Case 1:21-cv-06102 Document 1 Filed 11/02/21 Page 1 of 14 PageID #: 1
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`Daniel Sadeh, Esq.
`HALPER SADEH LLP
`667 Madison Avenue, 5th Floor
`New York, NY 10065
`Telephone: (212) 763-0060
`Facsimile: (646) 776-2600
`Email: sadeh@halpersadeh.com
`
`Counsel for Plaintiff
`
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF NEW YORK
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`
`Case No:
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`JURY TRIAL DEMANDED
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`
`
`KELLY COOK,
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`Plaintiff,
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`v.
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`ADAMAS PHARMACEUTICALS, INC.,
`DAVID L. MAHONEY, NEIL F.
`MCFARLANE, MICHAEL F. BIGHAM,
`MARTHA J. DEMSKI, WILLIAM
`ERICSON, JOHN MACPHEE, SPYROS
`PAPAPETROPOULOS, and ANNA
`RICHO,
`
`
`Defendants.
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`
`
`
`
`
`
`
`
`
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`COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS
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`Plaintiff Kelly Cook (“Plaintiff”), by Plaintiff’s undersigned attorneys, for Plaintiff’s
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`complaint against Defendants (defined below), alleges the following based upon personal
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`knowledge as to Plaintiff and Plaintiff’s own acts, and upon information and belief as to all other
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`matters, based upon, inter alia, the investigation conducted by and through Plaintiff’s attorneys.
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`NATURE OF THE ACTION
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`1.
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`This is an action against Adamas Pharmaceuticals, Inc. (“Adamas” or the
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`“Company”) and its Board of Directors (the “Board” or the “Individual Defendants”) for their
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`violations of Sections 14(e), 14(d)(4), and 20(a) of the Securities Exchange Act of 1934 (the
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`Case 1:21-cv-06102 Document 1 Filed 11/02/21 Page 2 of 14 PageID #: 2
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`“Exchange Act”), 15 U.S.C. §§ 78n(e), 78n(d)(4), and 78t(a), and Rule 14d-9 promulgated
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`thereunder by the SEC, 17 C.F.R. § 240.14d-9, in connection with the proposed acquisition (the
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`“Proposed Transaction”) of Adamas by Supernus Pharmaceuticals, Inc. (“Supernus”).
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`JURISDICTION AND VENUE
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`2.
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`The claims asserted herein arise under and pursuant to Sections 14(e), 14(d)(4),
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`and 20(a) of the Exchange Act (15 U.S.C. §§ 78n(e), 78n(d)(4), and 78t(a)) and Rule 14d-9
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`promulgated thereunder by the SEC (17 C.F.R. § 240.14d-9).
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`3.
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`This Court has jurisdiction over the subject matter of this action pursuant to 28
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`U.S.C. § 1331, and Section 27 of the Exchange Act, 15 U.S.C. § 78aa.
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`4.
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`Venue is proper in this District pursuant to 28 U.S.C. § 1391(b) and Section 27 of
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`the Exchange Act (15 U.S.C. § 78aa(c)) as a substantial portion of the transactions and wrongs
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`complained of herein had an effect in this District, the alleged misstatements entered and the
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`subsequent damages occurred in this District, and the Company conducts business in New York
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`City.
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`5.
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`In connection with the acts, conduct and other wrongs alleged in this complaint,
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`Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,
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`including but not limited to, the United States mails, interstate telephone communications and the
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`facilities of the national securities exchange.
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`PARTIES
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`6.
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`Plaintiff is, and has been at all relevant times hereto, an owner of Adamas common
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`stock.
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`7.
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`Defendant Adamas focuses on the discovery, development, and commercialization
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`of medicines for patients suffering from chronic neurologic disorders in the United States. The
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`Company is incorporated in Delaware. The Company’s common stock trades on the NASDAQ
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`under the ticker symbol, “ADMS.”
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`8.
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`Defendant David L. Mahoney (“Mahoney”) is Chairman of the Board of the
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`Company.
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`9.
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`Defendant Neil F. McFarlane (“McFarlane”) is Chief Executive Officer and a
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`director of the Company.
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`10.
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`11.
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`12.
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`13.
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`14.
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`Company.
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`15.
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`16.
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`Defendant Michael F. Bigham (“Bigham”) is a director of the Company.
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`Defendant Martha J. Demski (“Demski”) is a director of the Company.
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`Defendant William Ericson (“Ericson”) is a director of the Company.
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`Defendant John MacPhee (“MacPhee”) is a director of the Company.
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`Defendant Spyros Papapetropoulos (“Papapetropoulos”) is a director of the
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`Defendant Anna Richo (“Richo”) is a director of the Company.
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`Defendants Mahoney, McFarlane, Bigham, Demski, Ericson, MacPhee,
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`Papapetropoulos, and Richo are collectively referred to herein as the “Individual Defendants.”
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`17.
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`Defendants Adamas and the Individual Defendants are collectively referred to
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`herein as the “Defendants.”
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`SUBSTANTIVE ALLEGATIONS
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`A. The Proposed Transaction
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`18.
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`On October 11, 2021, Adamas and Supernus announced that they had entered into
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`a definitive agreement for Supernus to acquire Adamas through a tender offer for $8.10 per share
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`in cash, payable at closing plus two non-tradable contingent value rights collectively worth up to
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`$1.00 per share in cash. The press release announcing the Proposed Transaction states, in pertinent
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`part:
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`Supernus Pharmaceuticals to Acquire Adamas Pharmaceuticals
`Strengthening its CNS Product Portfolio
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`October 11, 2021 06:30 ET | Source: Supernus Pharmaceuticals, Inc.
`
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` Acquisition of two marketed products diversifies and accelerates revenue
`and cash flow
` Expected to be significantly accretive in 2022
` Potential synergies of $60 million to $80 million in year one due to strong
`overlap with existing infrastructure
` Total consideration up to $9.10 per share. Upfront cash payment of $8.10
`per share with fully diluted equity value of approximately $400 million, plus
`$1.00 contingent value right based on net sales of GOCOVRI®
` Conference call and webcast today at 8:30 a.m. ET to discuss the transaction
`
`
`ROCKVILLE, Md. and EMERYVILLE, Calif., Oct. 11, 2021 (GLOBE
`NEWSWIRE) -- 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 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 patients.
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`
`*
`
`*
`
`*
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`Terms and Financing
`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
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`at closing plus two non-tradable 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
`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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`*
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`*
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`*
`
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`Advisors
`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 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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`*
`
`
`About Supernus Pharmaceuticals, Inc.
`Supernus Pharmaceuticals is a biopharmaceutical company focused on developing
`and commercializing products for the treatment of central nervous system (CNS)
`diseases.
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`Our diverse neuroscience portfolio includes approved treatments for epilepsy,
`migraine, ADHD, hypomobility in Parkinson’s disease, cervical dystonia and
`chronic sialorrhea. We are developing a broad range of novel CNS product
`candidates including new potential treatments for hypomobility in Parkinson’s
`disease, epilepsy, depression and rare CNS disorders.
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`For more information, please visit www.supernus.com
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`About Adamas Pharmaceuticals
`At Adamas our vision is clear – to deliver innovative medicines that reduce the
`burden of neurological diseases on patients, caregivers and society. We are a fully
`integrated company focused on growing a portfolio of therapies to address a range
`of neurological diseases.
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`19.
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`On October 25, 2021, Defendants caused to be filed with the SEC a Schedule 14D-
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`9 Solicitation/Recommendation Statement under Section 14(d)(4) of the Exchange Act (the
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`“Solicitation Statement”) in connection with the Proposed Transaction.
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`B. The Solicitation Statement Contains Materially False and Misleading Statements
`and Omissions
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`20.
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`The Solicitation Statement, which recommends that Adamas shareholders tender
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`their shares in connection with the Proposed Transaction, omits and/or misrepresents material
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`information concerning: (i) Adamas’ financial projections; and (ii) the financial analyses
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`performed by the Company’s financial advisor, Lazard Frères & Co. LLC (“Lazard”), in
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`connection with its fairness opinion.
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`21.
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`The omission of the material information (referenced below) renders the following
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`sections of the Solicitation Statement false and misleading, among others: (i) Recommendation of
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`the Adamas Board; (ii) The Adamas Board’s Reasons for the Offer and the Merger; (iii) Opinion
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`of Adamas’s Financial Advisor; and (iv) Projected Financial Information.
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`22.
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`The tender offer in connection with the Proposed Transaction is set to expire at
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`12:00 midnight, New York Time, on November 24, 2021 (the “Expiration Date”). It is imperative
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`that the material information that was omitted from the Solicitation Statement be disclosed to the
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`Company’s shareholders prior to the Expiration Date to enable them to make an informed decision
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`as to whether to tender their shares. Plaintiff may seek to enjoin Defendants from closing the tender
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`offer or the Proposed Transaction unless and until the material misstatements and omissions
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`(referenced below) are remedied. In the event the Proposed Transaction is consummated, Plaintiff
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`may seek to recover damages resulting from Defendants’ misconduct.
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`1. Material Omissions Concerning Adamas’ Financial Projections
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`23.
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`The Solicitation Statement omits material information concerning Adamas’
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`financial projections.
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`24. With respect to the Company’s financial projections, the Solicitation Statement
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`fails to disclose: (1) all line items underlying the Company’s financial projections; and (2) a
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`reconciliation of all non-GAAP to GAAP metrics.
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`25.
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`The disclosure of this information is material because it would provide the
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`Company’s shareholders with a basis to project the future financial performance of the Company
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`and would allow shareholders to better understand the financial analyses performed by the
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`Company’s financial advisor in support of its fairness opinion. Shareholders cannot hope to
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`replicate management’s inside view of the future prospects of the Company. Without such
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`information, which is uniquely possessed by Defendant(s) and the Company’s financial advisor,
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`the Company’s shareholders are unable to determine how much weight, if any, to place on the
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`Company’s financial advisor’s fairness opinion in determining whether to tender their shares in
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`connection Proposed Transaction.
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`26. When a company discloses non-GAAP financial metrics in a Solicitation Statement
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`that were relied upon by its board of directors in recommending that shareholders exercise their
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`corporate suffrage rights in a particular manner, the company must also disclose, pursuant to SEC
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`Regulation G, all projections and information necessary to make the non-GAAP metrics not
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`misleading, and must provide a reconciliation (by schedule or other clearly understandable
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`method) of the differences between the non-GAAP financial metrics disclosed or released with the
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`most comparable financial metrics calculated and presented in accordance with GAAP. 17 C.F.R.
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`§ 244.100.1
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`27.
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`The above-referenced omitted information, if disclosed, would significantly alter
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`the total mix of information available to the Company’s shareholders.
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`2. Material Omissions Concerning Lazard’s Analyses
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`28.
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`In connection with the Proposed Transaction, the Solicitation Statement omits
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`material information concerning analyses performed by Lazard.
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`29.
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`The Solicitation Statement fails to disclose the following concerning Lazard’s
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`“Discounted Cash Flow Analysis”: (1) the individual inputs and assumptions underlying the
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`discount rates ranging from 11.0% to 13.0%; (2) the estimated net cash of Adamas at
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`September 30, 2021; and (3) the number of fully diluted Company shares outstanding as of
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`October 8, 2021.
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`30. With respect to Lazard’s “Premia Paid Analysis,” the Solicitation Statement fails
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`to disclose each transaction and the individual premiums paid therein.
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`31.
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`The Solicitation Statement fails to disclose the following concerning Lazard’s
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`“Research Analyst Price Targets” analysis: (1) the individual price targets observed by Lazard in
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`its analysis; and (2) the sources thereof.
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`32.
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`The valuation methods, underlying assumptions, and key
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`inputs used
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`by Lazard in rendering its purported fairness opinion must be fairly disclosed to Adamas
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`
`1 Mary Jo White, Keynote Address, International Corporate Governance Network Annual
`Conference: Focusing the Lens of Disclosure to Set the Path Forward on Board Diversity, Non-
`GAAP, and Sustainability (June 27, 2016), https://www.sec.gov/news/speech/chair-white-icgn-
`speech.html (footnotes omitted) (last visited Nov. 2, 2021) (“And last month, the staff issued
`guidance addressing a number of troublesome practices which can make non-GAAP disclosures
`misleading: the lack of equal or greater prominence for GAAP measures; exclusion of normal,
`recurring cash operating expenses; individually tailored non-GAAP revenues; lack of
`consistency; cherry-picking; and the use of cash per share data. I strongly urge companies to
`carefully consider this guidance and revisit their approach to non-GAAP disclosures.”).
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`shareholders. The description Lazard’s fairness opinion and analyses, however, fails to include
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`key inputs and assumptions underlying those analyses. Without the information described above,
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`Adamas shareholders are unable to fully understand Lazard’s fairness opinion and analyses, and
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`are thus unable to determine how much weight, if any, to place on them in determining whether to
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`tender their shares in connection with the Proposed Transaction. This omitted information, if
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`disclosed, would significantly alter the total mix of information available to the Company’s
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`shareholders.
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`COUNT I
`For Violations of Section 14(e) of the Exchange Act
`Against All Defendants
`Plaintiff repeats and re-alleges each and every allegation contained in the foregoing
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`33.
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`paragraphs as if fully set forth herein.
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`34.
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`Section 14(e) of the Exchange Act states, in relevant part:
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`It shall be unlawful for any person to make any untrue statement of a material fact
`or omit to state any material fact necessary in order to make the statements made,
`in the light of the circumstances under which they are made, not misleading . . . in
`connection with any tender offer or request or invitation for tenders[.]
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`35.
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`During the relevant period, Defendants, individually and in concert, directly or
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`indirectly, disseminated or approved the false and misleading Solicitation Statement specified
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`above, which failed to disclose material facts necessary in order to make the statements made, in
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`light of the circumstances under which they were made, not misleading, in violation of Section
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`14(e) of the Exchange Act.
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`36.
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`Each of the Individual Defendants, by virtue of their positions within the Company
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`as officers and/or directors, were aware of materially false and/or misleading and/or omitted
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`information but failed to disclose such information, in violation of Section 14(e) of the Exchange
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`Act. Defendants, by use of the mails and means and instrumentalities of interstate commerce,
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`solicited and/or permitted the use of their names to file and disseminate the Solicitation Statement
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`with respect to the Proposed Transaction.
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`37.
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`The false and misleading statements and omissions in the Solicitation Statement are
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`material in that a reasonable shareholder would consider them important in deciding whether to
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`tender their shares in connection with the Proposed Transaction.
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`38.
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`Defendants acted knowingly or with deliberate recklessness in filing or causing the
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`filing of the materially false and misleading Solicitation Statement.
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`39.
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`40.
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`By reason of the foregoing, Defendants violated Section 14(e) of the Exchange Act.
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`Because of the false and misleading statements in the Solicitation Statement,
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`Plaintiff is threatened with irreparable harm.
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`COUNT II
`For Violations of Section 14(d)(4) of the Exchange Act and Rule 14d-9 Promulgated
`Thereunder
`Against All Defendants
`Plaintiff repeats and re-alleges each and every allegation contained in the foregoing
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`41.
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`paragraphs as if fully set forth herein.
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`42. Defendants caused the Solicitation Statement to be issued with the intent to solicit
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`shareholder support for the Proposed Transaction.
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`43.
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`Section 14(d)(4) of the Exchange Act and SEC Rule 14d-9 promulgated thereunder
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`require full and complete disclosure in connection with tender offers. Specifically, Section
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`14(d)(4) states, in relevant part:
`
`Any solicitation or recommendation to the holders of such a security to accept or
`reject a tender offer or request or invitation for tenders shall be made in accordance
`with such rules and regulations as the Commission may prescribe as necessary or
`appropriate in the public interest or for the protection of investors.
`
`
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`44.
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`SEC Rule 14d-9(d), adopted to implement Section 14(d)(4) of the
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`Exchange Act, states, in relevant part:
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`Any solicitation or recommendation to holders of a class of securities referred to in
`section 14(d)(1) of the Act with respect to a tender offer for such securities shall
`include the name of the person making such solicitation or recommendation and
`the information required by Items 1 through 8 of Schedule 14D-9 (§ 240.14d-101)
`or a fair and adequate summary thereof[.]
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`45.
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`In accordance with SEC Rule 14d-9, Item 8 of Schedule 14D-9 requires that a
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`company:
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`Furnish such additional material information, if any, as may be necessary to make
`the required statements, in light of the circumstances under which they are made,
`not materially misleading.
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`46.
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`During the relevant period, Defendants, individually and in concert, directly or
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`indirectly, disseminated or approved the false and misleading Solicitation Statement specified
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`above, which failed to disclose material facts necessary in order to make the statements made, in
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`light of the circumstances under which they were made, not misleading, in violation of Section
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`14(d)(4) of the Exchange Act and SEC Rule 14d-9.
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`47.
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`Each of the Individual Defendants, by virtue of their positions within the Company
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`as officers and/or directors, were aware of materially false and/or misleading and/or omitted
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`information but failed to disclose such information, in violation of Section 14(d)(4) of the
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`Exchange Act and SEC Rule 14d-9. Defendants, by use of the mails and means and
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`instrumentalities of interstate commerce, solicited and/or permitted the use of their names to file
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`and disseminate the Solicitation Statement with respect to the Proposed Transaction.
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`48.
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`Defendants acted knowingly or with deliberate recklessness in filing the materially
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`false and misleading Solicitation Statement which omitted material information.
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`49.
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`The false and misleading statements and omissions in the Solicitation Statement are
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`material in that a reasonable shareholder would consider them important in deciding whether to
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`tender their shares in connection with the Proposed Transaction.
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`COUNT III
`Violations of Section 20(a) of the Exchange Act
`Against the Individual Defendants
`Plaintiff repeats and re-alleges each and every allegation contained in the foregoing
`
`50.
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`paragraphs as if fully set forth herein.
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`51.
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`The Individual Defendants acted as control persons of the Company within the
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`meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their senior positions
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`as officers and/or directors of the Company 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
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`Solicitation Statement filed with the SEC, they had the power to and did influence and control,
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`directly or indirectly, the decision-making of the Company, including the content and
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`dissemination of the false and misleading Solicitation Statement.
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`52.
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`Each of the Individual Defendants was provided with or had unlimited access to
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`copies of the Solicitation Statement and other statements alleged by Plaintiff to be misleading prior
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`to and/or shortly after these statements were issued and had the ability to prevent the issuance of
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`the statements or cause the statements to be corrected. As officers and/or directors of a publicly
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`owned company, the Individual Defendants had a duty to disseminate accurate and truthful
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`information with respect to the Solicitation Statement, and to correct promptly any public
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`statements issued by the Company which were or had become materially false or misleading.
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`53.
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`In particular, each of the Individual Defendants had direct and supervisory
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`involvement in the operations of the Company, and, therefore, is presumed to have had the power
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`to control or influence the particular transactions giving rise to the securities violations as alleged
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`herein, and exercised the same. The Individual Defendants were provided with or had unlimited
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`access to copies of the Solicitation Statement and had the ability to prevent the issuance of the
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`statements or to cause the statements to be corrected. The Solicitation Statement at issue contains
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`the recommendation of the Individual Defendants to tender their shares pursuant to the Proposed
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`Transaction. Thus, the Individual Defendants were directly involved in the making of the
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`Solicitation Statement.
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`54.
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`In addition, as the Solicitation Statement sets forth at length, and as described
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`herein, the Individual Defendants were involved in negotiating, reviewing, and approving the
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`Proposed Transaction. The Solicitation 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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`55.
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`By virtue of the foregoing, the Individual Defendants have violated Section 20(a)
`
`of the Exchange Act.
`
`56.
`
`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 Sections 14(e), 14(d)(4), and Rule
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`14d-9 promulgated thereunder, by their acts and omissions as alleged herein. By virtue of their
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`positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of
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`the Exchange Act. As a direct and proximate result of Defendants’ conduct, the Company’s
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`shareholders will be irreparably harmed.
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`PRAYER FOR RELIEF
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`WHEREFORE, Plaintiff prays for judgment and relief as follows:
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`A.
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`Preliminarily and permanently enjoining Defendants and all persons acting in
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`concert with them from proceeding with, consummating, or closing the Proposed Transaction and
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`the tender offer in connection with the Proposed Transaction, unless and until Defendants disclose
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`and disseminate the material information identified above to the Company’s shareholders;
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`Case 1:21-cv-06102 Document 1 Filed 11/02/21 Page 14 of 14 PageID #: 14
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`B.
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`In the event Defendants consummate the Proposed Transaction, rescinding it and
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`setting it aside or awarding Plaintiff rescissory damages;
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`C.
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`Declaring that Defendants violated Sections 14(e), 14(d)(4), and 20(a) of the
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`Exchange Act, and Rule 14d-9 promulgated thereunder;
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`D.
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`Awarding Plaintiff reasonable costs and expenses incurred in this action, including
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`counsel fees and expenses and expert fees; and
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`E.
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`Granting such other and further relief as the Court may deem just and proper.
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`JURY TRIAL DEMANDED
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`Plaintiff hereby demands a trial by jury.
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`Dated: November 2, 2021
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` Respectfully submitted,
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`HALPER SADEH LLP
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`By: /s/ Daniel Sadeh
`Daniel Sadeh, Esq.
`Zachary Halper, Esq. (to be admitted pro hac
`vice)
`667 Madison Avenue, 5th Floor
`New York, NY 10065
`Telephone: (212) 763-0060
`Facsimile: (646) 776-2600
`Email: sadeh@halpersadeh.com
` zhalper@halpersadeh.com
`
`Counsel for Plaintiff
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`14
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