Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 1 of 10 PageID #: 1
`
`
`
`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
`
`
`
`CRAIG DAVIDSON,
`
`
`
`
`v.
`
`INTEC PHARMA LTD., JOHN W.
`KOZARICH, JEFFREY A. MECKLER,
`BRAD HAYES, HILA KARAH, ANTHONY
`J. MADDALUNA, ROGER J.
`POMERANTZ, INTEC PARENT, INC.,
`DILLION MERGER SUBSIDIARY, INC.,
`DOMESTICATION MERGER SUB LTD.,
`and DECOY BIOSYSTEMS, INC.,
`
`
`
`Defendants.
`
`
`
`
`Case No. ______________
`
`JURY TRIAL DEMANDED
`
`
`
`
`Plaintiff,
`
`
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`COMPLAINT FOR VIOLATION OF THE SECURITIES EXCHANGE ACT OF 1934
`
`Plaintiff, by his undersigned attorneys, for this complaint against defendants, alleges upon
`
`personal knowledge with respect to himself, and upon information and belief based upon, inter
`
`alia, the investigation of counsel as to all other allegations herein, as follows:
`
`NATURE OF THE ACTION
`
`1.
`
`On March 15, 2021, Intec Pharma Ltd.’s (“Intec” or the “Company”) Board of
`
`Directors (the “Board” and “Individual Defendants”) caused the Company to enter into an
`
`agreement and plan of merger and reorganization (the “Merger Agreement”) with Intec Parent,
`
`Inc. (“Intec Parent”), Dillion Merger Subsidiary, Inc. (“Merger Sub”), Domestication Merger Sub
`
`Ltd. (“Domestication Merger Sub”), and Decoy Biosystems, Inc. (“Decoy”).
`
`2.
`
`Pursuant to the terms of the Merger Agreement, among other things: (i)
`
`Domestication Merger Sub will merge with and into Intec, with Intec surviving as a wholly-owned
`
`subsidiary of Intec Parent; (ii) Merger Sub will merge with and into Decoy, with Decoy surviving
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 2 of 10 PageID #: 2
`
`
`
`as a wholly-owned subsidiary of Intec Parent; (iii) each ordinary share of Intec will be converted
`
`on a one-for-one basis into shares of Intec Parent common stock; and (iv) each outstanding share
`
`of Decoy common stock will be converted into a number of shares of Intec Parent common stock
`
`(the “Proposed Transaction”).
`
`3.
`
`On April 20, 2021, defendants filed a Form S-4 Registration Statement (the
`
`“Registration Statement”) with the United States Securities and Exchange Commission (“SEC”)
`
`in connection with the Proposed Transaction.
`
`4.
`
`The Registration Statement omits material information with respect to the Proposed
`
`Transaction, which renders the Registration Statement false and misleading. Accordingly, plaintiff
`
`alleges herein that defendants violated Sections 14(a) and 20(a) of the Securities Exchange Act of
`
`1934 (the “1934 Act”) in connection with the Registration Statement.
`
`JURISDICTION AND VENUE
`
`5.
`
`This Court has jurisdiction over the claims asserted herein pursuant to Section 27
`
`of the 1934 Act because the claims asserted herein arise under Sections 14(a) and 20(a) of the 1934
`
`Act and Rule 14a-9.
`
`6.
`
`This Court has jurisdiction over defendants because each defendant is either a
`
`corporation that conducts business in and maintains operations within this District, or is an
`
`individual with sufficient minimum contacts with this District so as to make the exercise of
`
`jurisdiction by this Court permissible under traditional notions of fair play and substantial justice.
`
`7.
`
`Venue is proper under 28 U.S.C. § 1391(b) because a portion of the transactions
`
`and wrongs complained of herein occurred in this District.
`
`PARTIES
`
`8.
`
`Plaintiff is, and has been continuously throughout all times relevant hereto, the
`
`
`
`2
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 3 of 10 PageID #: 3
`
`owner of Intec common stock.
`
`
`
`9.
`
`Defendant Intec is an Israeli company and a party to the Merger Agreement. Intec’s
`
`common stock is traded on the NASDAQ under the ticker symbol “NTEC.”
`
`10.
`
`11.
`
`Defendant John W. Kozarich is Chairman of the Board of the Company.
`
`Defendant Jeffrey A. Meckler is Chief Executive Officer and Vice Chairman of the
`
`Board of the Company.
`
`12.
`
`13.
`
`14.
`
`15.
`
`16.
`
`Defendant Brad Hayes is a director of the Company.
`
`Defendant Hila Karah is a director of the Company.
`
`Defendant Anthony J. Maddaluna is a director of the Company.
`
`Defendant Roger J. Pomerantz is a director of the Company.
`
`The defendants identified in paragraphs 10 through 15 are collectively referred to
`
`herein as the “Individual Defendants.”
`
`17.
`
`Defendant Intec Parent is a Delaware corporation and a party to the Merger
`
`Agreement.
`
`18.
`
`Defendant Merger Sub is a Delaware corporation, a wholly-owned subsidiary of
`
`Intec Parent, and a party to the Merger Agreement.
`
`19.
`
`Defendant Domestication Merger Sub is an Israeli company, a wholly-owned
`
`subsidiary of Intec Parent, and a party to the Merger Agreement.
`
`20.
`
`Defendant Decoy is a Delaware corporation and a party to the Merger Agreement.
`
`
`Background of the Company and the Proposed Transaction
`
`SUBSTANTIVE ALLEGATIONS
`
`21.
`
`Intec is a clinical-stage biopharmaceutical company focused on developing drugs
`
`based on its proprietary Accordion Pill platform technology.
`
`
`
`3
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 4 of 10 PageID #: 4
`
`
`
`22.
`
`The Company’s Accordion Pill is an oral drug delivery system that is designed to
`
`improve the efficacy and safety of existing drugs and drugs in development by utilizing an efficient
`
`gastric retention and specific release mechanism.
`
`23.
`
`On March 15, 2021, Intec’s Board caused the Company to enter into the Merger
`
`Agreement.
`
`24.
`
`Pursuant to the terms of the Merger Agreement, among other things: (i)
`
`Domestication Merger Sub will merge with and into Intec, with Intec surviving as a wholly-owned
`
`subsidiary of Intec Parent; (ii) Merger Sub will merge with and into Decoy, with Decoy surviving
`
`as a wholly-owned subsidiary of Intec Parent; (iii) each ordinary share of Intec will be converted
`
`on a one-for-one basis into shares of Intec Parent common stock; and (iv) each outstanding share
`
`of Decoy common stock will be converted into a number of shares of Intec Parent common stock.
`
`25.
`
`According to the press release announcing the Proposed Transaction:
`
`Intec Pharma Ltd. (NASDAQ: NTEC) (“Intec” or “the Company”) announced
`today that it has entered into a definitive agreement for a business combination with
`Decoy Biosystems, Inc., a privately-held, preclinical-stage biotechnology company
`developing novel, multi-targeted products that safely prime both innate and
`adaptive anti-tumor and anti-viral immune responses. . . .
`
`Transaction Terms
`
`Under the exchange ratio formula in the merger agreement, without taking into
`consideration the effect of the respective levels of cash and liabilities of each of
`Intec Pharma and Decoy, upon completion of the merger, the former Decoy
`stockholders are expected to own approximately 75% of the combined company,
`and the Intec shareholders are expected to own approximately 25% of the combined
`company, calculated on a fully diluted basis. The actual allocation will be subject
`to adjustment based on, among other things, Decoy’s and Intec Pharma’s net cash
`balance (including, in the case of Intec Pharma, any proceeds from any disposition
`of the Accordion Pill business) at the time of closing and the amount of closing
`financing raised, which will dilute securityholders of Decoy and Intec Pharma on a
`pro-forma basis.
`
`
`The combined company is expected to be led by Jeffrey Meckler as Chief Executive
`Officer and Michael Newman as Chief Scientific Officer with Dr. Roger Pomerantz
`
`
`
`4
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 5 of 10 PageID #: 5
`
`
`
`serving as Chairman. At closing, the combined company’s board of directors is
`anticipated to consist of eight members, including five members of Intec Pharma’s
`current board and three members of Decoy’s current board.
`
`
`The Board of Directors of both companies have approved the transaction. The
`merger is expected to close in the third quarter of 2021, subject to the approval of
`the shareholders of each company, the domestication of Intec Pharma to Delaware,
`the disposition of Intec’s Accordion Pill business, the raising of closing
`financing, the continued listing of the combined company on Nasdaq, as well as
`customary closing conditions.
`
`
`The Registration Statement Omits Material Information
`
`26.
`
`Defendants filed the Registration Statement with the SEC in connection with the
`
`Proposed Transaction.
`
`27.
`
`As set forth below, the Registration Statement omits material information with
`
`respect to the Proposed Transaction.
`
`28.
`
`The Registration Statement fails to disclose the Company’s and Decoy’s financial
`
`projections.
`
`29.
`
`The Registration Statement fails to disclose the analyses performed by the
`
`Company’s financial advisor and/or Company management in connection with the Proposed
`
`Transaction.
`
`30.
`
`The Registration Statement fails to disclose the terms of the Company’s financial
`
`advisor’s engagement, including: (i) the amount of compensation the financial advisor has received
`
`or will receive in connection with its engagement; (ii) the amount of the financial advisor’s
`
`compensation that is contingent upon the consummation of the Proposed Transaction; (iii) whether
`
`the financial advisor has performed past services for any parties to the Merger Agreement or their
`
`affiliates; (iv) the timing and nature of such services; and (v) the amount of compensation received
`
`by the financial advisor for providing such services.
`
`
`
`5
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 6 of 10 PageID #: 6
`
`
`
`31.
`
`The Registration Statement fails to disclose the terms of all non-disclosure
`
`agreements executed by the Company during the process leading up to the execution of the Merger
`
`Agreement, including whether they contained standstill and/or “don’t ask, don’t waive”
`
`provisions.
`
`32.
`
`The Registration Statement fails to disclose the timing and nature of all
`
`communications regarding post-transaction employment, directorships, and benefits, including
`
`who participated in all such communications.
`
`33.
`
`The omission of the above-referenced material information renders the Registration
`
`Statement false and misleading.
`
`34.
`
`The above-referenced omitted information, if disclosed, would significantly alter
`
`the total mix of information available to the Company’s stockholders.
`
`COUNT I
`
`Claim for Violation of Section 14(a) of the 1934 Act and Rule 14a-9 Promulgated
`Thereunder Against the Individual Defendants and Intec
`
`35.
`
`36.
`
`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
`
`The Individual Defendants disseminated the false and misleading Registration
`
`Statement, which contained statements that, in violation of Section 14(a) of the 1934 Act and Rule
`
`14a-9, in light of the circumstances under which they were made, omitted to state material facts
`
`necessary to make the statements therein not materially false or misleading. Intec is liable as the
`
`issuer of these statements.
`
`37.
`
`The Registration Statement was prepared, reviewed, and/or disseminated by the
`
`Individual Defendants. By virtue of their positions within the Company, the Individual Defendants
`
`were aware of this information and their duty to disclose this information in the Registration
`
`Statement.
`
`
`
`6
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 7 of 10 PageID #: 7
`
`
`
`38.
`
`The Individual Defendants were at least negligent in filing the Registration
`
`Statement with these materially false and misleading statements.
`
`39.
`
`The omissions and false and misleading statements in the Registration Statement
`
`are material in that a reasonable stockholder will consider them important in deciding how to vote
`
`on the Proposed Transaction. In addition, a reasonable investor will view a full and accurate
`
`disclosure as significantly altering the total mix of information made available in the Registration
`
`Statement and in other information reasonably available to stockholders.
`
`40.
`
`The Registration Statement is an essential link in causing plaintiff to approve the
`
`Proposed Transaction.
`
`41.
`
`By reason of the foregoing, defendants violated Section 14(a) of the 1934 Act and
`
`Rule 14a-9 promulgated thereunder.
`
`42.
`
`Because of the false and misleading statements in the Registration Statement,
`
`plaintiff is threatened with irreparable harm.
`
`COUNT II
`
`Claim for Violation of Section 20(a) of the 1934 Act
`Against the Individual Defendants, Intec Parent,
`Merger Sub, Domestication Merger Sub, and Decoy
`
`Plaintiff repeats and realleges the preceding allegations as if fully set forth herein.
`
`The Individual Defendants, Intec Parent, Merger Sub, Domestication Merger Sub,
`
`
`
`43.
`
`44.
`
`and Decoy acted as controlling persons of Intec within the meaning of Section 20(a) of the 1934
`
`Act as alleged herein. By virtue of their positions as officers and/or Board members of Intec and
`
`participation in and/or awareness of the Company’s operations and/or intimate knowledge of the
`
`false statements contained in the Registration Statement, they had the power to influence and
`
`control and did influence and control, directly or indirectly, the decision making of the Company,
`
`including the content and dissemination of the various statements that plaintiff contends are false
`
`
`
`7
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 8 of 10 PageID #: 8
`
`and misleading.
`
`
`
`45.
`
`Each of the Individual Defendants, Intec Parent, Merger Sub, Domestication
`
`Merger Sub, and Decoy was provided with or had unlimited access to copies of the Registration
`
`Statement alleged by plaintiff to be misleading prior to and/or shortly after these statements were
`
`issued and had the ability to prevent the issuance of the statements or cause them to be corrected.
`
`46.
`
`In particular, each of the Individual Defendants had direct and supervisory
`
`involvement in the day-to-day operations of the Company, and, therefore, is presumed to have had
`
`the power to control and influence the particular transactions giving rise to the violations as alleged
`
`herein, and exercised the same. The Registration Statement contains the unanimous
`
`recommendation of the Individual Defendants to approve the Proposed Transaction. They were
`
`thus directly involved in the making of the Registration Statement.
`
`47.
`
`Intec Parent, Merger Sub, Domestication Merger Sub, and Decoy also had
`
`supervisory control over the composition of the Registration Statement and the information
`
`disclosed therein, as well as the information that was omitted and/or misrepresented in the
`
`Registration Statement.
`
`48.
`
`By virtue of the foregoing, the Individual Defendants, Intec Parent, Merger Sub,
`
`Domestication Merger Sub, and Decoy violated Section 20(a) of the 1934 Act.
`
`49.
`
`As set forth above, the Individual Defendants, Intec Parent, Merger Sub,
`
`Domestication Merger Sub, and Decoy had the ability to exercise control over and did control a
`
`person or persons who have each violated Section 14(a) of the 1934 Act and Rule 14a-9, by their
`
`acts and omissions as alleged herein. By virtue of their positions as controlling persons, these
`
`defendants are liable pursuant to Section 20(a) of the 1934 Act. As a direct and proximate result
`
`of defendants’ conduct, plaintiff is threatened with irreparable harm.
`
`
`
`8
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 9 of 10 PageID #: 9
`
`
`
`PRAYER FOR RELIEF
`
`
`
`WHEREFORE, plaintiff prays for judgment and relief as follows:
`
`A.
`
`Preliminarily and permanently enjoining defendants and all persons acting in
`
`concert with them from proceeding with, consummating, or closing the Proposed Transaction;
`
`B.
`
`In the event defendants consummate the Proposed Transaction, rescinding it and
`
`setting it aside or awarding rescissory damages;
`
`C.
`
`Directing the Individual Defendants to disseminate a Registration Statement that
`
`does not contain any untrue statements of material fact and that states all material facts required in
`
`it or necessary to make the statements contained therein not misleading;
`
`D.
`
`Declaring that defendants violated Sections 14(a) and/or 20(a) of the 1934 Act, as
`
`well as Rule 14a-9 promulgated thereunder;
`
`E.
`
`Awarding plaintiff the costs of this action, including reasonable allowance for
`
`plaintiff’s attorneys’ and experts’ fees; and
`
`F.
`
`Granting such other and further relief as this Court may deem just and proper.
`
`JURY DEMAND
`
`Plaintiff hereby requests a trial by jury on all issues so triable.
`
`9
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 1:21-cv-00673-UNA Document 1 Filed 05/07/21 Page 10 of 10 PageID #: 10
`
`Dated: May 7, 2021
`
`
`
`
`
`
`
`By:
`
`
`
`RIGRODSKY LAW, P.A.
`
`/s/ Gina M. Serra
`Seth D. Rigrodsky (#3147)
`Gina M. Serra (#5387)
`Herbert W. Mondros (#3308)
`300 Delaware Avenue, Suite 210
`Wilmington, DE 19801
`Telephone: (302) 295-5310
`Facsimile: (302) 654-7530
`Email: sdr@rl-legal.com
`Email: gms@rl-legal.com
`Email: hwm@rl-legal.com
`
`Attorneys for Plaintiff
`
`
`
`10
`
`