Performer Cher is suing Los Angeles billionaire Patrick Soon-Shiong, alleging he and others duped her into selling shares in a promising drug company at a fraction of the stock's value.
In January 2016, Cher sold her shares in a Florida-based biopharmaceutical company, Altor, at $1.50 each — for a total of $450,000 — for "an unreasonably below-market price," according to a lawsuit filed in Los Angeles County Superior Court on Friday. Cher sold her shares back to the company.
Soon-Shiong, through his firm NantCell, acquired the outstanding shares of Altor in 2016 for about $15 million. The suit contends that Altor now is worth "over $1 billion."
The lawsuit contends that when Cher was asked to sell her shares she was not told that compounds of an Altor drug were showing promise in treating cancer and AIDS/HIV in clinical trials. Other minority shareholders have separately sued over the deal.
Cher alleges fraudulent concealment and breach of fiduciary duty. In addition to Soon-Shiong, defendants include Altor Acquisition LLC, Altor cofounder Hing C. Wong and Fred Middleton, a vice chairman of Altor's board. The suit asks for damages and attorney fees and costs.
"The lawsuit has no merit. We intend to vigorously defend against it," Soon-Shiong's spokesman, Michael Sitrick, said in a statement.
A person close to the situation not authorized to comment said Soon-Shiong was not aware that Cher was an investor — nor did he approach her about selling her interest.
Cher bought her stake in the company in 2013 through the Inshallah Trust, of which she is the trustee. Though the lawsuit did not say how much Cher paid for the stake,; the person close to the situation said Cher and others paid about 50 cents a share for their Altor holdings.
Middleton, in a statement to The Times on Sunday, said the 2016 stock sales came after a small group of investors, including two board members, became unhappy with the direction of the company.
The board members were Boyden Gray and Adam Waldman, an attorney and advisor to Cher. Middleton said that they wanted to sell their stakes in the company and negotiated the price of the shares.
"Cher decided to sell her shares in January 2016 [after] she made a substantial profit in less than three years," Middleton said. "Her decision to sell was completely discretionary as she was under no duress to sell."
By that time, Altor's management had been encouraging Soon-Shiong to buy out the shares of the restive investors, Middleton said. Soon-Shiong agreed to purchase his initial shares in the company for $1.50 apiece. He became a shareholder in early 2016, investing $50 million in the company.
Earlier this year, Soon-Shiong's Nantcell bought Altor for $2 a share. Minority shareholders approved the deal, Middleton said.
Soon-Shiong is a major stockholder of media company Tronc Inc., which owns the Los Angeles Times.
Oct. 1, 12:30 p.m.: This article was updated with additional comments by Middleton and a person close to the situation.
Sept. 29, 8:35 p.m.: This article was updated with a statement from Soon-Shiong's spokesman.