Washington, D.C. 20549
SUPPLEMENT
TO THE PROXY STATEMENT FOR
THE ANNUAL MEETING OF STOCKHOLDERS
WHICH HAS BEEN ADJOURNED TO
NOVEMBER
5, 2021 AT 1:00 pm eASTERN tIME
October 26, 2021
These definitive additional materials amend and
supplement the definitive proxy statement, dated September 16, 2021 (the “Definitive Proxy Statement”), initially mailed to
stockholders on or about September 16, 2021, by Scopus BioPharma Inc., a Delaware corporation (“Scopus” or the “Company”),
in connection with the annual meeting of stockholders of the Company to be held in virtual format only at www.cesonlineservices.com/scps21_vm
originally scheduled to be held on October 8, 2021, at 1:00 p.m., Eastern Time, or any adjournment or postponement thereof (the “Annual
Meeting”).
As described below, pursuant to a stipulation
between the Company and Morris C. Laster, MD (“Dr. Laster”) that was approved by the Delaware Court of Chancery on September
27, 2021, the Company convened, and then immediately adjourned, the Company’s scheduled Annual Meeting on October 8, 2021, and will
reconvene the Annual Meeting on November 5, 2021, at 1:00 p.m., Eastern Time. Pursuant to the stipulation, the Annual Meeting will be
held and the vote on the items of business to be considered at the Annual Meeting will be taken no earlier than 14 days and no later than
30 days after a decision on the merits or a final settlement between the parties in connection with the pending claims brought by Dr.
Laster in the Delaware Court of Chancery. No business was conducted at the October 8, 2021 Annual Meeting other than to adjourn the Annual
Meeting to November 5, 2021, at 1:00 p.m., Eastern Time. The record date for the Annual Meeting will remain August 16, 2021.
In order to attend the reconvened Annual Meeting,
you must register in advance at www.cesonlineservices.com/scps21_vm prior to the deadline of November 4, 2021 at 1:00 p.m. Eastern Time.
Upon completing your registration, you will receive further instructions via email. You will not be able to attend the Annual Meeting
in person.
At the Annual Meeting, the Company’s
stockholders will be asked to consider and vote on (i) the election of two directors to serve as Class A directors on our Board of Directors
to serve until our 2024 Annual Meeting of Stockholders or until successors have been duly elected and qualified and (ii) the ratification
of the appointment of Citrin Cooperman & Company, LLP as our independent registered public accounting firm for the 2021 fiscal year.
As previously disclosed, on May 9, 2021, Dr. Laster,
a former officer and director of the Company, whose resignation from such positions was accepted in June 2020 by the Company, provided
notice to the Company of his intention to nominate two nominees to stand for election as directors of the Company at the Annual Meeting,
in opposition to the nominees recommended by the Board. After careful review and consideration, including in consultation with its advisors,
the Board determined that voting “FOR” Dr. Laster’s nominees is not in the best interests of the Company or its
stockholders. You may receive a proxy statement, blue proxy card and other solicitation materials from Dr. Laster. The Company is not
responsible for the accuracy of any information provided by, or relating to, Dr. Laster or his nominees contained in any proxy solicitation
materials filed or disseminated by, or on behalf of, Dr. Laster or any other statements that Dr. Laster may otherwise make.
Our Board does NOT endorse either of Dr.
Laster’s nominees. Based upon information provided in Dr. Laster’s notice, among other reasons, Dr. Laster’s
nominees have limited or no experience serving as directors of publicly-traded companies in the United States. Accordingly, the
Board recommends that you vote “FOR” the election of each of the two nominees proposed by the Board on your WHITE
proxy card. The Board strongly urges you NOT to sign or return any blue proxy card which may be sent to you by Dr. Laster. If you
have previously submitted a blue proxy card sent to you by Dr. Laster, you can revoke such proxy and vote “FOR”
the Board’s nominees and on the other matters to be voted on at the Annual Meeting by signing, dating and mailing your WHITE
proxy card in the postage-paid envelope that was previously provided. Only your latest dated proxy will be counted.
Your vote is very important, regardless of the
number of shares of our voting securities that you own. Whether or not you expect to attend the virtual Annual Meeting, please vote as
promptly as possible on the enclosed WHITE proxy card to ensure your representation and the presence of a quorum at the Annual Meeting.
Only stockholders who held shares at the close of business on the record date, Monday, August 16, 2021, may vote at the Annual Meeting.
As an alternative to voting online during the Annual Meeting, you may vote in advance of the Annual Meeting, via the Internet, by telephone,
or by signing, dating and returning a WHITE proxy card. If your shares are held in the name of a broker, trust, bank or other nominee,
please complete and return the WHITE voting instruction form provided to you by such broker or other intermediary, or, if permitted by
such broker or other intermediary, you may vote via the Internet or by telephone as instructed by such broker or other intermediary. If
you wish to attend the Annual Meeting virtually and vote your shares, you will need to contact your broker directly in order to obtain
a valid legal proxy issued to you by your nominee holder. We urge you to submit your vote as soon as possible, even if you currently plan
to attend the Annual Meeting virtually.
Holders of shares as of the close of business
on August 16, 2021, the record date for the Annual Meeting, are urged to submit a WHITE proxy card, even if your shares were sold after
such date.
Thank you for your continued support. If you have
any questions, please contact Morrow Sodali LLC, our proxy solicitor assisting us in connection with the Annual Meeting:
Morrow Sodali
509 Madison Avenue, Suite 1206
New York, New York 10022
Call Collect: (203) 658-9400
Call Toll Free: (800) 662-5200
Email: SCPS@investor.morrowsodali.com
The information contained herein speaks only as
of October 26, 2021 unless the information specifically indicates that another date applies.
SUPPLEMENTAL
DISCLOSURES TO DEFINITIVE PROXY STATEMENT
The supplemental disclosures
set forth below should be read in conjunction with the Definitive Proxy Statement, which should be read in its entirety, along with periodic
reports and other information Scopus files with the Securities and Exchange Commission. To the extent that information set forth herein
differs from or updates information contained in the Definitive Proxy Statement, the information contained herein supersedes the information
contained in the Definitive Proxy Statement. Any defined terms used but not defined herein shall have the meanings set forth in the Definitive
Proxy Statement.
BACKGROUND OF SOLICITATION
Following the mailing of the Definitive Proxy Statement,
the Company’s representatives reached out to Dr. Laster and his representatives on numerous occasions to attempt to resolve Dr.
Laster’s pending claims against the Company and the Shareholder LLCs in the Delaware Court of Chancery that were described in the
Definitive Proxy Statement (the “Delaware Matter”), but was unable to reach a mutually agreeable resolution.
On September 27, 2021, the Delaware Court of Chancery
approved a stipulation entered into among the Company, the Shareholder LLCs and Dr. Laster (the “Stipulation”) in connection
with the Delaware Matter, which, among other things, set an expedited schedule for the Delaware Matter and required Dr. Laster to cause
all shares of Common Stock held by him to be present in person or by proxy at the Annual Meeting and any adjournments thereof exclusively
for purposes of establishing a quorum at the Annual Meeting. The stipulation is described in further detail in the section below entitled
“Involvement in Certain Legal Proceedings.”
On October 7, 2021, Australian counsel for Paul Hopper
sent a letter to the Board claiming that the Company had made defamatory statements about Mr. Hopper in the Company’s Form 8-K filed
on July 9, 2021, and in the Definitive Proxy Statement and requesting (i) the immediate withdrawal of such statements, (ii) that the Company
publish a written apology and file such apology with the SEC and Nasdaq, (iii) that the Company and its representatives (including the
Board) cease and desist from further publishing any defamatory statements about Mr. Hopper and (iv) that the Company and its directors
verify, by affidavit, that they have taken the steps described in the foregoing clauses (i)-(iv). The Company believes that Mr. Hopper’s
claims are without merit and that the Company’s disclosures with respect to Mr. Hopper were factual and accurate.
On October 8, 2021, the Company convened and the
immediately adjourned the Annual Meeting to 1:00 p.m., Eastern time, on Friday, November 5, 2021, without any business being conducted.
At the Annual Meeting on October 8, 2021, Dr. Laster failed to cause his shares to be present in person or by proxy, in violation of the
Stipulation approved by the Delaware Court of Chancery in connection with the Delaware Matter. The Company also issued a press release
on October 8, 2021, announcing the adjournment of the Annual Meeting until Friday, November 5, 2021 at 1:00 p.m., Eastern time, and noting
that Dr. Laster had failed to satisfy the requirements of the Stipulation by not attending the Annual Meeting on October 8, 2021 in person
or by proxy.
On October 12, 2021, counsel to the Shareholder LLCs
made a proposal to Dr. Laster’s counsel, seeking to resolve the Delaware Matter, but such proposal was rejected by Dr. Laster.
On October 14, 2021, the Executive Committee’s
counsel, on behalf of the Company, made a proposal to Dr. Laster’s counsel seeking to resolve the proxy contest, pursuant to which
(i) the Company would agree to expand the size of the Board by two seats to an 11-person Board and appoint two directors selected by Dr.
Laster and reasonably acceptable to the Company (with such newly appointed directors added to the class of directors standing for election
at the Annual Meeting, which class would be expanded to four directors), (ii) Dr. Laster would agree to stop his proxy contest and enter
into a customary standstill and voting agreement with the Company, pursuant to which Dr Laster would vote any shares that he is entitled
to vote in accordance with the Board’s recommendation through December 31, 2022 and (iii) in connection with the Delaware Matter,
the parties would advise the Delaware Court of Chancery that there is no longer a need for an expedited trial and the Delaware Matter
would proceed on a non-expedited basis. On October 15, 2021, Dr. Laster’s counsel informed the Executive Committee’s counsel
via email that Dr. Laster was not interested in moving forward regarding the Company’s proposal.
On October 15, 2021, in a hearing before the
Delaware Court of Chancery in the Delaware Matter in response to a motion to compel discovery made by Dr. Laster alleging that
certain documents had not been produced in accordance with the Stipulation, the Delaware Court of Chancery ordered the Company and
the Shareholder LLCs, on a more expedited basis than was contemplated by the Stipulation, to produce all documents requested by Dr.
Laster by no later than Thursday, October 21, 2021, less than one week following such hearing. The Delaware Court of Chancery also
denied an order to show cause filed by the Company requesting Dr. Laster to explain why he violated the Stipulation and failed to
appear in person or by proxy at the Annual Meeting on October 8, 2021.
On October 16, 2021, the Executive Committee’s
outside counsel again contacted Dr. Laster’s counsel via email to discuss a possible settlement to resolve the Delaware Matter.
On October 17, 2021, Dr. Laster’s counsel informed
the Executive Committee’s counsel that Dr. Laster was not interested in settlement discussions.
Also on October 17, 2021, the Executive Committee’s
counsel, on behalf of the Company, sent Dr. Laster’s counsel via email a signed letter agreement regarding a settlement proposal
for the Delaware Matter, pursuant to which, among other things, (i) the Company would agree to transfer ownership of the 3,500,000 shares
of Common Stock at issue in the Delaware Matter (the “Disputed Shares”) to Dr. Laster (either through the Shareholder LLCs
or directly, at the election of Dr. Laster) by no later than 5:00 p.m., Eastern time, on Wednesday, October 20, 2021, (ii) the Company
would adjourn the Annual Meeting (currently scheduled for November 5, 2021) until a later time and date, as determined by the Company,
which time would be prior to 12:00 p.m., Eastern time, and which date would be November 8, 9, 10 or 11, 2021, (iii) the Company would
accept any proxies submitted by Dr. Laster on behalf of the Shareholder LLCs at the Annual Meeting and such proxies would be voted in
accordance with the instructions provided by Dr. Laster in such proxies, (iv) the Company, Dr. Laster and the Shareholder LLCs would send
a joint letter to the Delaware Court of Chancery in connection with the Delaware Matter no later than 1:00 p.m., Eastern time, on Monday,
October 18, 2021, requesting that the Delaware Court of Chancery dismiss the Delaware Matter with prejudice without requiring the parties
to engage in any further discovery and (v) the Company would agree to pay Dr. Laster’s reasonable and documented legal fees and
expenses relating to the Delaware Matter through the date of the letter agreement, subject to mutually acceptable terms in light of the
Company’s liquidity needs and constraints. The Executive Committee’s counsel also requested that Dr. Laster’s counsel
advise whether Dr. Laster was willing to accept the Company’s proposal by no later than 12:00 p.m., Eastern time on October 18,
2021. The Company believes that its proposal provided Dr. Laster with essentially all of the relief that he was seeking in the Delaware
Matter.
On October 18, 2021, Dr. Laster’s
counsel, on behalf of Dr. Laster, sent a counterproposal to the Executive Committee’s counsel via email, pursuant to which (i)
by no later than 5:00 p.m., Eastern Time, on Wednesday, October 20, 2021, (A) the Company and the Shareholder LLCs would agree to
take all necessary actions to directly transfer ownership of the Disputed Shares to Dr. Laster (rather than through the Shareholder
LLCs), (B) the Shareholder LLCs would grant Dr. Laster an irrevocable proxy to vote the Disputed Shares at the Annual Meeting and
confirm in writing that Dr. Laster was not and had never been a member or manager of either of the Shareholder LLCs, (C) the Company
would issue (or cause the Company’s transfer agent to issue) to each of Dr. Laster’s daughters one or more share
certificates for the shares that were owned by each of Dr. Laster’s daughters and (D) the Shareholder LLCs would wire Dr.
Laster $1,800,000, which payment would be jointly and severally guaranteed in writing by Ira Greenspan and Joshua Lamstein, (ii)
within two hours of the satisfaction of the conditions set forth in (A)-(D) above, the Company, Dr. Laster and the Shareholder LLCs
would send a joint letter to the Delaware Court of Chancery in connection with the Delaware Matter requesting that the Delaware
Court of Chancery dismiss the Delaware Matter with prejudice without requiring the parties to engage in any further discovery, (iii)
the Company would promptly prepare and file a resale shelf registration statement on Form S-3, effective for 24 months, for the
Disputed Shares and all shares owned by each of Dr. Laster’s daughters, and use its best efforts to cause the Form S-3 to be
declared effective, (iv) the Company would adjourn the Annual Meeting (currently scheduled for November 5, 2021) until a later time
and date, as determined by the Company, which time would be prior to 12:00 p.m., Eastern time, and which date would be November 8,
9, 10 or 11, 2021, and (v) the Company would accept any proxies submitted by Dr. Laster at the Annual Meeting and such proxies would
be voted in accordance with the instructions provided by Dr. Laster in such proxies. Dr. Laster’s counsel indicated that the
Executive Committee’s counsel should advise whether the Company was willing to accept the Company’s proposal by no later
than 11:00 a.m., Eastern time, on October 19, 2021. The Company believes that Dr. Laster’s counterproposal sought relief
beyond the relief he was seeking in the Delaware Matter.
On October 18, 2021, the Company’s counsel,
on behalf of the Company, sent yet another counterproposal to Dr. Laster’s counsel via email, pursuant to which (i) by no later
than 5:00 p.m., Eastern Time, on Wednesday, October 20, 2021, (A) the Shareholder LLCs would instruct the Company’s transfer agent
to transfer the Disputed Shares to Dr. Laster directly (including any applicable share certificates) and within two business days of receiving
the requisite confirmation from the transfer agent of such transfer, the Company and/or the Shareholder LLCs would confirm that Dr. Laster
is the record owner of the Disputed Shares, (B) the Shareholder LLCs would grant Dr. Laster an irrevocable proxy to vote the Disputed
Shares at the Annual Meeting, (C) the Company would issue (or cause the Company’s transfer agent to issue) to each of Dr. Laster’s
daughters one or more share certificates for the shares that were owned by each of Dr. Laster’s daughters and (D) the Company would
provide confirmation that it had initiated a wire transfer to Dr. Laster for $500,000, which payment would settle any potential claims
for fees, costs or expenses related to the Delaware Matter, (ii) upon written confirmation of the acceptance of the settlement proposal,
the Company, Dr. Laster and the Shareholder LLCs would immediately cease all discovery, (iii) by no later than 11:00 a.m., Eastern time,
on Tuesday, October 19, 2021, the Company, Dr. Laster and the Shareholder LLCs would send a joint letter to the Delaware Court of Chancery
in connection with the Delaware Matter requesting that the Delaware Court of Chancery dismiss the Delaware Matter with prejudice without
requiring the parties to engage in any further discovery, (iv) the Company would adjourn the Annual Meeting (currently scheduled for November
5, 2021) until a later time and date, as determined by the Company, which time would be prior to 12:00 p.m., Eastern time, and which date
would be November 8, 9, 10 or 11, 2021, and (v) the Company would accept any proxies with respect to the Disputed Shares submitted by
Dr. Laster at the Annual Meeting and such proxies would be voted in accordance with the instructions provided by Dr. Laster in such proxies.
The Company’s counsel requested that Dr. Laster’s counsel advise whether Dr. Laster was willing to accept the Company’s
proposal by no later than 10:00 a.m., Eastern time, on October 19, 2021.
On October 19, 2021, the Company dismissed Boies
Schiller Flexner LLP (“Boies”) and Richards, Layton & Finger P.A.(“Richards Layton”) as counsel to the Company
in connection with the Delaware Matter, and the Shareholder LLCs dismissed their counsel in connection with the Delaware Matter. Later
on October 19, 2021, each of Boies, Richards Layton and counsel to the Shareholder LLCs filed with the Delaware Court of Chancery motions
to withdraw as counsel to their respective clients in the Delaware Matter.
On October 19, Dr. Laster’s counsel, on behalf
of Dr. Laster, sent another counterproposal to the Executive Committee’s counsel via email, pursuant to which (i) within one hour
after the final execution of a binding letter agreement by all parties to the Delaware Matter, (A) the Shareholder LLCs would instruct
the Company’s transfer agent to transfer the Disputed Shares to Dr. Laster directly (including any applicable share certificates)
and within one business day of receiving the requisite confirmation from the transfer agent of such transfer, the Company and the Shareholder
LLCs would confirm that Dr. Laster is the record owner of the Disputed Shares, (B) the Shareholder LLCs would grant Dr. Laster an irrevocable
proxy to vote the Disputed Shares at the Annual Meeting, (C) the Company would issue (or cause the Company’s transfer agent to issue)
to each of Dr. Laster’s daughters one or more share certificates for the shares that were owned by each of Dr. Laster’s daughters
and (D) the Company would provide confirmation that it had initiated a wire transfer to Dr. Laster for $1,650,000, which payment would
settle any potential claims for fees, costs or expenses related to the Delaware Matter and would be jointly and severally guaranteed in
writing by Ira Greenspan and Joshua Lamstein, (ii) immediately upon satisfaction of the conditions set forth in (A)-(D) above, the Company,
Dr. Laster and the Shareholder LLCs would cease all discovery and send a joint letter to the Delaware Court of Chancery in connection
with the Delaware Matter requesting that the Delaware Court of Chancery dismiss the Delaware Matter with prejudice without requiring the
parties to engage in any further discovery, (iii) with respect to the shares of Common Stock owned by Dr. Laster, within three trading
days after the final execution of a binding letter agreement for a settlement by all parties to the Delaware Matter, the Company would
release the shares and Dr. Laster from any lock-up agreements and transfer restrictions, and would do the same with respect to any shares
of Common Stock owned by Dr. Laster’s daughters, (iv) the Company would adjourn the Annual Meeting (currently scheduled for November
5, 2021) until a later time and date, as determined by the Company, which time would be prior to 12:00 p.m., Eastern time, and which date
would be November 8, 9, 10 or 11, 2021, and (v) the Company would accept any proxies with respect to all of Dr. Laster’s shares
of Common Stock that are submitted by Dr. Laster at the Annual Meeting and such proxies would be voted in accordance with the instructions
provided by Dr. Laster in such proxies. In view of the fact that Dr. Laster's counterproposal continued to seek relief beyond the relief
he would have been entitled to receive in the Delaware Matter, the Company did not make a counterproposal to Dr. Laster’s latest
proposal.
On October 20, 2021, the Executive Committee’s
counsel, on behalf of the Company, contacted Dr. Laster’s counsel via email and offered to have a frank and open discussion regarding
a possible settlement to the Delaware Matter and to provide Dr. Laster and Dr. Laster’s outside counsel with confidential, material
non-public information relating to the Company, subject to agreement by all recipients to keep such information confidential and to refrain
from trading the Company’s securities until such information has become public or stale (which would happen no later than the Annual
Meeting).
Later on October 20, 2021, Dr. Laster’s counsel
informed the Executive Committee’s counsel that although they were willing to engage in further discussions regarding a possible
settlement to the Delaware Matter, Dr. Laster and his counsel were not prepared to receive material non-public information and would not
agree to the confidentiality and trading restrictions that the Executive Committee’s counsel had proposed. Since such time, the
Company and Dr. Laster have not engaged in substantive settlement discussions.
Also on October 20, 2021, the Delaware Court
of Chancery granted the motion by Boies, Richards Layton and counsel to the Shareholder LLCs to withdraw as counsel to their
respective clients in connection with the Delaware Matter, except that the Delaware Court of Chancery permitted such counsel to
remain as counsel for 24 hours for the limited purpose of facilitating production of discovery material in connection with
the Delaware Matter. Also on such date, the Delaware Court of Chancery ordered the Company and the Shareholder LLCs to obtain new
counsel by October 22, 2021.
On October 21, 2021, the Company and the Shareholder
LLCs made a partial production of the documents requested in discovery in connection with the Delaware Matter. Also on October 21, 2021,
the Company and the Shareholder LLCs sent a letter to the Delaware Court of Chancery, advising the Court that they had on multiple occasions
sought to resolve the Delaware Matter by providing Dr. Laster with essentially all the relief he was seeking and accordingly that the
Company and the Shareholder LLCs believed that further discovery was an unnecessary burden on the parties and on the Delaware Court of
Chancery. The Company advised the Court that the Company did not have sufficient capital resources to bear the cost of
continued expedited litigation while at the same time to continue the development of a potentially life-saving cancer drug. The Company
further advised the Delaware Court of Chancery that ongoing litigation will have a material adverse effect on the Company’s ability
to arrange necessary additional financing and that there can be no assurance that the absence of such additional financing will not have
a material adverse effect on the Company’s business. The letter is described in further detail in the section below entitled “Involvement
in Certain Legal Proceedings.”
On October 22, 2021, the Company advised the
Delaware Court of Chancery that the Company was working diligently and in good faith to comply with the court’s order to
retain new Delaware counsel but that, given the complexity of the case, the accelerated timeline for the proceedings, the short time
frame for obtaining new Delaware counsel and the existing resource constraints of Delaware law firms with which the Company had
spoken, the Company had not yet, as of such date, retained new Delaware counsel. Since October 22, 2021, the Company has continued
intensive and good faith efforts to retain new counsel in the Delaware Matter.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 26, 2021, a Special Committee
of the Board, upon the recommendation of the Audit Committee, approved an indemnification agreement (the “Indemnification
Agreement”), pursuant to which the Company has agreed to indemnify each of HCFP and its affiliates, including Ira Scott
Greenspan, Joshua Lamstein and Robert Gibson and entities under the common control of HCFP, Messrs. Greenspan, Lamstein or Gibson or
its other affiliates (collectively, the “Indemnified Parties”) from and against any losses, claims, damages or
liabilities, including reasonable attorney’s fees, suffered or incurred by the Indemnified Parties in connection with any
disputes, litigation or threatened litigation (whether existing prior to or commencing after the date of the Indemnification
Agreement) (i) involving Ashish Sanghrajka or Paul Hopper, each of whom is a member of the Board, and any of the Indemnified
Parties, (ii) involving Morris C. Laster, MD, including relating to Dr. Laster’s purported ownership of certain of the
Company’s shares of common stock and (iii) arising or resulting from any Indemnified Party’s affiliation or involvement
with the Company, including in connection with the provision of additional services beyond those initially contemplated under the
management services agreement between the Company and HCFP, regardless of whether such involvement or affiliation was caused by
virtue of the fact that the Indemnified Party was acting as an officer of the Company and, in each case contemplated by this clause
(iii), subject to the limitations contained in the Company’s Certificate of Incorporation and the Delaware General Corporation
Law. The Indemnification Agreement also provides that the Company will advance expenses to any Indemnified Party, including legal
fees, incurred by such Indemnified Party in connection with any litigation or proceeding to which such Indemnified Party is entitled
to indemnification under the Indemnification Agreement. The foregoing summary of the Indemnification Agreement is qualified in its
entirety by reference to the Indemnification Agreement, a copy of which was filed as Exhibit 10.21 to the Company’s Current
Report on Form 8-K filed on September 30, 2021.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
In accordance with the Stipulation, on September
25, 2021, the Company withdrew the interpleader action in the United States District Court for the Southern District of New York that
was described in further detail in the Definitive Proxy Statement.
On September 27, 2021, the Delaware Court of Chancery
approved the Stipulation entered into among the Company, the Shareholder LLCs and Dr. Laster in connection with the Delaware Matter, pursuant
to which (i) the Company agreed to voluntarily dismiss the interpleader lawsuit that it filed in the United States District Court for
the Southern District of New York, (ii) Dr. Laster agreed to withdraw his motion to compel, motion to expedite and motion for a preliminary
injunction in the Delaware Matter, (iii) the parties agreed that the Company would convene, and then immediately adjourn, the Company’s
scheduled October 8, 2021 Annual Meeting such that the Annual Meeting will be held and the vote on the items of business to be considered
at the Annual Meeting will be taken no earlier than 14 days and no later than 30 days after a decision on the merits or a final settlement
between the parties, and the record date for the Annual Meeting will remain August 16, 2021, (iv) the parties agreed to cause all shares
of common stock held by them to be present in person or by proxy at the Annual Meeting and any adjournments thereof exclusively for purposes
of establishing a quorum at the Annual Meeting and (v) the parties agreed to an expedited timeline for resolving the Delaware Matter with
a trial intended to be held in December 2021.
On October 13, 2021, the Shareholder LLCs filed separate
counterclaims against Dr. Laster in connection with the Delaware Matter, (i) alleging that Dr. Laster, as a managing member of the Shareholder
LLCs, breached his fiduciary duties to the Shareholder LLCs, breached the express provisions and the implied covenant of good faith and
fair dealing contained in the operating agreements of the Shareholder LLCs and (ii) seeking a declaratory judgment that the Shareholder
LLCs legally own the Disputed Shares.
As described in the section above entitled “Background
of the Solicitation”, on October 15, 2021, in response to a motion to compel made by Dr. Laster relating to the alleged failure
of the Company to comply fully with Dr. Laster’s initial discovery requests, the Delaware Court of Chancery ordered the Company
and the Shareholder LLCs to produce, on a more expedited basis than was contemplated by the Stipulation, all documents requested by Dr.
Laster by no later than the close of business on October 21, 2021, less than one week following such hearing.
From October 12, 2021 until October 19, 2021, the
Company and the Shareholder LLCs engaged in settlement discussions with Dr. Laster, through their respective counsels, to attempt to resolve
the Delaware Matter, as described in further detail above in the section entitled “Background of the Solicitation.”
On October 19, 2021, the Company dismissed Boies
and Richards Layton as counsel to the Company in connection with the Delaware Matter and the Shareholder LLCs dismissed their counsel
in connection with the Delaware Matter. On October 20, 2021, the Delaware Court of Chancery granted the motion by Boies, Richards Layton
and counsel to the Shareholder LLC to withdraw as counsel to their respective clients in connection with the Delaware Matter, except that
the Delaware Court of Chancery permitted such counsel to remain as counsel for 24 hours for the limited purpose of producing discovery
material in connection with the Delaware Matter. Also on such date, the Delaware Court of Chancery ordered the Company and the Shareholder
LLCs to obtain new counsel by October 22, 2021.
On October 21, 2021, the Company and the
Shareholder LLCs sent a letter to the Delaware Court of Chancery advising the Court that they had on multiple occasions sought to
resolve the Delaware Matter by providing Dr. Laster with essentially all the relief he was seeking and accordingly that the Company
and the Shareholder LLCs believed that further discovery was an unnecessary burden on the parties and on the Delaware Court of
Chancery. In particular, the Company and the Shareholder LLCs notified the Court of the October 17th settlement proposal made to Dr.
Laster and that Dr. Laster had been unwilling to agree to it, noting (i) that the Shareholder LLCs had offered to transfer ownership
of the Disputed Shares to Dr. Laster and (ii) that the Company had offered to reimburse Dr. Laster for his reasonable and documented
expenses incurred in connection with the Delaware Matter and abide by the decision of the Delaware Court of Chancery as to the
amount of such reimbursement. In the letter, the Company also advised the Delaware Court of Chancery that the Company
does not have sufficient capital resources to bear the cost of continued expedited litigation while at the same time to continue the
development of a potentially life-saving cancer drug. The Company further advised the Delaware Court of Chancery that ongoing
litigation will have a material adverse effect on the Company’s ability to arrange necessary additional financing and that
there can be no assurance that the absence of such additional financing will not have a material adverse effect on the
Company’s business. The Company requested that they be permitted to have a conference to resolve the Delaware Matter within
two days of their engaging new counsel in connection with the Delaware Matter. The Company also agreed that if the Delaware Court of
Chancery determined that document production should still be made despite the apparent resolution of the Delaware Matter offered by
the Company and the Shareholder LLCs in their settlement proposal, that the Company and the Shareholder LLCs would undertake to
begin such production within two days of the requested conference.
On October 22, 2021, the Company advised the
Delaware Court of Chancery that the Company was working diligently and in good faith to comply with the court’s order to
retain new Delaware counsel but that, given the complexity of the case, the accelerated timeline for the proceedings, the short time
frame for obtaining new Delaware counsel and the existing resource constraints of Delaware law firms with which the Company had
spoken, the Company had not yet, as of such date, retained new Delaware counsel. Since October 22, 2021, the Company has continued
intensive and good faith efforts to retain new counsel in the Delaware Matter.
On October 3, 2021, the Company filed a lawsuit (the
“SDNY Lawsuit”) in the United States District Court for the Southern District of New York against Paul Hopper, a current member
of the Board of the Company, Ashish Sanghrajka, a current member of the Board of the Company and former President and Chief Financial
Officer of the Company, and Kilinwata Investments Pty Ltd., an entity through which Mr. Hopper entered an agreement with the Company to
provide management services. The lawsuit alleges that Mr. Hopper and Mr. Sanghrajka breached fiduciary duties and contractual obligations
owed to the Company and violated Section 10(b) of the Exchange Act and SEC Rule 10b-5(b), among other claims, and asks for a declaratory
judgment that Mr. Hopper and Mr. Sanghrajka are not entitled to indemnification or advancement from the Company. On October 20, 2021,
counsel for Mr. Hopper and Mr. Sanghrajka sent a letter to the Company’s counsel demanding indemnification and advancement of expenses
in connection with the SDNY Lawsuit.