Biotech Co Settles Suit Naming Law Firm Cooley for $60 Million

A biotech company that was sued over its merger with a blank check company has resolved the lawsuit for $60 million, settling claims against the law firm Cooley LLP in the process.

Biote Holdings, which sells hormone optimization therapies, settled the lawsuit filed in Delaware Chancery Court earlier this month by the ex-wife of the company’s cofounder, who alleged her shares in the company were diluted by the deal. The suit alleged company insiders benefited from a transaction with Haymaker Acquisition Corp. III that delivered almost no cash to the company, and that Cooley assisted in “tricking” the founder into closing the deal.

Haymaker was a special purpose acquisition company, or SPAC, that merged with Biote in 2022. The lawsuit alleged the merger failed to deliver operating cash for the business but benefited corporate insiders to the tune of about $135 million in cash and stock from closing the deal.

The lawsuit named San Francisco-founded Cooley LLP as a defendant, saying partner Ryan Sansom allegedly threatened the company’s founder, Dr. Gary Donovitz, that he could face significant personal liability if the merger failed to close.

Donovitz in April settled a seperate lawsuit over the merger for $77 million.

Brewer, Attorneys & Counselors, the law firm that represented Marci Donovitz in the case, announced the settlement last week. The company will buy back her shares over a three-year period, with $30 million paid upfront. The settlement releases the plaintiff’s claims against Cooley, a firm representative said.

The Brewer law firm also represented Gary Donovitz in the earlier settlement.

“This settlement validates our client’s claim that the transaction was a scheme to enrich a few company ‘insiders’ – and reward them with financial and managerial benefits to which they were not entitled,” William A. Brewer III, a partner at the Brewer firm, said in a statement.

Biote announced the settlement late last month. A representative for Cooley did not immediately respond to a request for comment.

The case is: The Donovitz Family Irrevocable Trust v. Weber, Del. Ch., 2024 0617.