closing conditions, including receipt of required regulatory
`approvals and the tender of a majority of the outstanding shares of Adamas’ common
`stock. Following the successful closing of the tender offer, Supernus will acquire any
`shares of Adamas that are not tendered in the tender offer through a second-step
`merger at the same consideration as paid in the tender offer.
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`Full Year Financial Guidance
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`Supernus will provide full year 2022 financial guidance during the Company’s fourth
`quarter 2021 financial results conference call in February 2022.
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`Advisors
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`Jefferies LLC is acting as the exclusive financial advisor to Supernus. Lazard is acting
`as the exclusive financial advisor to Adamas. Saul Ewing Arnstein & Lehr LLP is
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 9 of 17
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`serving as legal counsel and Grant Thornton is providing due diligence services to
`Supernus, and Cooley LLP is serving as legal counsel to Adamas.
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`Insiders’ Interests in the Proposed Transaction
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`28.
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`Adamas insiders are the primary beneficiaries of the Proposed Transaction, not the
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`Company’s public stockholders. The Board and the Company’s executive officers are conflicted
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`because they will have secured unique benefits for themselves from the Proposed Transaction not
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`available to Plaintiff and the public stockholders of Adamas.
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`29.
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`Notably, Company insiders stand to reap substantial financial benefits for securing the
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`deal with Supernus. The following table sets forth the cash payments the Company’s executive
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`officers and directors will receive in connection with tendering their shares in the Tender Offer:
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`30. Moreover, upon consummation of the Proposed Transaction, all vested and unvested
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`Company options and restricted stock units (“RSUs”) will be converted into the right to receive cash
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 10 of 17
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`payments. The following table sets forth the payments that Adamas insiders will receive in
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`connection with their Company options and RSUs upon consummation of the merger:
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`31.
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`Further, if they are terminated in connection with the Proposed Transaction, Adamas’
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`named executive officers will receive substantial cash severance payments in the form of golden
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`parachute compensation as set forth in the following table:
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`The Recommendation Statement Contains Material Misstatements or Omissions
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`32.
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`The defendants filed a materially incomplete and misleading Recommendation
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`Statement with the SEC and disseminated it to Adamas’ stockholders. The Recommendation
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`Statement misrepresents or omits material information that is necessary for the Company’s
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`stockholders to make an informed decision whether to tender their shares in the Proposed Transaction
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`or seek appraisal.
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 11 of 17
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`33.
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`Specifically, as set forth below, the Recommendation Statement fails to provide
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`Company stockholders with material information or provides them with materially misleading
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`information concerning: (i) Adamas management’s financial projections; (ii) the data and inputs
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`underlying the financial valuation analyses that support the fairness opinion provided by Lazard; and
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`(iii) Company insiders’ potential conflicts of interest.
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`Material Omissions Concerning Adamas’ Financial Projections
`The Recommendation Statement omits material information regarding the Company’s
`34.
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`financial projections.
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`35.
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`For example, the projections note that Total Revenue includes revenue for GOCOVRI,
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`OSMOLEX ER, and NAMZARIC royalties. The Recommendation Statement, however, fails to
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`disclose a breakdown of the projected revenue for each of the Company’s products and pipeline
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`candidates over the period from 2021 through 2032.
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`36.
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`Additionally, in connection with rendering its fairness opinion, the Recommendation
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`Statement states that Lazard reviewed “sales forecasts prepared by management of the Company
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`taking into account information provided by management of Supernus regarding its marketing plans
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`for GOCOVRI.” Recommendation Statement at 30. Yet, the Recommendation Statement omits the
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`sales forecasts prepared by Adamas management.
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`37.
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`The Recommendation Statement also sets forth that in connection with its Discounted
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`Cash Flow Analysis, Lazard utilized “the estimated after-tax unlevered free cash flows to be generated
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`by Adamas from September 30, 2021 through the end of the year of 2032.” Id. at 26. Yet, the
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`Recommendation Statement only discloses the Company’s levered free cash flows and fails to
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`disclose the unlevered free cash flows relied upon by Lazard for its financial analyses, as well as all
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`line items underlying the calculation of the Company’s levered free cash flow and unlevered free cash
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`flow.
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 12 of 17
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`38. Moreover, the Recommendation Statement sets forth “[t]he non-public, unaudited
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`prospective financial information included information for calendar years 2021 through 2032 that
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`reflect Adamas’s management’s estimate of the probability of commercial success for the Company’s
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`products.” Id. at 26. The Recommendation Statement, however, fails to disclose the Company’s non-
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`probability of success-adjusted projections so Adamas stockholders can evaluate the financial impact
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`the Company’s risk-adjustments had on the projections.
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`39.
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`The omission of this information renders the statements in the “Projected Financial
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`Information” and “Opinion of Adamas’s Financial Advisor” sections of the Recommendation
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`Statement false and/or materially misleading in contravention of the Exchange Act.
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`Material Omissions Concerning Lazard’s Financial Analyses
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`40.
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`The Recommendation Statement fails to disclose material information concerning the
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`financial analyses performed by the Company’s financial advisor, Lazard.
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`41.
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`The Recommendation Statement describes Lazard’s fairness opinion and the various
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`valuation analyses performed in support of its opinion. However, the description of Lazard’s fairness
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`opinion and analyses fails to include key inputs and assumptions underlying these analyses. Without
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`this information, as described below, Adamas’ public stockholders are unable to fully understand
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`these analyses and, thus, are unable to determine what weight, if any, to place on Lazard’s fairness
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`opinion in determining whether to tender their shares in the Proposed Transaction or seek appraisal.
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`42. With respect to Lazard’s Discounted Cash Flow Analysis, the Recommendation
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`Statement fails to disclose: (i) as set forth above, the Company’s after-tax unlevered free cash flows
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`from September 30, 2021 through the end of year 2032; (ii) quantification of the inputs and
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`assumptions underlying the discount rate range of 11.0% to 13.0%; (iii) Adamas’ estimated net cash
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`at September 30, 2021; and (iv) the number of fully diluted shares outstanding of Adamas as of
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`October 8, 2021 utilized in the analysis.
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`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 13 of 17
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`43. With respect to Lazard’s Premia Paid Analysis, the Recommendation Statement fails
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`to disclose: (i) the transactions observed; and (ii) the individual premia for each transaction.
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`44. With respect to Lazard’s Research Analyst Price Targets, the Recommendation
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`Statement fails to disclose the price targets observed and the sources thereof.
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`45.
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`The omission of this information renders the statements in the “Opinion of Adamas’s
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`Financial Advisor” section of the Recommendation Statement false and/or materially misleading in
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`contravention of the Exchange Act.
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`Material Omissions Concerning Company Insiders’ Potential Conflicts of Interest
`The Recommendation Statement fails to disclose material information concerning the
`46.
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`potential conflicts of interest faced by Company insiders
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`47.
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`The Proxy Statement fails to disclose whether any of Adamas’ directors or executive
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`officers has secured employment with Supernus upon closing of the Proposed Transaction. The
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`Recommendation Statement also fails to disclose the specific details of all employment and retention-
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`related discussions and negotiations that occurred between Supernus and Adamas’ executive officers,
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`including who participated in all such communications, when they occurred and their content. The
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`Recommendation Statement further fails to disclose whether any of Supernus’s proposals or
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`indications of interest mentioned management retention in the combined company following the
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`Proposed Transaction or the purchase of or participation in the equity of the surviving corporation.
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`48.
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`Communications regarding post-transaction employment and merger-related benefits
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`during the negotiation of the underlying transaction must be disclosed to stockholders. This
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`information is necessary for stockholders to understand potential conflicts of interest of management
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`and the Board, as that information provides illumination concerning motivations that would prevent
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`fiduciaries from acting solely in the best interests of the Company’s stockholders.
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`- 13 -
`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 14 of 17
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`49.
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`The omission of this information renders the statements in the “Background of the
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`Offer and the Merger” and “Arrangements between Adamas and Supernus” sections of the
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`Recommendation Statement false and/or materially misleading in contravention of the Exchange Act.
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`50.
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`The Individual Defendants were aware of their duty to disclose the above-referenced
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`omitted information and acted negligently (if not deliberately) in failing to include this information
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`in the Recommendation Statement. Absent disclosure of the foregoing material information prior to
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`the expiration of the Tender Offer, Plaintiff and the other Adamas stockholders will be unable to make
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`an informed decision whether to tender their shares in the Proposed Transaction or seek appraisal and
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`are thus threatened with irreparable harm warranting the injunctive relief sought herein.
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`CLAIMS FOR RELIEF
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`COUNT I
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`Claims Against All Defendants for Violations
`of Section 14(e) of the Exchange Act
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`Plaintiff repeats all previous allegations as if set forth in full.
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`Defendants violated Section 14(e) of
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`the Exchange Act by
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`issuing
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`the
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`51.
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`52.
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`Recommendation Statement in which they made untrue statements of material facts or failed to state
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`all material facts necessary in order to make the statements made, in light of the circumstances under
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`which they are made, not misleading, or engaged in deceptive or manipulative acts or practices, in
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`connection with the Tender Offer commenced in conjunction with the Proposed Transaction.
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`53.
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`Defendants knew
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`that Plaintiff would rely upon
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`their statements
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`in
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`the
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`Recommendation Statement in determining whether to tender her shares pursuant to the Tender Offer
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`commenced in conjunction with the Proposed Transaction.
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`54.
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`As a direct and proximate result of these defendants’ unlawful course of conduct in
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`violation of Section 14(e) of the Exchange Act, absent injunctive relief from the Court, Plaintiff has
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`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 15 of 17
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`sustained and will continue to sustain irreparable injury by being denied the opportunity to make an
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`informed decision in deciding whether or not to tender her shares.
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`COUNT II
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`Claims Against the Individual Defendants for
`Violation of Section 20(a) of the Exchange Act
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`Plaintiff repeats all previous allegations as if set forth in full.
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`The Individual Defendants acted as controlling persons of Adamas within the meaning
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`55.
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`56.
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`of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions as officers or
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`directors of Adamas and participation in or awareness of the Company’s operations or intimate
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`knowledge of the false statements contained in the Recommendation Statement filed with the SEC,
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`they had the power to influence and control and did influence and control, directly or indirectly, the
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`decision-making of the Company, including the content and dissemination of the various statements
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`which Plaintiff contends are false and misleading.
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`57.
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`Each of the Individual Defendants was provided with or had unlimited access to copies
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`of the Recommendation Statement and other statements alleged by Plaintiff to be misleading prior to
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`or shortly after these statements were issued and had the ability to prevent the issuance of the
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`statements or cause the statements to be corrected.
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`58.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had
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`the power to control or influence the particular transactions giving rise to the securities violations as
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`alleged herein, and exercised the same. The Recommendation Statement at issue contains the
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`unanimous recommendation of each of the Individual Defendants to approve the Proposed
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`Transaction. They were, thus, directly involved in the making of this document.
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`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Case 3:21-cv-08646-AGT Document 1 Filed 11/05/21 Page 16 of 17
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`59.
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`In addition, as the Recommendation Statement sets forth at length, and as described
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`herein, the Individual Defendants were each involved in negotiating, reviewing, and approving the
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`Proposed Transaction. The Recommendation Statement purports to describe the various issues and
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`information that they reviewed and considered — descriptions which had input from the Individual
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`Defendants.
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`60.
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`By virtue of the