An Angry investor has filed a proposed securities class action lawsuit in Delaware Chancery Court on July 07, 2009, on behalf of current investors of Cell Genesys, Inc. (Public, NASDAQ:CEGE), who purchased their shares before June 30, 2009, alleged breaches of fiduciary duty by the board of directors of Cell Genesys, Inc. (Public, NASDAQ:CEGE).
According to the complaint challenging the fairness of the buyout by BioSante Pharmaceuticals the plaintiff alleges breaches of fiduciary duty and other violations of state law by the board of directors of Cell Genesys, Inc in connection with their attempt to sell Cell Genesys to BioSante Pharmaceuticals, Inc. (Nasdaq:BPAX). The plaintiffs say that the buyout price does not represent the true value .
BioSante Pharmaceuticals, Inc. (NASDAQ:BPAX) and Cell Genesys (NASDAQ:CEGE) announced on June 30, 2009 that they have entered into a definitive merger agreement by which the companies will merge in an all-stock transaction, with BioSante Pharmaceuticals, Inc as the surviving company. Under the terms of the proposed merger agreement, Cell Genesys stockholders will receive 0.1615 of a share of BioSante Pharmaceuticals, Inc common stock (NASDAQ:BPAX) for each share of Cell Genesys common stock (NASDAQ:CEGE) they own. Based on BioSante's closing price on June 29, 2009, the deal is presently worth $0.347 a share for Cell Genesys shareholders, or a total consideration of approximately $38 million, and a premium of 12 percent to the closing sale price of Cell Genesys’ common stock on that date.
The plaintiffs asked judge to stop the buyout under the given conditions and award damages.
According to a previous investigation “deal appears to be unfair, in part, given the fact that since April 2009, Cell Genesys stock has traded at or above the offer price and as recently as May 2008 traded at over $0.68 a share. Moreover, the 200 day Moving Average on BioSante shares is only $1.75.” The other investigation concerned “whether the Cell Genesys Board of Directors breached their fiduciary duties to Cell Genesys shareholders given that (i) the Company's shares traded at $0.77 as recently as May 7, 2009; (ii) at least one analysts has set a $2.00 price target for Cell Genesys shares; (iii) the average price of BioSante shares for the six-month period prior to the merger announcement is only $1.78; (iv) Cell Genesys' CEO and a director will have positions in the post-merger entity; and (v) the Cell Genesys Board of Directors agreed to a strict no solicitation provision and agreed to pay a $1,000,000 termination fee that will all but ensure no superior offer will ever be forthcoming”.
Cell Genesys, Inc., located in South San Francisco, California, is a biotechnology company focused on the development and commercialization of biological therapies for patients with cancer. Cell Genesys, Inc. reported Total Revenue of $1.38million and Total Assets of $273.39million in 2007 and Total Revenue of $94.57million in 2008. Shares of Cell Genesys, Inc. (NASDAQ: CEGE) were down from a 52weekHigh of $.350 per share, over $4.50 per share in 2008 and over $5.40 per share in 2007.