Item 1. Legal Proceedings
Item 1. Legal Proceedings.
Securities Class Action Litigation .
On July 26, 2022 and July 28, 2022, securities class action complaints were filed by purported stockholders of ours in the United States
District Court for the Central District of California against us and certain of our current and former officers and directors. The complaints
allege, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended,
and Rule 10b-5 thereunder, by making false and misleading statements and omissions of material fact in connection with the Company’s
relationship with Serhat Gümrükcü and its commercial prospects. The complaints seek unspecified damages, interest, fees,
and costs. The defendants have not yet responded to the complaints.
Federal Derivative Litigation .
On September 22, 2022, Samuel E. Koenig filed a shareholder derivative action in the United States District Court for the Central District
of California. On January 19, 2023, John Solak filed a substantially similar shareholder derivative action in the United States District
Court for the District of Delaware. Both derivative actions recite similar underlying facts as those alleged in the Securities Class
Action Litigation. The actions, filed on behalf of the Company, name Serhat Gümrükcü and certain of the Company’s
current and former directors as defendants. The actions also name the Company as a nominal defendant. The actions allege violations of
Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and also set out claims for breach of fiduciary duty, contribution and
indemnification, aiding and abetting, and gross mismanagement. Plaintiffs do not quantify any alleged injury, but seek damages, disgorgement,
restitution, and other costs and expenses. On January 24, 2023, the United States District Court for the Central District of California
stayed the Koenig matter pending resolution of the defendants’ anticipated motion to dismiss in the Securities Class Action Litigation.
The defendants have not yet responded to either complaint.
State Derivative Litigation .
On October 20, 2022, Susan Midler filed a shareholder derivative action in the Superior Court of California, Los Angeles County, reciting
similar underlying facts as those alleged in the Securities Class Action Litigation. The action, filed on behalf of the Company, names
Serhat Gümrükcü and certain of the Company’s current and former directors as defendants. The action also names the
Company as a nominal defendant. The action sets out claims for breaches of fiduciary duty, contribution and indemnification, aiding and
abetting, and gross mismanagement. Plaintiff does not quantify any alleged injury, but seeks damages, disgorgement, restitution, and
other costs and expenses. The defendants have not yet responded to the complaint.
On October 21, 2022, the Company
filed a Complaint in the Superior Court of the State of California for the County of Los Angeles against Serhat Gümrükcü,
William Anderson Wittekind, G Tech Bio LLC, SG & AW Holdings LLC, and Seraph Research Institute. The Complaint alleges that the defendants
engaged in a “concerted, deliberate scheme to alter, falsify, and misrepresent to the Company the results of multiple studies supporting
its [Hepatitis B] and SARS-CoV-2/influenza pipelines.” Specifically, “Defendants manipulated negative results to reflect
positive outcomes from various studies, and even fabricated studies out of whole cloth.” As a result of the defendants’ conduct,
the Company claims that it “paid approximately $25 million to Defendants and third-parties that it would not otherwise have paid.”
The defendants have not yet answered the allegations set forth in the Company’s Complaint.
On December 28, 2022, the Company
received a demand letter on behalf of Weird Science LLC (“Weird Science”), William Anderson Wittekind, the William Anderson
Wittekind 2020 Annuity Trust, the William Anderson Wittekind 2021 Annuity Trust, the Dybul 2020 Angel Annuity Trust, and the Ty Mabry
2021 Annuity Trust alleging that the Company breached the February 16, 2018 Investor Rights Agreement between the Company, Weird Science,
and RS Group ApS. Specifically, the demand letter alleges that the Company “breached its obligations under the Investor Rights
Agreement to provide the requisite thirty days’ notice” to Holders of Registrable Securities in connection with SEC Form
S-3 filings on July 13, 2020 and February 11, 2022 and demands over $64 million in damages. The Company denies these allegations and
intends to vigorously defend against this claim.
On March 1, 2021, former Enochian
BioSciences Chief Financial Officer, Robert Wolfe and his company, Crossfield, Inc., filed a Complaint in the U.S. District Court for
the District of Vermont against the Company, Enochian BioSciences Denmark ApS, and certain directors and officers. In the Complaint,
Mr. Wolfe and Crossfield, Inc. asserted claims for abuse of process and malicious prosecution, alleging, inter alia, that the Company
lacked probable cause to file and prosecute an earlier action, and sought millions of dollars of compensatory damages, as well as punitive
damages. The allegations in the Complaint relate to an earlier action filed by the Company and Enochian BioSciences Denmark ApS in the
Vermont Superior Court, Orange Civil Division. On March 3, 2022, the court partially granted the Company’s motion to dismiss, dismissing
the abuse of process claim against all defendants and all claims against Mark Dybul and Henrik Grønfeldt-Sørensen. On November
29, 2022, the Company filed a motion for summary judgment with respect to the sole remaining claim of malicious prosecution. The Company
denies the allegations set forth in the Complaint and will continue to vigorously defend against the remaining claim.
34
Item 1A. Risk Factors.
Risk factors that may affect our
business and financial results are discussed within Item 1A ”Risk Factors” of our annual report for the fiscal year
ended June 30, 2022, on Form 10-K (“2022 Form 10-K”) filed with the SEC on February 27, 2023. There have been no
material changes to the disclosures relating to this item from those set forth in our 2022 Form 10-K.
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.