October 2, 2017
By Alex Keown, BioSpace.com Breaking News Staff
LOS ANGELES – Patrick Soon-Shiong is facing a new critic – the iconic singer Cher who is accusing the billionaire doctor of stock fraud.
Cher filed a lawsuit against Soon-Shiong alleging that he “duped” her into selling shares of Florida-based Altor BioScience at a below-market cost. In January 2016, Cher sold her shares back to the company for $1.50 each. The sale netted her $450,000.
Soon-Shiong, dubbed the world’s richest doctor, acquired the outstanding company shares for about $15 million, the Los Angeles Times reported.
In her lawsuit filed last week, Cher contends that the company did not tell her, along with other investors, that some of the company’s drugs were showing clinical promise in treating AIDS and HIV. The Times noted that other shareholders have also filed lawsuits against Soon-Shiong and Altor. Cher’s lawsuit alleged “fraudulent concealment and breach of fiduciary duty,” the Times said. Cher has held a stake in Altor since 2013.
Soon-Shiong’s attorney called Cher’s lawsuit frivolous and without merit. A company official told the Times in a statement that Cher was “under no duress” to sell her shares and her decision was “completely discretionary.”
Soon-Shiong became involved in the acquisition of outstanding shares shortly after several minority holders in Altor opted to sell their shares back to the company, according to the report. In the early part of the year, company officials were encouraging Soon-Shiong to buy out those minority holders, Fred Middleton, a vice chairman of Altor’s board, told the Times. Soon-Shiong agreed to the request and acquired the shares, including those owned by Cher, for $1.50 each. The Times said Soon-Shiong who already had a stake in the company, acquired the shares of those looking to sell them back for about $15 million.
In June, Soon-Shiong’s NantCell, Inc. a member of his Nantworks family, acquired Altor for $290 million, about $2 per share. Soon-Shiong’s move to acquire Altor has also been met with another lawsuit. Attorneys Boyden Gray and Adam Waldman, who both served on the Altor board of directors, filed a lawsuit in June alleging that Soon-Shiong was getting a “sweetheart” deal that “comes at the expense of the minority shareholders.” The attorneys said the $290 million deal was lower than its December 2016 valuation of $309 million, HealthcareIT news reported. Cher’s lawsuit, which is separate from Boyden and Waldman’s, contends that Altor is worth approximately $1 billion.
Soon-Shiong’s acquisition came a month after Altor announced it received Fast Track Designation from the U.S. Food and Drug Administration for its investigational interleukin-15 agonist complex, ALT-803, in combination with bacillus Calmette-Guérin for the treatment of patients with non-muscle invasive bladder cancer.
The acquisition of Altor is not the only criticism that Soon-Shiong has faced this year. The billionaire doctor has faced allegations a charitable donation he provided the University of Utah was self-dealing in order to benefit one of his companies. According to reports, Soon-Shiong’s $12 million donation to the university was written so that his company, NantHealth Inc., received $10 million in order to conduct the research, as well as “reams of patient data” that allowed the company to inflate numbers provided to investors regarding its GPS Cancer product. Soon-Shiong has decried that report.
