Case 1:22-cv-01314-UNA Document 1 Filed 10/05/22 Page 1 of 12 PageID #: 1
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`UNITED STATES DISTRICT COURT
`DISTRICT OF DELAWARE
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`MICHAEL KENT,
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`Plaintiff,
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`v.
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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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`Plaintiff Michael Kent (“Plaintiff”), upon information and belief, including an
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`CHEMOCENTRYX, INC., THOMAS J.
`SCHALL, THOMAS A. EDWARDS, JOSEPH
`M. FECZKO, JENNIFER L. HERRON, RITA
`I. JAIN, SUSAN M. KANAYA, GEOFFREY
`M. PARKER, JAMES L. TYREE, and DAVID
`E. WHEADON,
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`Defendants.
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`examination and inquiry conducted by and through his counsel, except as to those allegations
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`pertaining to Plaintiff, which are alleged upon personal belief, alleges the following for his
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`Complaint:
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`NATURE OF THE ACTION
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`Plaintiff brings this action against ChemoCentryx, Inc. (“ChemoCentryx” or the
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`1.
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`“Company”) and its corporate directors for violating Sections 14(a) and 20(a) of the Securities
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`Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. §§ 78n(a), 78t(a), and U.S. Securities
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`and Exchange Commission (“SEC”) Rule 14a-9, 17 C.F.R. §240.14a-9 (“Rule 14a-9”), in
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`connection with the proposed acquisition of the Company by Amgen, Inc. (“Amgen”).1
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`2.
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`On August 3, 2022, the Company entered into an Agreement and Plan of Merger
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`1 The proposed acquisition of the Company described herein is referred to as the “Proposed
`Transaction.”
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`with Amgen and Carnation Merger Sub, Inc. (“Merger Sub”) (the “Merger Agreement”). The
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`Merger Agreement provides that the Company’s stockholders will receive $52.00 in cash for
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`each share of Company common stock held.
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`3.
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`The Company’s corporate directors subsequently authorized the September 14,
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`2022 filing of the materially incomplete and misleading Schedule 14A Definitive Proxy
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`Statement (the “Proxy Statement”) with the SEC. The Proxy Statement, which recommends
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`that Company stockholders vote in favor of the Proposed Transaction, omits or misrepresents
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`material information necessary and essential to that decision. Defendants authorized the
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`issuance of the false and misleading Proxy Statement in violation of Sections 14(a) and 20(a)
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`of the Exchange Act.
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`4.
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`It is imperative that the material information omitted from the Proxy Statement
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`is disclosed to the Company’s stockholders prior to the forthcoming stockholder vote so that
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`they can properly exercise their corporate suffrage rights, among other things.2
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`5.
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`For these reasons and as set forth in detail herein, Plaintiff seeks to enjoin
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`Defendants from taking any steps to consummate the Proposed Transaction unless and until the
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`material information discussed below is disclosed to the Company’s stockholders or, in the
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`event the Proposed Transaction is consummated, to recover damages resulting from the
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`defendants’ violations of the Exchange Act.
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`JURISDICTION AND VENUE
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`6.
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`This Court has jurisdiction over the claims asserted herein for violations of
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`Sections 14(a) and 20(a) of the Exchange Act and SEC Rule 14a-9 promulgated thereunder
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`2 The Special Meeting at which stockholders will be asked to approve the Proposed Transaction
`currently is scheduled for October 18, 2022.
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`pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa, and 28 U.S.C. § 1331 (federal
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`question jurisdiction).
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`7.
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`Personal jurisdiction exists over the defendants because each defendant either
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`conducts business in or maintains operations within this District, or is an individual with
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`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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`8.
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`Venue is proper in this District pursuant to 28 U.S.C. § 1391 because defendants
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`are found or are inhabitants or transact business in this District.
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`THE PARTIES
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`9.
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`Plaintiff is, and has been at all times relevant hereto, the owner of
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`ChemoCentryx common stock.
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`10.
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`Defendant ChemoCentryx is a Delaware corporation with its principal executive
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`offices located at 835 Industrial Road, Suite 600, San Carlos, California 94070.
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`ChemoCentryx’s shares trade on the Nasdaq Global Select Market under the ticker symbol
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`“CCXI.” ChemoCentryx is a biopharmaceutical company focused on the development and
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`commercialization of new medications for inflammatory disorders, autoimmune diseases, and
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`cancer in the United States.
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`11.
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`Defendant Thomas J. Schall is and has been Chairman of the Board and
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`President, Chief Executive Officer, and a director of the Company at all times relevant hereto.
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`12.
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`Defendant Thomas A. Edwards is and has been a director of the Company at all
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`times relevant hereto.
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`13.
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`Defendant Joseph M. Feczko is and has been a director of the Company at all
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`times relevant hereto.
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`14.
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`Defendant Jennifer L. Herron is and has been a director of the Company at all
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`times relevant hereto.
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`15.
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`Defendant Rita I. Jain is and has been a director of the Company at all times
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`relevant hereto.
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`16.
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`Defendant Susan M. Kanaya is and has been a director of the Company at all
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`times relevant hereto.
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`17.
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`Defendant Geoffrey M. Parker is and has been a director of the Company at all
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`times relevant hereto.
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`18.
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`Defendant James L. Tyree is and has been a director of the Company at all times
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`relevant hereto.
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`19.
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`Defendant David E. Wheadon is and has been a director of the Company at all
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`times relevant hereto.
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`20.
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`Defendant Defendants identified in paragraphs 11-19 are collectively referred to
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`herein as the “Board” or the “Individual Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`The Proposed Transaction
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`21.
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`On August 4, 2022, Amgen and ChemoCentryx jointly announced in relevant
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`part:
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`THOUSAND OAKS, Calif. And SAN CARLOS, Calif., Aug. 4, 2022
`/PRNewswire/ -- Amgen (NASDAQ: AMGN) and ChemoCentryx, Inc.,
`(NASDAQ: CCXI), a biopharmaceutical company focused on orally
`administered therapeutics to treat autoimmune diseases, inflammatory disorders
`and cancer, today announced that the companies have entered into a definitive
`agreement under which Amgen will acquire ChemoCentryx for $52 per share in
`cash, representing an enterprise value of approximately $3.7 billion.
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`“The acquisition of ChemoCentryx represents a compelling opportunity for
`Amgen to add to our decades-long leadership in inflammation and nephrology
`with TAVNEOS, a transformative, first-in-class treatment for ANCA-associated
`vasculitis,” said Robert A. Bradway, chairman and chief executive officer at
`Amgen. “We are excited to join in the TAVNEOS launch and help many more
`patients with this serious and sometimes life-threatening disease for which there
`remains significant unmet medical need. We also look forward to welcoming
`the highly skilled team from ChemoCentryx that shares our passion for serving
`patients suffering from serious diseases.”
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`“A fierce commitment to improving human lives is the bond that unites Amgen
`and ChemoCentryx today,” said Thomas J. Schall, Ph.D., president and chief
`executive officer of ChemoCentryx. “Last year, after 25 years of proud history,
`we at CCXI delivered on our founding promise with the approval of TAVNEOS
`for patients with anti-neutrophil cytoplasmic autoantibody-associated vasculitis
`(ANCA-associated vasculitis). It is an honor to now join Amgen's great mission,
`and together begin a bright new era bringing landscape-shaping medicines like
`TAVNEOS to those who will benefit most.”
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`TAVNEOS is an orally administered selective complement component 5a
`receptor inhibitor. It was approved by the U.S. Food and Drug Administration
`in October 2021 as an adjunctive treatment for adult patients with severe active
`ANCA-associated vasculitis, specifically granulomatosis with polyangiitis
`(GPA) and microscopic polyangiitis (MPA) (the two main forms of ANCA-
`associated vasculitis), in combination with standard therapy.
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`ANCA-associated vasculitis is an umbrella term for a group of multi-system
`autoimmune diseases with small vessel inflammation. Inflamed vessels may
`rupture or become occluded giving rise to a broad array of clinical symptoms
`and signs related to a systemic inflammatory response which may result in
`profound injury and dysfunction in the kidneys, lungs and other organs.
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`Amgen is a leader in inflammation and nephrology. The company's
`includes Otezla®, ENBREL®, TEZSPIRE®,
`inflammation portfolio
`AMGEVITA™ (a biosimilar to HUMIRA®), RIABNI™ (a biosimilar to
`Rituxan®), and AVSOLA® (a biosimilar to REMICADE®). Amgen's pipeline
`includes four innovative Phase 2 inflammation medicines – efavaleukin alpha
`for systemic lupus erythematosus and ulcerative colitis, ordesekimab for celiac
`disease, rocatinlimab for atopic dermatitis and rozibafusap alfa for systemic
`lupus erythematosus – as well as ABP 654, a biosimilar to STELARA® that is
`in Phase 3 development. Amgen's nephrology portfolio includes EPOGEN®,
`Aranesp®, Parsabiv® and Sensipar®.
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`U.S. sales of TAVNEOS in the first quarter of 2022, the first full quarter of sales,
`were $5.4 million. TAVNEOS is also approved in major markets outside the
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`U.S., including the European Union and Japan. Vifor Fresenius Medical Care
`Renal Pharma Ltd. will retain exclusive rights to commercialize TAVNEOS
`outside the U.S., except in Japan where Kissei Pharmaceutical Co., Ltd. holds
`commercialization rights and Canada where Otsuka Canada Pharmaceutical
`holds commercialization rights.
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`In addition to TAVNEOS, ChemoCentryx has three early-stage drug candidates
`that target chemoattractant receptors in other inflammatory diseases and an oral
`checkpoint inhibitor for cancer.
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`The transaction has been unanimously approved by each company's board of
`directors. The transaction is subject to ChemoCentryx stockholder approval,
`regulatory approvals and other customary closing conditions, and is expected to
`close in the fourth quarter of 2022.
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`Amgen management will comment further on the ChemoCentryx transaction on
`its Q2 earnings call today.
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`PJT Partners acted as financial advisor to Amgen and Wachtell, Lipton, Rosen
`& Katz is serving as its legal advisor. Goldman Sachs & Co. LLC acted as
`financial advisor to ChemoCentryx, and Latham & Watkins LLP is serving as
`its legal advisor.
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`The Materially Incomplete and Misleading Proxy Statement
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`22.
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`The Board caused to be filed the materially incomplete and misleading Proxy
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`Statement with the SEC on September 14, 2022. The Proxy Statement, which recommends that
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`ChemoCentryx stockholders vote their shares in favor of the Proposed Transaction, fails to
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`disclose material information to Company stockholders, or provides them with materially
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`misleading information, concerning: (a) the financial analyses underlying the fairness opinion
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`provided by Goldman Sachs & Co. LLC (“Goldman”), financial advisor to the Board; (b) the
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`process leading to the Proposed Transaction; and (c) Company insiders’ potential conflicts of
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`interest.
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`Material Misrepresentations and/or Omissions Concerning the Company’s Financial
`Forecasts and Goldman’s Financial Analyses
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`23.
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`The Proxy Statement fails to disclose material information concerning the
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`financial forecasts for the Company, including the line items underlying forecasted: (a)
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`EBITDA; (b) Unlevered Free Cash Flow; (c) EBIT (AAV Only); and (d) Unlevered Free Cash
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`Flow (AAV Only). The Proxy Statement also fails to disclose a quantification of the
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`assumptions underlying those forecasts.
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`24.
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`The Proxy Statement also fails to disclose material information concerning
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`Goldman’s financial analyses.
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`25. With respect to the Illustrative Discounted Cash Flow Analysis - TAVNEOS AAV
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`Only Cash Flows performed by Goldman, the Proxy Statement fails to disclose: (a) the
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`Company’s terminal values; (b) the inputs and assumptions underlying the range of discount
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`rates Goldman used in connection with the analysis; (c) the terminal year estimate of the
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`TAVNEOS AAV Only Cash Flows; (d) the estimated benefits of ChemoCentryx’s NOLs for
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`the third and fourth quarters of 2022 and years 2023 through 2044; and (e) the Company’s fully
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`diluted outstanding shares.
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`26. With respect to the Illustrative Discounted Cash Flow Analysis – Aggregate
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`Cash Flows performed by Goldman, the Proxy Statement fails to disclose: (a) the Company’s
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`terminal values; (b) the inputs and assumptions underlying the range of discount rates Goldman
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`used in connection with the analysis; (c) the terminal year estimate of the Aggregate Cash
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`Flows; (d) the estimated benefits of ChemoCentryx’s NOLs for the third and fourth quarters of
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`2022 and years 2023 through 2044; and (e) the Company’s fully diluted outstanding shares.
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`27. With respect to the Premia Analysis – Undisturbed Closing Stock Price and
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`Premia Analysis – 52-Week High Closing Stock Price performed by Goldman, the Proxy
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`Statement fails to disclose the transactions analyzed, as well as the individual premiums
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`observed for each transaction.
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`28. With respect to the Selected Public Company Comparables analysis performed
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`by Goldman, the Proxy Statement fails to disclose the individual financial metrics for each of
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`the selected companies analyzed by Goldman.
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`Material Misrepresentations and/or Omissions Concerning the Process Leading to the
`Proposed Transaction
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`29.
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`The Proxy Statement fails to disclose material information concerning the
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`process leading to the Proposed Transaction, including whether the non-disclosure agreement
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`the Company executed with “Party A” on July 29, 2022 included a “don’t-ask, don’t-waive”
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`standstill provision that is still in effect and presently precluding Party A from submitting a
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`topping bid for the Company.
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`Material Misrepresentations and/or Omissions Concerning Company Insiders’ Potential
`Conflicts of Interest
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`30.
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`The Proxy Statement fails to disclose material information concerning potential
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`conflicts of interest faced by Company insiders, including whether any of Amgen’s proposals
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`or indications of interest mentioned management retention in the combined company following
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`the Proposed Transaction or the purchase of or participation in the equity of the surviving
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`corporation.
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`31.
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`The omission of the above-referenced information renders statements in the
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`“Certain Unaudited Prospective Financial Information,” “Opinion of Goldman Sachs & Co.
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`LLC,” “Background of the Merger,” and “Interests of the Directors and Executive Officers of
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`ChemoCentryx in the Merger” sections of the Proxy Statement materially incomplete and
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`misleading in contravention of the Exchange Act.
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`32.
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`Absent disclosure of the foregoing material information prior to the stockholder
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`vote, Plaintiff and the other stockholders of ChemoCentryx will be unable to make a sufficiently
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`informed decision in connection with the Proposed Transaction and are thus threatened with
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`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 for Violation of Section 14(a) of the Exchange Act and Rule 14a-9 Promulgated
`Thereunder Against the Individual Defendants and ChemoCentryx
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`33.
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth
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`herein.
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`34.
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`The Individual Defendants disseminated the false and misleading Proxy
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`Statement, which contained statements that, in light of the circumstances under which they were
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`made, omitted to state material facts necessary to make the statements therein not materially
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`misleading, in violation of Section 14(a) of the Exchange Act and Rule 14a-9. ChemoCentryx
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`is liable as the issuer of these statements.
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`35.
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`The Proxy Statement was prepared, reviewed, and/or disseminated by the
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`Individual Defendants. By virtue of their positions within the Company, the Individual
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`Defendants were aware of this information and their duty to disclose this information in the
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`Proxy Statement.
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`36.
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`The Individual Defendants were at least negligent in filing the Proxy Statement
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`with these materially false and misleading statements.
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`37.
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`The omissions and false and misleading statements in the Proxy Statement are
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`material in that a reasonable stockholder will consider them important in deciding how to vote
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`on the Proposed Transaction. In addition, a reasonable investor will view a full and accurate
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`disclosure as significantly altering the total mix of information made available in the Proxy
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`Statement and in other information reasonably available to stockholders.
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`38.
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`The Proxy Statement is an essential link in causing Plaintiff and the Company’s
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`stockholders to approve the Proposed Transaction.
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`39.
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`By reason of the foregoing, defendants violated Section 14(a) of the Exchange
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`Act and Rule 14a-9 promulgated thereunder.
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`40.
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`Because of the false and misleading statements in the Proxy Statement, Plaintiff
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`is threatened with irreparable harm.
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`COUNT II
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`Claims for Violation of Section 20(a) of the Exchange Act
`Against the Individual Defendants
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`Plaintiff repeats and realleges the preceding allegations as if fully set forth
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`41.
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`herein.
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`42.
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`The Individual Defendants acted as controlling persons of ChemoCentryx within
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`the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their positions
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`as officers and/or directors of ChemoCentryx and participation in and/or awareness of the
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`Company’s operations and/or intimate knowledge of the false statements contained in the Proxy
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`Statement, they had the power to influence and control and did influence and control, directly
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`or indirectly, the decision making of the Company, including the content and dissemination of
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`the various statements that Plaintiff contends are false and misleading.
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`43.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Proxy Statement alleged by Plaintiff to be misleading prior to and/or shortly after
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`these statements were issued and had the ability to prevent the issuance of the statements or
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`cause them to be corrected.
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`44.
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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
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`had the power to control and influence the particular transactions giving rise to the violations
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`as alleged herein, and exercised the same. The Proxy Statement contains the unanimous
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`recommendation of the Individual Defendants to approve the Proposed Transaction. They were
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`thus directly involved in the making of the Proxy Statement.
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`45.
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`By virtue of the foregoing, the Individual Defendants violated Section 20(a) of
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`the Exchange Act.
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`46.
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`As set forth above, the Individual Defendants had the ability to exercise control
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`over and did control a person or persons who have each violated Section 14(a) of the Exchange
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`Act and Rule 14a-9, by their acts and omissions as alleged herein. By virtue of their positions
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`as controlling persons, these defendants are liable pursuant to Section 20(a) of the Exchange
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`Act. As a direct and proximate result of defendants’ conduct, Plaintiff is threatened with
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`irreparable harm.
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`PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff demands judgment and preliminary and permanent relief,
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`including injunctive relief, in his favor on behalf of the Company, and against defendants, as
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`follows:
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`A.
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`Preliminarily and permanently enjoining defendants and all persons
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`acting in concert with them from proceeding with, consummating, or closing the Proposed
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`Transaction and any vote on the Proposed Transaction, unless and until defendants disclose and
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`disseminate the material information identified above to Company stockholders;
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`B.
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`In the event defendants consummate the Proposed Transaction,
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`rescinding it and setting it aside or awarding rescissory damages to Plaintiff;
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`C.
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`Declaring that defendants violated Sections 14(a) and/or 20(a) of the
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`Exchange Act;
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`D.
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`Awarding Plaintiff the costs of this action, including reasonable
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`allowance for Plaintiff’s attorneys’ and experts’ fees; and
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`E.
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`Granting such other and further relief as this Court may deem just and
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`proper.
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`JURY DEMAND
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`Plaintiff demands a trial by jury on all claims and issues so triable.
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`Dated: October 5, 2022
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`By:
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`LONG LAW, LLC
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`/s/ Brian D. Long
`Brian D. Long (#4347)
`3828 Kennett Pike, Suite 208
`Wilmington, DE 19807
`Telephone: (302) 729-9100
`Email: BDLong@LongLawDE.com
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`Attorneys for Plaintiff
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