As previously announced, on October 18, 2022, Ayala Pharmaceuticals, Inc. (“Ayala”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Advaxis, Inc., a Delaware corporation (“Advaxis”), and Doe Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary of Advaxis (“Merger Sub”), pursuant to which Merger Sub will merge with and into Ayala, with Ayala as the surviving corporation and a wholly-owned subsidiary of Advaxis (the “Merger”). On December 12, 2022, Ayala filed a definitive proxy statement on Schedule 14A (the “Proxy Statement”) with the U.S. Securities and Exchange Commission (the “SEC”) relating to the special meeting of Ayala’s stockholders to approve certain matters related to the Merger, which will be held on January 13, 2023.
On December 15, 2022, a purported Ayala stockholder filed a complaint in the U.S. District Court for the Southern District of New York against Ayala and the members of its Board, captioned Stephen Bushansky v. Ayala Pharmaceuticals, Inc., Case No. 1:22-cv-10621 (S.D.N.Y.) (the “Complaint”).
The Complaint asserts claims against all defendants under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 14a-9 promulgated thereunder for omitting or misrepresenting material information from Ayala’s Proxy Statement and against the individual defendants under Section 20(a) of the Exchange Act for alleged “control person” liability with respect to such alleged omissions and misrepresentations. The allegations in the Complaint include that the Proxy Statement omitted material information regarding Ayala’s financial projections and Torreya’s financial analyses. The Complaint seeks, among other relief, (1) to enjoin defendants from consummating the Merger; (2) to enjoin a vote on the Merger; (3) to rescind the Merger Agreement or recover damages, if the Merger is completed; (4) a declaration that defendants violated Sections 14(a) or 20(a) and Rule 14a-9 of the Exchange Act; and (5) attorneys’ fees and costs.
In addition, as of the date of this Current Report on Form 8-K, nine purported Ayala stockholders sent letters to those noted in the above-referenced Complaint alleging similar deficiencies in Ayala’s Proxy Statement (collectively, the “Demand Letters”).
Ayala believes that the Proxy Statement complies fully with all applicable law and that the allegations in the Complaint and the Demand Letters are without merit. Additional lawsuits arising out of the Merger may be filed in the future. No assurances can be made as to the outcome of such lawsuits, the Complaint or the Demand Letters.
Supplemental Proxy Statement Disclosure
Ayala does not believe, with respect to the Complaint or Demand Letters, that supplemental disclosures are required or necessary under applicable laws or that any information contained herein is material. However, solely to moot the unmeritorious disclosure claims and minimize the risk, costs, burden, nuisance and uncertainties inherent in litigation, and without admitting any liability or wrongdoing, Ayala is electing to make the supplemental disclosures to the Proxy Statement set forth below in response to the Complaint and Demand Letters. These supplemental disclosures should be read in conjunction with, and incorporated by reference into, the Proxy Statement. Ayala denies the allegations in the Complaint and Demand Letters, and denies any violation of law. Ayala believes that the Proxy Statement disclosed all material information required to be disclosed therein, and denies that the supplemental disclosures are material or are otherwise required to be disclosed. Nothing in the supplemental disclosures should be deemed an admission of the legal necessity or materiality of any supplemental disclosures under applicable laws.
SUPPLEMENT TO PROXY STATEMENT/PROSPECTUS
This supplemental information should be read in conjunction with the Proxy Statement, which should be read in its entirety. Page references in the below disclosures are to the pages in the Proxy Statement, and defined terms used but not defined herein have the meanings set forth in the Proxy Statement. Without admitting in any way that the disclosures below are material or otherwise required by law, Ayala makes the following amended and supplemental disclosures. For clarity, new text within the amended or amended and restated portions of the Proxy Statement is highlighted with bold, underlined text, and deleted text is denoted with a strikethrough.