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Item 3. Legal Proceedings

2024-03-12 compared with 2023-03-31 · 34 added, 61 removed, 22 unchanged (81% of the section changed)

Legal Proceedings.

Bioventus stockholder litigation

On January 12, 2023, the Company and certain of its current and former directors and officers were named as defendants in a putative class action lawsuit filed in the Middle District of North Carolina, Ciarciello v.

Bioventus, Inc.

Bioventus, Inc., No.

1:23– CV – 00032-CCE-JEP (M.D.N.C.

1 unchanged sentence

The complaint seeks damages in an unspecified amount.

The case is in its early stages, and a lead plaintiff has not yet been appointed.

The Company believes the claims alleged lack merit and intends to file a motion to dismiss.

The outcome of the litigation is not presently determinable, and any loss is neither probable nor reasonable estimable.

On June 15, 2022, the Company, through its subsidiary Bioness, filed a lawsuit in the United States District Court for the Eastern District of Virginia against Aretech, LLC (“Aretech”) alleging infringement by Aretech of various patents related to our Vector Gait and Safety Support System ® .

On August 8, 2022, Aretech filed an answer to the lawsuit denying infringement and asserting various affirmative defenses and counterclaims to the Bioness complaint.

Bioness filed a motion to dismiss the defendant’s counterclaims on September 28, 2022.

In response to Bioness’ motion to dismiss the counterclaims, on October 19, 2022, Aretech filed an amended answer and counterclaims.

On November 16, 2022, Bioness filed a partial motion to dismiss certain of the amended counterclaims.

On January 23, 2023, the court granted-in-part Bioness’s motion dismissing Aretech’s antitrust and inventorship-related counterclaims, but allowed certain of Aretech’s counterclaims to proceed.

The parties are presently finalizing a joint discovery plan and timeline.

On March 23, 2023 the parties entered into a settlement and license agreement that provides for a payment by Aretech to us of $1.5 million to resolve all claims in the litigation.

The agreement also provides cross licenses to the parties for certain of their respective patents relevant to the claims asserted in the litigation.

On April 12, 2023, the Court appointed Wayne County Employees’ Retirement System as lead plaintiff.

The plaintiff’s amended consolidated complaint was filed with the Court on June 12, 2023.

On July 17, 2023, the defendants filed a motion to dismiss the complaint raising a number of legal and factual deficiencies with the amended consolidated complaint.

In response to the defendants’ motion to dismiss, the lead plaintiff filed a second amended complaint on July 31, 2023.

The defendants moved to dismiss the second amended complaint on August 21, 2023, which the Court granted in part and denied in part on November 6, 2023.

The Court dismissed the plaintiff’s Securities Act claims, but allowed the plaintiff’s Exchange Act claims to proceed into discovery.

On October 4, 2023, certain of the Company’s current and former directors and officers were named as defendants in a derivative shareholder lawsuit (in which the Company was a nominal defendant) filed in the United States District Court for the District of Delaware, Grogan, on behalf of Bioventus Inc., v.

Reali, et.al., No.

1:23-CV-01099-RGA (D.

The complaint asserts violations of Section 14(a) of the Exchange Act, breaches of fiduciary duties and related state law claims, and a claim for contribution, and generally alleges the same purported misconduct as alleged in the Ciarciello case.

On January 12, 2024, the Court agreed to stay this case pending resolution of the Ciarciello case.

On February 9, 2024, another plaintiff filed a derivative shareholder lawsuit against certain of the Company’s current and former directors and officers (in which the Company is a nominal defendant) filed in the United States District Court for the District of Delaware, Sanderson, on behalf of Bioventus Inc., v.

Reali, et.al., No.

1:24-cv-00180-RGA (D.

Like the Grogan case, this case asserts violations of Section 10(b) of the Exchange Act, breaches of fiduciary duties and related state law claims, and a claim for contribution, and generally alleges the same purported misconduct as alleged in the Ciarciello case.

The parties are in discussions to consolidate the two derivative matters and stay them on terms similar to those entered in the Grogan case.

The Company believes the claims alleged in each of the above matters lack merit and intends to defend itself vigorously.

The outcome of the these matters is not presently determinable, and any loss is neither probable nor reasonably estimable.

Misonix former distributor litigation

On March 23, 2017, Misonix’s former distributor in China, Cicel (Beijing) Science & Technology Co., Ltd., filed a lawsuit against Misonix and certain of its officers and directors in the United States District Court for the Eastern District of New York.

6 unchanged sentences

Cicel’s motion for reconsideration of the court’s summary judgment ruling in Misonix’s favor was dismissed by the Court on April 29, 2022.

On July 18, 2022, Cicel voluntarily dismissed the remaining claim for trade secret theft and later filed an appeal in the United States Court of Appeals for the Second Circuit.

We believe that we have various legal and factual defenses to these claims and intend to vigorously defend the appeal of the lower court’s summary judgement rulings in our favor.

Prior to the closing of our acquisition of Bioness, Bioness had been named as a defendant in a lawsuit, for which we are indemnified under the indemnification provisions contained in the Bioness Merger Agreement.

The case relates to an action brought in February 2021 in the Delaware State Court of Chancery by a former minority shareholder and director of Bioness, seeking a temporary restraining order contesting our acquisition of Bioness.

While the complaint to block the Bioness acquisition was dismissed by the court, a separate action was brought against the Company under the indemnification provisions of the Bioness Certificate of Incorporation to recover approximately $3.0 million in attorney fees and other expenses incurred by the director and shareholder in connection with the matter.

On August 19, 2021, the court issued a ruling granting, in part, plaintiff’s motion for summary judgment, awarding plaintiff attorney’s fees and related expenses incurred in connection with performance of the plaintiff’s directorial duties, and denying fees and expenses incurred in a non-director capacity.

In its ruling, the court’s order also directed the parties to agree upon a process that was to govern the payment of and challenges to plaintiff’s payment requests and required Bioness to pay 50% of the demanded amount into escrow if more than 50% of the total invoiced amount was in dispute.

Pursuant to the court’s order, Bioness paid approximately $1.3 million into escrow.

On November 1, 2022, at a hearing before Delaware State Court of Chancery, the court ruled in favor of the former Bioness director awarding attorney’s fees in connection with the underlying pre-merger litigation and the advancement action in the amounts claimed, less approximately $50,000.

On December 23, 2022, Bioness and the plaintiff entered into a settlement agreement resolving the matter for the aggregate sum of $2.5 million payable to the plaintiff.

The settlement was satisfied by releasing the $1.3 million previously paid by Bioness and held in escrow and by an additional payment of $1.2 million.

Pursuant to the indemnification obligations under the Bioness Merger Agreement, this subsequent payment was made on behalf of Bioness on December 28.

2022, by the selling majority shareholder under that agreement.

Bioness subsequently recovered the $1.3 million paid into escrow from the selling Bioness shareholders pursuant an indemnification request under the Bioness Merger Agreement.

An order dismissing the case was entered by the court on January 27, 2023.

On February 8, 2022, the above referenced minority shareholder of Bioness filed another action in the Delaware State Court of Chancery in connection with our acquisition of Bioness.

On July 18, 2022, Cicel voluntarily dismissed the remaining claim for trade secret theft and later filed an appeal to the United States Court of Appeals for the Second Circuit.

On March 6, 2024, the Second Circuit Court of Appeals issued its ruling affirming the lower Court’s summary judgement in favor of Misonix in all respects.

Bioness stockholder litigation

On February 8, 2022, a minority shareholder of Bioness filed an action in the Delaware State Court of Chancery in connection with the Company’s acquisition of Bioness.

Teuza, a Fairchild Technology Venture Ltd.

2022-0130 -SG.

This action names the former Bioness directors, the Alfred E.

Mann Trust (Trust), which was the former majority shareholder of Bioness, the trustees of the Trust and Bioventus as defendants.

The complaint alleges, among other things, that the individual directors, the Trust, and the trustees breached their fiduciary duty to the plaintiff in connection with their consideration and approval of our transaction.

The complaint also alleges that we aided and abetted the other defendants in breaching their fiduciary duties to the plaintiff and that we breached the Merger Agreement by failing to pay the plaintiff its pro rata share of the merger consideration.

We believe that we are indemnified under the indemnification provisions contained in the Bioness Merger Agreement for these claims.

On July 20, 2022, we filed a motion to dismiss all claims made against us on various grounds, as did all the other named defendants in the suit.

A hearing on the Bioness and other defendant’s motions was held before the Court of Chancery on January 19, 2023.

The court has not yet issued its ruling on any of these motions.

We believe that there are various legal and factual defenses to the claims plaintiff made against us and intend to defend ourselves vigorously.

On September 15, 2021, a purported stockholder of Misonix filed an action in the United States District Court for the Eastern District of New York, captioned Stein v.

Misonix, Inc., et al., Case No.

2:21-cv-05127 (E.D.N.Y.) (the Stein Complaint).

The Stein Complaint named Misonix and members of its board of directors as defendants.

The Stein Complaint was dismissed on April 6, 2022.

On September 16, 2021, a purported stockholder of Misonix filed an action in the United States District Court for the Southern District of New York, captioned Ciccotelli v.

Misonix, Inc.

et al., Case No.

1:21-cv-07773 (S.D.N.Y.) (the Ciccotelli Complaint) against Misonix, members of its board of directors, the Company, and its subsidiaries, Merger Sub I and Merger Sub II, as defendants.

Plaintiff voluntarily dismissed the Ciccotelli Complaint on November 10, 2021.

On October 12, 2021, another purported stockholder of Misonix filed an action in the United States District Court for the Eastern District of New York, captioned Rubin v.

Misonix, Inc.

et al., Case No.

1:21-cv-05672 (S.D.N.Y.) (the Rubin Complaint) and on October 15, 2021, another purported stockholder of Misonix filed an action in the United States District Court for the Southern District of New York, captioned Taylor v.

Misonix, Inc.

et al., Case No.

1:21-cv-08513 (S.D.N.Y.) (the Taylor Complaint).

The Rubin Complaint and the Taylor Complaint name Misonix and members of its board of directors as defendants.

Plaintiffs voluntarily dismissed the Rubin and Taylor Complaints on January 21, 2022 and February 18, 2022, respectively.

Each of the complaints relating to the Misonix Acquisition asserted claims under Section 14(a) and Section 20(a) of the Exchange Act and SEC Rule 14a-9, challenging the adequacy of disclosures in the proxy statement/prospectus filed with the SEC on September 8, 2021 or the Definitive Proxy Statement filed with the SEC on September 24, 2021, regarding Misonix and/or Bioventus’ projections and J.P.

Morgan’s financial analysis.

The complaints sought, among other relief, (i) injunctive relief preventing the parties from proceeding with the merger;

(ii) rescission in the event that the merger is consummated;

and (iii) an award of costs, including attorneys’ and experts’ fees.

The complaint also alleges that the Company aided and abetted the other defendants in breaching their fiduciary duties to the plaintiff and that the Company breached the Merger Agreement by failing to pay the plaintiff its pro rata share of the merger consideration.

The Company believes that it is indemnified under the indemnification provisions contained in the Bioness Merger Agreement for these claims.

On July 20, 2022, the Company filed a motion to dismiss all claims made against it on various grounds, as did all the other named defendants in the suit.

A hearing on Bioness’ and other the defendant’s motions was held before the Court of Chancery on January 19, 2023.

On April 27, 2023, the Court issued an order which, among other things, dismissed Bioventus from the case.

Please refer to Part II, Item 8.

Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 12.

Commitments and contingencies of this Annual Report for information pertaining to legal proceedings.

Commitments and contingencies of this Annual Report for additional information pertaining to legal proceedings.

In addition, we are party to legal proceedings incidental to our business.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings