Organovo Holdings Inc V Simeon Research LLC Et Al - Complaint Filed 04 21 14

Organovo Holdings, Inc. v. Simeon Research, LLC, et al., C.A. No. 9563-, compl. (Del. Ch. Apr.
21, 2014)
EFiled: Apr 21 2014 05:43P Transaction ID 55330839 Case No. 9563-
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE ORGANOVO HOLDINGS, INC., a Delaware Corporation, Plaintiff, CA. No. SIMEON RESEARCH, LLC, a Delaware limited liability company, and Does 1 through 25, inclusive, Defendants. VERIFIED COMPLAINT Plaintiff Organovo Holdings, Inc. ("Plaintiff), by and through its counsel, hereby brings this Veried Complaint against Defendant Simeon Research, LLC, and unnamed Does 1-25 (referred to herein, collectively, as "Defendant"), and in support thereof alleges as follows: NATURE OF THE CASE 1. Defendant has undertaken a smear campaign against Plaintiff by reporting and disseminating to the public a series of false, misleading and inaccurate reports and statements regarding Plaintiffs viability and the viability of Plaintiffs products. Defendant's false, misleading and inaccurate reports were made for the purpose of injuring Plaintiff and reducing the value of Plaintiff as a
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www.chancerydaily.com
Organovo Holdings, Inc. v. Simeon Research, LLC, et al., C.A. No. 9563-, compl. (Del. Ch. Apr. 21, 2014)
company. Defendant may have also sought to injure Plaintiff for its own pecuniary gain in the form of deriving prots from "short selling" Plaintiffs securities by Defendant or others that would result from any decrease in Plaintiffs stock trading price. 2. Defendant's conduct has caused substantial injury to Plaintiff in the form of tarnished reputation, interference with Plaintiffs relationships with clients, vendors, and current and prospective investors, among others, and it will result in continued and irreparable harm to Plaintiff if it does not stop. Defendant's conduct therefore gives rise to claims for libel, libel per se, and intentional interference with prospective economic advantage. 3. As a result, Plaintiff seeks a nal order: (i) permanently enjoining Defendant from publishing or making any false and defamatory statements regarding Plaintiff; (ii) compelling Defendants to immediately remove all false and defamatory statements regarding Plaintiff from Defendant's website and any social media accounts maintained by Defendant; and (iii) awarding damages to compensate Plaintiff for Defendant's conduct. Plaintiff also seeks all such further relief at law or in equity to which it may be entitled.
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JURISDICTION AND VENUE 4. Plaintiff seeks, among other things, permanent injunctive relief. Therefore, this Court has jurisdiction over all causes of action asserted in this Complaint pursuant to 10 Del C. 341. 5. Plaintiff was incorporated in the State of Delaware in accordance with the Delaware General Corporation Law and remains an active corporation pursuant to the laws of the State of Delaware. Defendant was also incorporated in the State of Delaware in February 2014 and remains an active corporation. Accordingly, the Court has jurisdiction over all parties and all claims in this action. THE PARTIES 6. Plaintiff is a Delaware corporation with its principal place of business located at 6275 Nancy Ridge Drive, San Diego, CA 92121. Plaintiffs common stock trades on the New York Stock Exchange MKT ("NYSE") under the symbol "ONVO." Plaintiff designs and creates functional human tissues, with the goal of building living human tissues that function like native tissues. 7. Defendant is a Delaware limited liability company, with a designated agent for service of process, the Company Corporation, which is located in Wilmington, Delaware. Its principal place of business is unknown to Plaintiff. Defendant is purportedly an independent stock research rm which disseminates
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its research reports to the public at-large throughout Delaware and the United States. 8. Plaintiff is ignorant of the true names and capacities, whether individual, associate, partnership, corporate, or otherwise, of Defendants designated herein as Does 1 through 25, inclusive, and therefore sues those Defendants by these ctitious names. Plaintiff is informed and believes, and on that basis alleges, that Does 1 through 25, in some way unknown to Plaintiff, are responsible for the acts alleged in this Complaint, are the afliates, partners, coventurers, co-conspirators and/or aiders and abettors of Defendant, and have incurred liability to Plaintiff therefor. Plaintiff will amend this Complaint to allege the true names and capacities of Does 1 through 25 upon discovery thereof. FACTUAL BACKGROUND 9. The sole subsidiary and operating company of Plaintiff was founded in 2007. Plaintiff is in the business of designing and creating functional human tissues through use of its proprietary three-dimensional bio-printing technology. Plaintiff's goal is to improve the lives of individuals by building living human tissues that are proven to function like native tissues. 10. By creating three-dimensional tissues that accurately represent human biology, the following goals are achieved: (1) the creation of functional, three dimensional tissues that can be implanted or delivered into the human body to
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repair or replace damaged or diseased tissues; (2) assisting biopharmaceutical companies and academic medical centers to design, build, and validate more predictive in vitro tissues for disease modeling and toxicology; (3) providing researchers the opportunity to test drugs on functional human tissues before ever administering the drug to a living person; and (4) bridging the gulf between preclinical testing and clinical trials. 11. Starting in July 2013, Plaintiff entered the NYSE MKT under the symbol "ONVO" and its shares began to be publicly traded at that time. 12. Defendant's libelous campaign against Plaintiff started soon after that. In February 2014, Simeon Research, LLC formed for the apparent purpose of destroying Plaintiffs reputation and causing harm to Plaintiffs business. Indeed, Defendant undertook to appear to the public as a reputable equity research rm by creating an entity with the term "Research" in the name, referring to itself as involved in "long/short analytical equity research," purporting to undertake extensive inquiry into Organovo's operations, and issuing reports with a specic price target. Legitimate equity research rms do not attempt to hide or conceal the authors of their work, are typically afliated with an investment bank or seek to engage clients to receive ongoing research reports directly by subscription, and do not seek to hide the compensation they might receive as a result of issuing reports.
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13. Defendant's own documents of incorporation led with the Delaware Secretary of State are devoid of any information relating to Defendant's business address or acting principals. Rather, Defendant's incorporation documents comprise a single document, and identify only Defendant's agent for service of process, demonstrating the haste with which Defendant was formed as an entity for the sole purpose of exacting harm upon Plaintiff. 14. Next, Defendant rushed to put together a website, http://www.simeonresearch.com. The website lacks any contact information for Defendant's principals, and has no content other than links to two libelous reports discussed herein, relating to Plaintiff. 15. Shortly thereafter, Defendant posted its rst defamatory statements that were intended to damage and injure Plaintiff. On or about March 20, 2014, Defendant posted a report via its website entitled "Organovo: Dissecting the Fairy Tale - Full Report." (hereinafter the "March Report.") Defendant then circulated the March Report to investor websites. The March Report did not name an individual author and did not provide any method for contacting Defendant for comment. The March Report also made numerous statements about Plaintiff which were false, misleading and/or inaccurate which include, but are not limited to, the following:
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a. "Organovo has a history of serial dilution and insider sales in the last half-year exceed the amount of money the company invested in Research & Development." b. "[Organovo] has failed to achieve renewal from its 2 key pharmaceutical partners and secured uff PR pieces instead." c. "Even worse, Keith Murphy tells investors that Organovo can leverage its platform to achieve partnership deals that bring in $10,000,000-$30,000,000 per deal plus a 3%-7% royalty. That is 7 times to 22 times greater than Organovo's largest deal to-date, a deal that has not been renewed." d. "The company publicizes any thread of good news while sweeping detrimental events under the rug without mention." e. "But no one bought the bioprinter. The reason, of course, is obvious. No researcher will shell out $200,000 to buy Organovo's bioprinter when they can make a comparable or better bioprinter on their own for a fraction of the price. Organovo has placed 6of these bioprinters with academic centers since 200979, or -1 bioprinter per year. And they didn't receive a cent - they loaned the printers at no cost."
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f. "Compare this to Organovo, which has placed only 6 printers to date since 2009, a little over 1 printer a year. And, Organovo loaned these printers." g. "Of course, Organovo knows all of this, because it worked with nScrypt to develop its own bioprinter." h. "Leapfrogging Organovo, researchers at Scotland's Herriot-Watt University have made a revolutionary breakthrough in tandem with privately-held Rodin Cellab by bioprinting human embryonic stem cells with high levels of viability (>95% with identical physiology post-printing) using a modied MakerBot printer. The work, unlike the claims of Organovo, has been published in the journal Biofabrication - it has been called "the greatest breakthrough in 3D bioprinting to date." i. Defendant claims that Plaintiff initially based its commercialization strategy on selling its bioprinters. j. Defendant claims that Plaintiff misled investors or did not meet its promises to investors in regards to advancing projects from 2010 to clinical trials, stating, among other things, that, "either Organovo's management made dubious claims to raise money from investors, or its employees and technology failed to achieve the targets."
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k. "Back in 2012, every private investor in Organovo sold their shares into the market, liquidating 32.1M shares (99.7% of their holdings) at a blended price of $3.02/share." 16. None of those statements in the March Report are true. Each of the above-referenced statements, among others, is patently false, misleading and/or inaccurate. 17. On or about April 8, 2014, Defendant posted a second report via its website, http://www.simeonresearch.com, entitled "Bargaining with the Devil: How Organovo Used Fraudulent Brokers and Promoters to Sell its Shares and Story" (hereinafter the "April Report.") The April Report was disseminated to third party investors. The April Report did not name an individual author and did not provide any method for contacting Defendant for comment. The April Report also made numerous statements about Plaintiff which were false, misleading and/or inaccurate which include, but are not limited to, the following: a. "Organovo has spent triple its entire R&D budget since inception on raising money from small-time investors and stock promotion demonstrates that Organovo is more penny-stock promotion than legitimate company." b. "Organovo has spent nearly three times as much money ($36.5 million) compensating its brokers and discounting shares in a follow-
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on as it has on Research & Development ($13.5 million) since the company's inception." c. "ProActive provided Organovo a number of stock promotion services in exchange for Organovo's business - many had none of the legallyrequired disclosures." d. "ProActive Capital and DreamTeamGroup have absolutely no disclosures on any of their operated websites that they were compensated by Organovo." e. "Organovo paid these brokers more than $1 in cash, stock, and warrants for every $1 raised from investors." 18. None of those statements in the April Report are true. Each of the above-referenced statements, among others, is patently false, misleading and/or inaccurate. 19. Defendant also published numerous statements in the March and April Reports that constituted half-truths at best; statements which contained some truthful information in addition to misleading information, which were designed to cast aspersions upon Plaintiff while appearing to be truthful and accurate statements. They were neither.
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20. Defendant also intentionally provided misleading information, by taking information relating to Plaintiffs products and nancial well-being out of context in order to cause damage and injury to Plaintiff. In addition, Defendant alludes to wrongdoing by third parties and insinuates wrongdoing by Plaintiff by association. Like its defamatory reports, Defendant's insinuations are false. 21. Once the March Report and the April Report were published, those reports were referenced by numerous nancial bloggers and websites. Following the publishing of those reports, Plaintiffs stock price dropped precipitously, and it continues to drop. Moreover, Plaintiff believes it has lost potential investors and has suffered injury to its reputation based upon Defendant's publications. 22. In addition to the website, a Twitter account with the address "@SimeonResearch" is currently active on Twitter - an account that has published at least 65 individual comments or "tweets." The content of the 65 tweets on that Twitter account are directed solely at Plaintiff, and those tweets appear to be an attempt to negatively impact Plaintiffs stock price. For example, in an April 8, 2014 tweet, @SimeonResearch states, "Simeon Research reiterates $1.35 price target for Organovo shares ..." In another tweet from April 8, 2014, @SimeonResearch states, "ONVO is down 4% today and 12% since our rst report in March. We believe downside exists to $1.35/share."
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23. Defendant's acts in publishing the reports and potentially the Twitter communications are intended solely to drive down the price of Plaintiff's common stock, so that Defendant or others acting.in concert with Defendant may effectuate protable short sales of that stock. 24. To this end, Defendant sought to have the reports it published distributed as widely as possible by providing them freely to investor news services on the internet. 25. Defendant will likely continue to publish false and defamatory statements on its website. 26. As a result of Defendant's conduct, Plaintiff has been irreparably harmed. Defendant's false and misleading statements have caused some readers and potential investors to view Plaintiffs business as non-viable, dishonest, and non-reputable. 27. Moreover, Plaintiff has suffered and will continue to suffer irreparable harm absent an order requiring Defendant to cease making false and misleading statements about Plaintiff, and requiring that all such statements be removed from Defendant's website.
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COUNT I-LIBEL (Against All Defendants) 28. Plaintiff re-alleges and fully incorporates by reference paragraphs 1 through 27 as though fully set forth herein. 29. Defendant made false and defamatory statements as alleged herein about Plaintiff. 30. Defendant made these negative defamatory statements with the intent and import that the statements were assertions of fact and not merely opinion, and with knowledge of their falsity and/or with reckless disregard for the truth or falsity thereof. 31. Defendant published these statements, in writing, to unprivileged third parties including, but not limited to, readers and purchasers of online and print nancial publications. 32. Defendant's statements cased its readers, including investors and the community, to view Plaintiffs business as non-viable, dishonest, non-reputable, and engaging improper conduct, and thus have diminished the esteem, respect, goodwill or condence in which Plaintiff was held. Moreover, upon information and belief, Defendant's statements have deterred third parties, including potential investors, from doing business with or investing in Plaintiffs business.
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33. Defendant knew such statements disparaged the quality of Plaintiff s business and its stock, and intended these statements to cause Plaintiff pecuniary loss and harm to reputation. 34. Defendant made its defamatory and libelous statements with malice, malicious intent, and with intent to cause the foregoing harm to Plaintiff. Accordingly, Plaintiff is entitled to and should be awarded damages against Defendant. 35. It was foreseeable that the defamatory statements would be repeated by second parties. Defendant, as the originator, is therefore liable for each repetition of the defamatory matter by second parties. 36. Defendant's libelous statements caused harm to Plaintiff, and will continue to cause harm to Plaintiff, including without limitation: harm to Plaintiffs reputation and good will; loss of product sales and the prots therefrom; interference with and damage to Plaintiffs relationships with its bankers, lenders, institutional investors, and the media; loss of market share and business opportunity for its products; loss of investment capital; loss of operating capital; and impairment of Plaintiff s ability to continue to grow.
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COUNT H - LIBEL PER SE (Against All Defendants) 37. Plaintiff re-alleges and fully incorporates by reference paragraphs 1 through 36 as though fully set forth herein. 38. Defendant made false and defamatory statements as alleged herein about Plaintiff. 39. Defendant made these defamatory statements with the intent and import that the statements were assertions of fact and not merely opinion, and with knowledge of their falsity and/or with reckless disregard for the truth or falsity thereof. 40. Defendant published these statements, in writing, to unprivileged third parties including, but not limited to, readers and purchasers of online and print nancial publications. 41. Defendant's false statements malign Plaintiff in its business, trade and profession. 42. Defendant's false statements also impute improper and unlawful conduct to Plaintiff. 43. Defendant's statements cased its readers, including investors and the community, to view Plaintiffs business as non-viable, dishonest, non-reputable, and engaging improper conduct, and thus have diminished the esteem, respect, goodwill or condence in which Plaintiff was held. Moreover, upon information
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and belief, Defendant's statements have deterred third parties, including potential investors, from doing business with or investing in Plaintiffs business. 44. Defendant knew such statements disparaged the quality of Plaintiff s business and its stock, and intended these statements to cause Plaintiff pecuniary loss and harm to reputation. 45. Defendant made its defamatory and libelous statements with malice, malicious intent, and with intent to cause the foregoing harm to Plaintiff. Accordingly, Plaintiff is entitled to and should be awarded damages against Defendant. 46. It was foreseeable that the defamatory statements would be repeated by second parties. Defendant, as the originator, is therefore liable for each repetition of the defamatory matter by second parties. 47. Defendant's libelous statements caused harm to Plaintiff, including without limitation: harm to Plaintiffs reputation and good will; loss of product sales and the prots therefrom; interference with and damage to Plaintiffs relationships with its bankers, lenders, institutional investors, and the media; loss of market share and business opportunity for its products; loss of investment capital; loss of operating capital; and impairment of Plaintiff s ability to continue to grow.
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COUNT m - INTERFERENCE WITH PROSPECTIVE ECONOMIC ADVANTAGE (Against All Defendants) 48. Plaintiff re-alleges and fully incorporates by reference paragraphs 1 through 47, as though fully set forth herein. 49. Plaintiff has or had valuable prospective economic relationships and business opportunities with its bankers, customers, lenders, investors and prospective investors, from which Plaintiff derived economic gain, and from which Plaintiff had a reasonable expectancy of deriving future economic gain. 50. Defendant was and is aware of these relationships. Defendant, through the acts alleged herein, has and continues to, wrongfully, knowingly and intentionally act to interfere with and destroy or harm Plaintiffs existing and/or prospective business relationships. 51. Defendant's wrongful acts alleged herein have actually interfered with and disrupted Plaintiffs relationships and/or prospective relationships, and these acts designed to interfere with and disrupt these relationships have been a substantial factor in causing Plaintiffs harm through the loss of prospective economic advantage. 52. Plaintiff is entitled to, and should be, awarded damages caused by Defendant's actions, including without limitation, monetary loss from: harm to Plaintiffs reputation and good will; loss of product sales and the prots therefrom;
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interference with and damage to Plaintiffs relationships with its bankers lenders, institutional investors, and the media; loss of market share and business opportunity for its products; and impairment of Plaintiffs ability to continue to grow. 53. Defendant acted with malice, malicious intent, and with intent to cause the foregoing harm to Plaintiff, COUNT IV - PERMANENT INJUNCTION (Against All Defendants) 54. Plaintiff re-alleges and fully incorporates by reference paragraphs 1 through 53, as though fully set forth herein. 55. Defendant's statements are false and defamatory. 56. As a result of Defendant's libelous statements, Plaintiff has suffered and will continue to suffer irreparable harm including, but not limited to, harm to its reputation. 57. Absent a permanent injunction barring Defendant from making any further false and defamatory statements, Plaintiff will suffer irreparable harm. 58. The harm caused by Defendant's destructive and knowingly false statements regarding Plaintiff outweighs any harm to Defendant if the injunction is granted. 59. Plaintiff lacks an adequate remedy at law.
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60. Accordingly, the Court should enter a permanent injunction (i) enjoining Defendant from making or publishing any further false and defamatory statements regarding Plaintiff, and (ii) compelling Defendant to remove any and all defamatory and violative statements from its website and Twitter account.
PRAYER FOR RELIEF WHEREFORE, respectfully requests that the Court enter an Order: A. granting judgment in favor of Plaintiff and against Defendant; B. awarding Plaintiff general and special damages in an amount to be determined; C. awarding Plaintiff the reasonable attorneys' fees, costs, and expenses it incurred in this action; D. permanently enjoining Defendant from making any false and defamatory statements against Plaintiff; E. compelling Defendant to remove any and all libelous statements from its website; and D. granting such other and further relief as this Court shall deem proper and just.
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Dated: April 21,2014 DLA PIPER LLP (US) Of Counsel: Nicolas Morgan Grant P. Alexander DLA PIPER LLP (US) 2000 Avenue of the Stars Suite 400 North Tower Los Angeles, CA 90067-4704 Phone:(310)595-3000 Fax:(310)595-3300 nicolas.morgan@dlapiper.com grant.alexander@dlapiper.com /s/ John L. Reed John L. Reed (I.D. No. 3023) Laura D. Hatcher (I.D. No. 5098) 1201 North Market Street, Suite 2100 Wilmington, DE 19801 (302) 468-5700 (302) 394-2341 (Fax) john.reed@dlapiper.com laura.hatcher@dlapiper.com Attorneys for Plaintiff Organovo Holdings, Inc.
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Organovo Holdings Inc V Simeon Research LLC Et Al - Complaint Filed 04 21 14

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Organovo Holdings, Inc. v. Simeon Research, LLC, et al., C.A. No. 9563-, compl. (Del. Ch. Apr.

EFiled: Apr 21 2014 05:43P Transaction ID 55330839 Case No. 9563-

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