RE:RE:No Justice for Investors 20. The D&O’s consistently mismanaged their function to provide timely and accurate material
disclosure to the Investors in respect of the business and affairs of the Applicants. Among other
things, they failed to establish, implement and/or adhere to a corporate disclosure policy. As a
result, it is now apparent that the D&O’s persistently engaged in insufficient, imbalanced,
exaggerated, inaccurate and misleading disclosure of material information to the Investors.
21. These statements contained material misrepresentations (the “Misrepresentations”),
including but not limited to:
(a) Statements made by management and Directors of IMV, including Hall, Ors and
Bailey and certain Board members, expressly representing that no share issues or
other dilutions of Share interest would take place at particular points in time, when
in fact IMV did subsequently conduct new share issues and other dilutions of Share
interest to the material detriment of the Investors;
(b) Statements making representations regarding the status and expected progress of
various IMV research and development projects, including that certain projects had
achieved or would achieve certain targets or results, including but not limited to:
(i) Misleading and/or incorrect statements by Hall and Ors regarding
negotiations, planned or scheduled meetings, and clinical trial standards and
protocol guidelines in connection with DPX and IMV’s first clinical
candidate, maveropepimut-S (“MVP-S”), with the U.S. Food & Drug
Administration (“FDA”);
(ii) Misleading and/or incorrect statements made by Ors throughout 2021 and
specifically in association with the negotiation of a substantial investment
from the Investors by private placement in July of 2021 to the effect that: i)
it was “guaranteed that we will have success with Lymphoma”, ii) that the
scientific risk of the platform was “gone” and “off the table”, iii) that IMV
was producing the “best results in the world” from a clinical perspective and
finally iv) that IMV would trade at a valuation of between $250 and $300
per share;
(iii) Misleading and/or incorrect statements by IMV regarding DPX and MVP-S
science and trial results, including statements by Hall in or about early 2023 to the effect that a particular IMV cancer therapy drug participating in clinical
trials was “actually working”; that IMV would “make sure it gets to market”
for the benefit of IMV shareholders; that IMV was “in a very good position
with respect to the supply of commercial product”; and that Hall was
“confident” that the primary endpoint of a particular Diffuse large B cell
lymphoma (“DLBCL”) trial would be achieved, which did not occur;
(iv) Misleading and/or incorrect statements by IMV indicating positive
developments in connection with one or more ovarian cancer therapies,
including having claimed to have identified a biomarker in connection with
ovarian cancer, and that the identification of the biomarker rendered IMV “a
guaranteed success”; and
(v) Misleading and/or incorrect statements principally by Hall, Ors and Bailey
regarding the Applicants’ operational funding timeline, including the
making of statements that the Applicants have sufficient cash to maintain
operations into 2024;
(c) Misleading and/or incorrect statements concerning ongoing meetings,
collaborations and agreements concerning strategic partnerships and/or joint
venture arrangements with Merck Corporation (or subsidiary and related entities),
Medicago Inc. (or subsidiary and related entities), Bristol-Myers Squibb, Health Canada, and other governmental health authorities and organizations in Japan, Israel
and elsewhere;
(d) Statements representing that IMV would execute numerous business development
agreements to produce substantial revenue for the company, which did not occur,
including but not limited to repeated assertions by Hall beginning in 2021 that
partnership talks for clinical trials and other corporate transactions were taking place
and in some cases were imminent with several parties, including Merck;
(e) Misleading and/or incorrect public statements regarding IMV’s relationships with
various cancer laboratories, including Sloan Kettering in New York City and
Sunnyside Toronto, among others;
(f) Misleading and/or incorrect public statements regarding IMV’s efforts to, and the
prospects for, development and approval of a COVID-19 vaccine, which were not
true and/or did not occur;
(g) Misleading and/or incorrect statements regarding IMV’s lender, Horizon, and its
obligations to Horizon and related negative impacts on the interests of the Investors,
including the capacity (or the lack thereof) for Horizon to call its loan for repayment;
(h) Misleading and/or incorrect statements by Hall in March of 2023 in respect of the
engagement of Stonegate Capital Partners (“Stonegate”), including that Stonegate
had been retained to complete an accelerated strategic partnership and/or collaboration for IMV to commercialize IMV’s platform and bring its products to
market, rather than to implement a declaration of insolvency by the Applicants; and
(i) Statements representing that certain actions would be taken by IMV which would
result in significant savings for the company, which did not occur. .
22. The D&O’s, including Ors, Hall and Bailey persistently disseminated the
Misrepresentations and made omissions, exaggerations, and imbalanced disclosures to the
Investors. The D&O’s failed to establish, implement and/or adhere to a corporate disclosure policy
to govern their disclosure and communication of information to the Investors. .
23. The Misrepresentations were comprised of untrue statements of material facts, omissions
to state material facts that were required to be stated, and omissions to state material facts that were
necessary to make a statement not misleading in the light of the circumstances in which it was
made. The full extent of the Misrepresentations is unknown to the Investors at this time and are
only expected to be known following further investigation.
24. The Misrepresentations were reflected in, among other things, communications made
directly to Investors as well as public disclosures of IMV Inc., including:
(a) Offering memoranda and/or offering term sheets concerning the features of the
distribution and the business and affairs of the Applicants;
(b) Various Preliminary and Final Prospectuses, issued between July 2007 to present; (c) Financial reporting including annual and quarterly financial statements and
MD&As; and
(d) Other documentation provided to the Investors in connection with private
placements.
25. The effects of these Misrepresentations include but are not limited to: artificial inflations of
Share price at the time, or after, the Investors purchased the shares; inducements to the Investors
to purchase Shares or retain Shares rather than sell them; and declines in Share value once the
Misrepresentations were known to the public markets.
26. None of the Investors were aware that the Misrepresentations were untrue at the time they
were made.
Common Law Negligent or Fraudulent Misrepresentation
27. The D&O’s are liable to the Investors for negligent and/or fraudulent misrepresentation.
28. The D&O’s made Misrepresentations which were untrue, misleading, and/or coercive, as
described above. The D&O’s also failed to correct the Misrepresentations.
29. A special relationship existed between the Applicants and the Investors giving rise to a duty
of care. The D&O’s, by virtue of their specified roles in making disclosure under the OSA and
Other Securities Legislation, owed a duty of care to the Investors to exercise due care and diligence to ensure that full, true, and plain disclosure of all material facts was made to the Investors. They
failed to do so.
30. The reasonable standard of care expected of the D&O’s in the circumstances was to ensure
that any statements made to the Investors contained no misrepresentation or, alternatively, to
correct the Misrepresentations set out herein as soon as reasonably possible. They failed to meet
this standard, thereby breaching their duties.
31. The standard of care applicable to the D&O’s required them to establish, implement and/or
adhere to a corporate disclosure policy to govern their disclosure and communication of
information to the Investors. The D&O’s failed to establish, implement and/or adhere to any such
corporate disclosure policy.
32. In the alternative, the D&O’s made the Misrepresentations knowing they were untrue,
misleading, and/or coercive, or they were reckless or willfully blind as to their falsity. The D&O’s’
failure to correct any Misrepresentation amounts to fraudulent behaviour.
33. The Investors reasonably relied on the Misrepresentations and were induced to make direct
monetary payments to the Applicants by way of private placements, to retain shares rather than to
sell or redeem them when they retained some value and/or to purchase Shares as a result of the
Misrepresentations, all to their detriment. The D&O’s knew, or it was reasonably foreseeable, that
the Investors would reasonably, and to their detriment, rely on the Misrepresentations and
statements made by the D&O’s in making decisions in respect of the Shares, and that the Investors would suffer damages and losses if the D&O’s breached their duty of care, which was in fact the
case.
34. The Investors are entitled to damages sufficient to put them in a position as if the D&O’s’
Misrepresentations had never been made.
Breach of Securities Legislation
35. The Investors intend to assert the rights of action found in sections 130, 130.1, 131, and
138.1 of the OSA, and any equivalent or similar provisions in Other Securities Legislation.
36. IMV Inc. is a “responsible issuer” pursuant to the OSA and equivalent or similar provisions
in Other Securities Legislation.
37. The D&O’s were obligated to make full, true, and plain disclosure of all material facts or
otherwise not make misrepresentations relating to the issued securities in the prospectus, offering
memorandum, any circulars, any released documents, public oral statements, or other
representations made by the D&O’s, their representatives and fiduciaries, influential persons (as
defined in the OSA or Other Securities Legislation), or other persons with authority to speak on
behalf of the D&O’s.
38. In making the Misrepresentations as described above, the D&O’s breached the applicable
provisions of the OSA and Other Securities Legislation, and are liable for damages caused to the
Investors as a result.
Oppression
39. The Investors claim damages and equitable remedies as against the D&O’s pursuant to s.
241 of the CBCA and s. 5 of the NSCA, to the extent applicable.
40. As shareholders of IMV Inc., the Investors reasonably expected, among other things, that
the D&O’s, their representatives, and their fiduciaries would:
(a) Conduct the affairs of IMV and its subsidiaries and affiliates in a manner that would
not oppress, unfairly prejudice, or otherwise unfairly disregard the interests of the
Investors;
(b) Make full, true, and plain disclosure of all material facts to Investors, in accordance
with the applicable securities legislation and standard of care expected of a publicly
traded company; and
(c) Refrain from making misleading, incorrect, or otherwise wrong statements to
Investors regarding the manner in which they were conducting the affairs of IMV.
41. The D&O’s’ conduct was oppressive, unfairly prejudicial to, and/or unfairly disregarded
the Investors’ interests. This oppressive conduct included, but is not limited to:
(a) Making the Misrepresentations to Investors, publicly and privately, with the
purpose of securing funding from Investors to the detriment of the Investors and
their interests; (b) Making Misrepresentations, on which the Investors reasonably relied to make
decisions to purchase, hold, and/or otherwise refrain from selling Shares;
(c) Dilutions of Share value and interests, including share issuances and reverse stock
splits, despite express and/or implied assurances that the Applicants and the D&O’s
would not undertake the foregoing actions, which assurances were among the
Misrepresentations;
(d) Conducting financings and share consolidations that did not allow for participation
by individual shareholders and resulting in dilution of or other losses to the
Investors;
(e) Approving a significant and prejudicial share placement with Armistice Capital
(“Armistice”), which was oppressive to the interests of the Investors for reasons
that included:
(i) the Applicants, the D&O’s, or their representatives/fiduciaries, failed to
conduct reasonable due diligence, which would have revealed that Armistice
was at the time of the share placement implicated in a lawsuit relating to its
alleged operation of a “pump-and-dump” scheme; and
(ii) within 45 days of the share placement, as the Applicants and the D&O’s
should have known or reasonably should have known, Armistice sold all the
shares purchased during the placement, causing the value of the Shares to
drop, thereby causing significant losses to the Investors. 42. The D&O’s have continued to engage in oppressive conduct. In or around late 2022 and/or
early 2023, the Investors were assured that the Applicants were in the process of being acquired,
which would preserve the Investors’ investments and Share value. Instead, the Applicants
proceeded to file this CCAA Application. In doing so, the Applicants and the D&O’s acted in a
manner which was oppressive, unfairly prejudicial to, or unfairly disregarded the interests of the
Investors, who may be left with no ability to recover their losses caused by the unlawful conduct
of the Applicants and the D&O’s described above. Additionally, the Applicants and the D&O’s
failed to consider or implement, or attempt to implement, a restructuring under applicable corporate
legislation or other procedures to protect the interests of the D&O’s and the Applicants themselves
and to the prejudice of the Investors and other shareholders, as those shareholders reasonably
expected they would do.
Conspiracy
43. The D&O’s are liable to the Investors for the tort of civil conspiracy.
44. Hall, Bailey, Ors, the other D&O’s and the Applicant engaged in an ongoing course of
conduct, including but not limited to making coordinated, repeated statements and
Misrepresentations to the Investors. Those statements and Misrepresentations were made contrary
to applicable securities laws, the common law and equity. The statements and Misrepresentations
were made since at least 2017 and continuing to the date of filing of the CCAA Proceeding.
45. The conduct of Hall, Bailey, Ors, the D&O’s and the Applicants collectively was
undertaken to: i) induce the Investors to retain and not to sell or redeem their shares; ii) to keep the Investors in position to make further direct investments in the Applicants by way of private
placement; and iii) to otherwise encourage further investments in IMV in order to artificially
maintain and/or to inflate Share prices.
46. Hall, Bailey, Ors, the D&O’s and the Applicants, and their agents and representatives,
agreed to do so using the wrongful and unlawful means as described above, knowing that their
actions were intended to cause the effects described above and knowing it would cause damage to
shareholders like the Investors.
47. The full particulars of the D&O’s’ conspiracy are unknown to the Investors at this time and
known only to the Applicants and the D&O’s, and are only expected to be revealed following
review of information to be obtained.
Unjust Enrichment
48. The Applicants and the D&O’s are further liable for unjust enrichment.
49. The Applicants and the D&O’s were individually and collectively enriched through making
the Misrepresentations described above, and the Investors suffered a corresponding deprivation of:
(a) The amounts paid by the Investors for the Shares and received by the Applicants,
which amounts included fundraising and finance-related bonuses and other forms
of direct contribution to the compensation paid to the D&O’s; or
(b) Alternatively, an amount equivalent to the difference between the price at which the
Shares were sold to the Investors and the price at which the Shares would have been sold had the Misrepresentations not been made, multiplied by the number of Shares
sold to the Investors.
50. There is no juristic reason for the Applicants’ and the D&O’s enrichment. The proceeds
from the Share purchases were received by the Applicants as a result of its own wrongful and
unlawful acts. The various statements made which induced the Investors to invest in the Applicants
contained various Misrepresentations, as described above, and were in violation of the D&O’s’
common law and statutory duties towards the Investors.
Damages
51. The Investors have suffered losses for which they are entitled to common law or statutory
damages and/or equitable compensation as may be determined by a Court, in an amount to be
quantified, up to or exceeding the full value of their investment in IMV.
52. In particular, the Investors claim damages for:
(a) Common law negligent and fraudulent common law misrepresentation, unjust
enrichment, and conspiracy, in an amount to be quantified;
(b) Misrepresentation in the primary market pursuant to ss. 130, 130.1, and 131 of the
OSA and equivalent or similar provisions in Other Securities Legislation, in an
amount to be quantified; and (c) Misrepresentation in the secondary market pursuant to s. 138.3 of the OSA and
equivalent or similar provisions in Other Securities Legislation, in an amount to be
quantified.
53. The Investors further claim equitable remedies pursuant to the common law, CBCA,
NSCA (and equivalent or similar Delaware legislation).
54. The conduct of the D&O’s, as set out above, was egregious, high-handed, and/or highly
reprehensible, such as to warrant an award of punitive damages against them.