The Delaware Court of Chancery upheld Sarissa Capital Management LP's oral agreement with Innoviva Inc. requiring the U.S. biotechnology company to add two Sarissa nominees to its board.
Sarissa had sued Innoviva, claiming that the company reneged on its pledge to appoint the activist investor's nominees George Bickerstaff III and Odysseas Kostas as directors.
Both Bickerstaff and Kostas had failed to receive sufficient votes to be elected to Innoviva's board at its 2017 annual meeting, Innoviva said in a regulatory filing.
According to the court's post-trial memorandum opinion — a brief opinion without extensive discussion — Innoviva would expand its board and Sarissa would dismiss its complaint.
Sarissa and Innoviva had been engaged in a proxy battle, with the investor announcing a slate of three directors for election to Innoviva's board in March.
The investor had said that Innoviva had a bloated cost structure and overpaid its officers. Sarissa added that it would bring "financial discipline and oversight" through its nominees.
Innoviva said that while it disagrees with the court's decision, the company will add Bickerstaff and Kostas to its board and work with them.
The parties are required to submit a final order and judgment to the court within 10 business days, and Innoviva expects a final judgement to follow.