AIM ImmunoTech Inc (NYSE:AIM) said the Delaware Court of Chancery has denied an activist investor’s bid to put two nominees on its board during the November 3 annual meeting of shareholders.
In its decision, the court denied Jonathan Jorgl's motion for a mandatory preliminary injunction that sought to require the AIM board of directors to accept his director nominations and include his nominees on a universal proxy card.
On October 19, Activist Group member Jorgl issued an investor presentation, which urged shareholders to vote for his director nominees, Robert L Chioini and Michael Rice. AIM responded with a letter to shareholders on Oct. 26 against Jorgl’s campaign.
AIM CEO and vice chair of the board Thomas K Equels said this is a victory for its shareholders.
READ: AIM ImmunoTech receives regulatory go-ahead for Phase 2 trial of investigational drug Ampligen for patients with post-COVID conditions
"The court has vindicated the board's determination that the Activist Group includes individuals with deeply chequered pasts and was formed with the purpose of taking over the board while deliberately hiding the identities, criminal records and motivations of those involved from the rest of our shareholders,” Equels said in a statement.
Ocala, Florida-based AIM said its three-person board determined unanimously that Jorgl's nominations did not comply with the company's bylaws and are invalid, and that the court concluded Jorgl and his group "failed to show that (Jorgl's nomination) notice complied with the bylaws."
The biopharmaceutical company said it will ignore any nominations for directors made by Jorgl, and that no proxies or votes in favour of his purported nominees will be recognized or tabulated at the annual meeting.
In reaching its decision, the court recognized that Jorgl's nomination notice failed to disclose arrangements and understandings among a "web of individuals (working) together to bring Jorgl's nominations forward."
AIM said the bid to place Chioni and Rice on its board was orchestrated by Activist Group backers Franz Tudor, who has been convicted of insider trading, and Michael Xirinachs, who recently pled guilty to insider fraud. It also said that Jorgl owns 1,000 shares in AIM.
According to AIM, the court noted: "Other than describing a potential agreement for Chioini and Rice to reimburse certain costs, Jorgl did not mention any arrangements or understandings with Tudor or Xirinachs in his nomination notice... (T)he evidence put forward by (the board) indicates that Jorgl's notice was at best misleading."
Court documents note the “game of telephone” used by the activist group to nominate Chioini and Rice to the board, according to AIM.
"The evidence also indicates that Tudor's and Xirinachs's actions went beyond loose discussions about the nominations. Their actions appear purposefully directed toward a shared goal of taking control of the board. They were coordinated and constructed over a period of weeks," the court said in its decision.
Equels said the company can now hold its annual meeting and then move forward on the positive results in published data from cancer centres that it is seeing from clinical trials.
“We have already made significant progress in recent years, and especially over the past year and a half, repurposing our lead drug, Ampligen, into oncology, and we see significant important opportunities and milestones ahead,” Equels said, and urged shareholders to re-elect AIM’s current directors.
AIM ImmunoTech Inc (NYSE:AIM). is an immuno-pharma company focused on the research and development of therapeutics to treat multiple types of cancers, immune disorders, and viral diseases, including COVID-19. The company's lead product, Ampligen (rintatolimod), is an immuno-modulator with broad-spectrum activity being developed for cancers, viral diseases and disorders of the immune system.
Contact the author at susie@proactiveinvestors.com