The BARD1 (ASX: BD1) share price took a major hit today after the company announced legal proceedings are being brought against it.
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Consequently, shareholders have been rattled by the news, leading to a selloff in the company’s shares. By the market’s close, the BARD1 share price was down 14.51% to $2.71.
What drove the BARD1 share price lower?
The BARD1 share price took a major hit today after the company reported that two founding scientists are pursuing legal action against it. The two scientists were founders and major shareholders of BARD1AG SA, which was acquired from the plaintiffs in 2016, and is now a fully owned subsidiary of BARD1.
The founders commencing the proceedings are Tony Walker and Dr Irmgard Irminger-Finger. Mr Walker and Dr Irminger-Finger had pioneered a simple blood test for screening and diagnosing lung cancer in the early stages prior to the reverse takeover by Eurogold Limited.
As part of the reverse acquisition agreement, both founders were allocated performance shares. Dr Irminger-Finger retains a total of 3.6 million performance shares, while Tony Walker holds a total of 2.95 million. These performance shares are convertible on a one-for-one basis to ordinary shares subject to achieving milestones related to the company’s lung cancer test before the expiration date of 9 June 2021. Given the recent rise in the BARD1 share price, the matter is much more valuable now.
The statement of claim reportedly alleges the following:
Among other things that the Company was subject to obligations to do all things as were reasonably necessary to seek to have the Test satisfy the milestones by the expiry date and not to deprive the plaintiffs of the opportunity to have each of their Performance Shares convert into one ordinary share in the Company.
In addition to:
In breach of those obligations the plaintiffs have been deprived of that opportunity. The proceedings seek damages, costs, interest and such further or other orders as the Court considers just.
BARD1 has been busy with other things
This month alone, the company has released positive announcements regarding its ovarian cancer test and breast cancer test technology. The company’s recent announcements saw the BARD1 share price rocket from 74.5 cents on 10 February to a high of $3.70 on 16 February.
However, there has been no recent news from the company regarding the development of a lung cancer test.
BARD1 noted that it will be reviewing the statement of claim with legal advisors. Furthermore, the company intends to defend the proceedings and will file a comprehensive defence in due course.
Due to the legal nature of this event, BARD1 won’t be making any further comments on the matter.
The BARD1 share price has netted shareholders a 190% return over the past year.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.