Marstrand Partners, L.P. v. Israel Biotech Fund I, L.P.

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MARSTRAND PARTNERS, )
L.P., derivatively on behalf of )
AYALA PHARMACEUTICALS, )
INC., a Delaware corporation, )
)
Plaintiff, )
)
v. ) C.A. No. 2024-0421-KSJM
)
ISRAEL BIOTECH FUND I,
)
L.P., ISRAEL BIOTECH FUND
)
II, L.P., ARKIN BIO
)
VENTURES L.P., DAVID
)
SIDRANSKY, M.D., PINI
)
ORBACH, Phd., YUVAL
)
CABILLY, Phd., ROBERT
)
SPIEGEL, M.D., MURRAY
)
GOLDBERG, RONI APPEL,
)
KENNETH BERLIN, VERED
)
BISKER-LEIB, and BRIDGET
)
MARTEL, M.A., M.D.,
)
Defendants, )
)
and )
)
AYALA PHARMACEUTICALS, )
INC., a Delaware corporation, )
)
Nominal )
Defendant. )

ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS1

1 The facts are drawn from the Verified Amended Complaint (the “Amended
Complaint”) and documents it incorporates by reference. C.A. No. 2024-0421-KSJM,
Docket (“Dkt.”) 39 (Am. Compl.). The director defendants in this action attached
Israel Biotech’s marketing presentation and Ayala’s Form 10-Q filing for the third
quarter of 2023 as exhibits to their opening brief. Dkt. 50 (“Director Defs.’ Opening
Br.”), Exs. A, C. Each document is quoted or explicitly referenced in the Amended
Complaint and thus incorporated by reference. Freedman v. Adams, 2012 WL
1345638, at *5 (Del. Ch. Mar. 30, 2012) (“When a plaintiff expressly refers to and
1. Ayala Pharmaceuticals, Inc. (the “Company”) is a Delaware corporation

focused on developing cancer treatments. Israel-based venture capital funds

Defendants Israel Biotech Fund I, L.P. and Israel Biotech Fund II, L.P. (together,

“Israel Biotech”) invested in Ayala in 2017. In April 2018, Israel Biotech led a Series

A financing round. In connection with the financing, Israel Biotech appointed non-

party Roni Mamluk as CEO, Defendant and Israel Biotech co-founder David

Sidransky as executive chairman, and Defendants Robert Spiegel and Murray

Goldberg to Ayala’s board of directors (the “Board”). In May 2020, Ayala went public

on the NASDAQ stock exchange.

2. By 2021, Ayala was struggling financially. The Company sustained net

losses. Creditors doubted its ability to continue as a going concern. Sidransky was a

board member of Advaxis, Inc., another struggling biotechnology company, and

introduced the two management teams. Ayala began discussing a merger with

Advaxis in July 2022. The parties announced a merger (the “Advaxis Merger”)

pursuant to a merger agreement dated October 18, 2022.2

3. But Ayala was still in a precarious financial position. The month after

the Advaxis Merger was announced, NASDAQ threatened delisting Ayala because

the Company was not in compliance with stockholders’ equity and minimum bid price

requirements.

heavily relies upon documents in her complaint, these documents are considered to
be incorporated by reference into the complaint; this is true even where the
documents are not expressly incorporated into or attached to the complaint.”).
2 Am. Compl. ¶ 88.

2
4. Ayala began to consider another merger—this time with Biosight, a

portfolio company of Israel Biotech and another Israel-based venture capital fund,

Defendant Arkin Bio Ventures L.P. (“Arkin”). Ayala and Biosight announced a

merger (the “Biosight Merger”) pursuant to an agreement dated July 26, 2023. The

parties agreed that the board of the merged company would have nine members: four

appointed by Ayala; four appointed by Biosight; and Ayala CEO and Board Chair

Kenneth Berlin. Berlin would be CEO and Chair of the merged entity.

5. After the Biosight Merger, Ayala’s Board comprised Sidransky, Israel

Biotech co-founder Yuval Cabilly, Spiegel, Goldberg, Arkin executive Pini Orbach,

Roni Appel, Vered Bisker-Leib, Bridget Martel, and Berlin (together, “Director

Defendants”). When the Biosight Merger closed on October 19, 2023, Israel Biotech

and Arkin collectively owned approximately 36% of Ayala’s stock.

6. Germane to this litigation, the Amended Complaint identifies Spiegel

and Goldberg as “Venture Advisors” of Israel Biotech.3 In its marketing materials,

Israel Biotech describes Venture Advisors as industry experts that it appoints to its

portfolio company boards.4 Indeed, Spiegel is the former Chief Medical Officer of

pharmaceutical company Schering-Plough, and Goldberg is the former Chief

Financial Officer of pharmaceutical company Regeneron.5 Israel Biotech publicly

touts Venture Advisors as “chang[ing] the equation” in portfolio companies through

3 Director Defs.’ Opening Br., Ex. A at 6.

4 Am. Compl. ¶ 36.

5 Director Defs.’ Opening Br., Ex. A at 6.

3
hands-on involvement, including “strategic drug development leadership,”

“recruiting additional key personnel[,]” and “financial help[.]”6

7. Further, a 2019 article quotes Sidransky as explaining that Venture

Advisors are investors in Israel Biotech and have “skin in the game” with respect to

Israel Biotech’s investments.7 And Ayala’s public filings suggest that Spiegel and

Goldberg, as Venture Advisors, are limited partners in Israel Biotech Fund I, L.P.

8. The Biosight Merger did not stem Ayala’s financial difficulties. In

November 2023, the Board announced that without additional funding, it would need

to consider “bankruptcy and liquidation of the Company.”8 The Board simultaneously

explored financing options and engaged in strategic discussions with third parties.

9. On November 16, 2023, the Board met and considered several financing

options, including (i) a potential PIPE financing with third-party investors who had

indicated interest in providing up to $15 million at a 20% discount to market price,

(ii) ongoing strategic transaction discussions with several parties, and (iii) a proposal

for a convertible note issuance jointly presented by Israel Biotech and Arkin.

10. Pursuant to Israel Biotech and Arkin’s proposed transaction, Israel

Biotech, Arkin, and non-party and Ayala stockholder Biotel would lend Ayala up to

$4 million through convertible notes to be exercised at a 50% discount to market price.

The proposed transaction also contemplated granting warrants to Israel Biotech and

6 Am. Compl. ¶ 36; Dkt. 55 (“Pl.’s Answering Br.”) at 36–38.

7 Am. Compl. ¶ 34.

8 Director Defs.’ Opening Br., Ex. C at 5.

4
Arkin, giving them the right to purchase up to 15 million additional shares at a

discount.

11. The Board approved the transaction proposed by Israel Biotech and

Arkin that same day. Further, the Board granted Israel Biotech warrants for 7.5

million additional shares of Company stock at the same discount. The Board also

gave Israel Biotech, Arkin, and Biotel the ability to fund up to approximately $5.5

million in additional convertible notes—also to be exercised at the same 50% discount

(together with the $4 million convertible note issuance, the “Notes Transaction”).

12. After approving the Notes Transaction, Ayala continued to explore

strategic options. On December 6, 2023, an advisory firm proposed an asset sale to

another biotechnology company, Immunome, Inc. Ayala and Immunome entered into

a non-binding term sheet on December 22. Immunome agreed to acquire Ayala’s

assets, and the parties executed an Asset Purchase Agreement on February 5, 2024

(the “Immunome Transaction”). The Immunome Transaction was announced on

February 6, 2024.

13. Two days later, Israel Biotech and Arkin exercised their conversion and

warrant rights. Israel Biotech, Arkin, and Biotel also loaned an additional $2 million

to Ayala and exercised conversion rights related to that transaction, bringing Israel

Biotech and Arkin’s total ownership interest to over 80%.

14. The Immunome Transaction closed on March 29, 2024. Upon closing,

the Board granted each director a one-time payment: Berlin received $1.6 million;

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Sidransky received $160,000; Spiegel, Goldberg, Appel, Bisker-Leib, and Martel each

received $70,000; and Cabilly and Orbach each received $50,000.

15. Plaintiff Marstrand Partners, L.P. owns Ayala stock. Plaintiff filed this

action against Israel Biotech, Arkin, and the Director Defendants (together,

“Defendants”) on April 22, 2024.9 After Defendants moved to dismiss the action,

Plaintiff amended its complaint on November 15, 2024.10

16. The Amended Complaint asserts one count against Defendants for

breach of fiduciary duty. The Amended Complaint claims that Israel Biotech and

Arkin acted as a control group to cause the Director Defendants to approve the Notes

Transaction, and that Israel Biotech, Arkin, and the Director Defendants enriched

themselves through the Immunome Transaction. Plaintiff asserts that neither the

Notes Transaction nor the Immunome Transaction was entirely fair to Ayala

stockholders.

17. Defendants moved to dismiss the Amended Complaint on January 17,

2025.11 They moved to dismiss pursuant to Court of Chancery Rules 12(b)(6) and

23.1. Israel Biotech and Arkin additionally moved to dismiss under Rule 12(b)(2).

9 Dkt. 1.

10 Am. Compl.

11 Dkts. 49, 51.

6
18. The parties completed briefing on the motions on April 21, 2025. In

briefing, Plaintiff dropped its challenge to the Immunome Transaction.12 The court

heard oral argument on April 21, 2026.13

19. Rule 23.1 is the procedural embodiment of the “cardinal precept” of

Delaware law “that directors, rather than shareholders, manage the business and

affairs of the corporation.”14 “In a derivative suit, a stockholder seeks to displace the

board’s authority over a litigation asset and assert the corporation’s claim.”15

Because derivative litigation impinges on the managerial freedom of directors in this

way, “a stockholder only can pursue a cause of action belonging to the corporation if

(i) the stockholder demanded that the directors pursue the corporate claim and they

wrongfully refused to do so or (ii) demand is excused because the directors are

incapable of making an impartial decision regarding the litigation.”16

20. A stockholder can satisfy the demand requirement by pleading that

demand is futile. In Zuckerberg,17 the Delaware Supreme Court adopted the

“universal test” for demand futility that blends elements of the two precursor tests:

12 See Pl.’s Answering Br. at 47–59.

13 Dkt. 71.

14 Aronson v. Lewis, 473 A.2d 805, 811 (Del. 1984) (citing 8 Del. C. § 141(a)), overruled

on other grounds by Brehm v. Eisner, 746 A.2d 244 (Del. 2000).
15 United Food & Com. Workers Union & Participating Food Indus. Empls. Tri-State

Pension Fund v. Zuckerberg, 250 A.3d 862, 876 (Del. Ch. 2020) [“Zuckerberg I”], aff’d,
262 A.3d 1034 (Del. 2021).
16 Id.

17 262 A.3d 1034 (Del. 2021).

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Aronson18 and Rales.19 When conducting a demand futility analysis under

Zuckerberg, Delaware courts ask, on a director-by-director basis:

(i) whether the director received a material personal
benefit from the alleged misconduct that is the subject of
the litigation demand;

(ii) whether the director faces a substantial likelihood of
liability on any of the claims that would be the subject of
the litigation demand; and

(iii) whether the director lacks independence from someone
who received a material personal benefit from the alleged
misconduct that would be the subject of the litigation
demand or who would face a substantial likelihood of
liability on any of the claims that are the subject of the
litigation demand.20

21. “If the answer to any of the questions is ‘yes’ for at least half of the

members of the demand board, then demand is excused as futile.”21 Although the

Zuckerberg test displaced the prior tests from Aronson and Rales, cases properly

applying Aronson and Rales remain good law.22

22. To plead demand futility under any Zuckerberg theory, a stockholder

must allege “particularized factual statements that are essential to the claim.”23 “[I]t

18 473 A.2d 805 (Del. 1984).

19 634 A.2d 927 (Del. 1993).

20 Zuckerberg, 262 A.3d at 1059.

21 Id.

22 Id. In 2023, the Court of Chancery amended its rules to reflect the Delaware
Supreme Court’s adoption of the Zuckerberg test and modernize the language and
presentation of the Rules to bring them closer in style to the Federal Rules of Civil
Procedure. See In re: Amendments to Rules 7, 10, 17–25, and 171 of the Court of
Chancery Rules, Sections, III, IV, and XVI (Del. Ch. Sep. 25, 2023) (ORDER).
23 Brehm, 746 A.2d at 254.

8
is generally understood that for a fact to be pled ‘with particularity,’ it must have

some indicia of specificity.”24 A plaintiff must do more than provide notice pleading

permitted under Rule 8.25

23. The Rule 23.1 particularity requirement is not as strict as the Rule 9

particularity requirement, because Rule 23.1 does not call for “newspaper facts.” 26

“[E]ven with Section 220 documents in hand, derivative plaintiffs would be hard

pressed to plead . . . ‘who, what, when, where and how’ facts about fiduciary

wrongdoing” as derivative plaintiffs typically do not have the means to know those

“newspaper” facts like fraud claimants do.27 Still, the particularity requirement of

Rule 9 remains a “useful guidepost.”28 Rule 9 requires, “with respect to the subjects

24 Elburn ex rel. Invs. Bancorp, Inc. v. Albanese, 2020 WL 1929169, at *7 (Del. Ch.

Apr. 21, 2020) [“Invs. Bancorp. I”], appeal denied sub nom. Albanese v. Elburn ex rel.
Invs. Bancorp, Inc., 237 A.3d 820 (Del. 2020) (TABLE); see also Zuckerberg I, 250 A.3d
at 876–77(“Rule 23.1 requires that a plaintiff allege specific facts[.]”); Hughes v.
Xiaoming Hu, 2020 WL 1987029, at *10 (Del. Ch. Apr. 27, 2020) (same); In re GoPro,
Inc., 2020 WL 2036602, at *8 (Del. Ch. Apr. 28, 2020)(“The plaintiff pleading demand
futility must inform the defendants of the precise transactions at issue by describing
with particularity the specific misconduct in which each defendant is alleged to have
participated.” (citation modified)).
25 Invs. Bancorp. I, at *7–9.

26 Elburn ex rel. Invs. Bancorp, Inc. v. Albanese, 2020 WL 4194865, at *4–5 (Del. Ch.

July 21, 2020) [“Invs. Bancorp. II”] (denying application to certify interlocutory
appeal), appeal denied sub nom. Albanese v. Elburn ex rel. Invs. Bancorp, Inc., 237
A.3d 820 (Del. 2020) (TABLE).
27 Invs. Bancorp II, 2020 WL 4194865, at *5; Invs. Bancorp I, 2020 WL 1929169, at

*8 (observing that derivative plaintiffs asserting fiduciary breaches “were not in the
board room, and, unlike fraud, were not the direct targets of the wrongful behavior”).
28 See Invs. Bancorp I, 2020 WL 1929169, at *9 (describing this court’s “articulation

of Rule 9(b)’s pleading requirements” in Kahn Brothers & Co., Inc. Profit Sharing
Plan and Tr. v. Fischbach Corp., 1989 WL 109406, at *4 (Del. Ch. Sep. 19, 1989) as
“a useful guidepost for Rule 23.1”).

9
it treats, some greater degree of specificity in pleading. The rule gives to defendants

a right to insist that the circumstances constituting the alleged fraud be specified.”29

24. Rule 23.1 imposes a pleading-stage requirement. “While Rule 23.1

requires that a plaintiff allege specific facts, ‘he need not plead evidence.’” 30 And

although the requirement of factual particularity is a heightened pleading

requirement, it “does not entitle a court to discredit or weigh the persuasiveness of

well-pled allegations.”31 “[O]nce a plaintiff pleads particularized allegations, then the

plaintiff is entitled to all ‘reasonable inferences that logically flow from particularized

facts alleged by the plaintiff.’”32 As the high court explained in Marchand, “[t]he

standard for conducting this inquiry at the demand futility stage is well balanced,

29 Kahn, 1989 WL 109406, at *4.

30 Hughes, 2020 WL 1987029, at *10 (quoting Aronson, 473 A.2d at 816); Ontario

Provincial Council of Carpenters’ Pension Tr. Fund v. Walton, 2023 WL 3093500, at
*29 (Del. Ch. Apr. 26, 2023) (same); Zuckerberg I, 250 A.3d at 877 (same); In re Ezcorp
Inc. Consulting Agreement Deriv. Litig., 2016 WL 301245, at *33 (Del. Ch. Jan. 25,
2016) (same).
31 Zuckerberg I, 250 A.3d at 877.

32 Hughes, 2020 WL 1987029, at *10 (quoting Beam ex rel. Martha Stewart Living

Omnimedia, Inc. v. Stewart, 845 A.2d 1040, 1048 (Del. 2004)) (citation modified); see
also Melbourne Mun. Firefighters’ Pension Tr. Fund ex rel. Qualcomm, Inc. v. Jacobs,
2016 WL 4076369, at *1 n.1 (Del. Ch. Aug. 1, 2016) (“When considering a motion to
dismiss under Rule 23.1, this Court affords plaintiffs all reasonable inferences that
logically flow from the particularized facts alleged in the complaint.” (quoting
Postorivo v. AG Paintball Hldgs., Inc., 2008 WL 553205, at *4 (Del. Ch. Feb. 29,
2008))); Teamsters Union 25 Health Servs. & Ins. Plan v. Baiera, 119 A.3d 44, 56 (Del.
Ch. 2015) (“I accept as true Plaintiff’s particularized allegations of fact and draw all
reasonable inferences that logically flow from those allegations in Plaintiff’s favor.”
(citing White v. Panic, 783 A.2d 543, 549 (Del. 2001))).

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requiring that the plaintiff plead facts with particularity, but also requiring that this

Court draw all reasonable inferences in the plaintiff’s favor.”33

25. The demand analysis is conducted as to the board in place at the time

that the claims at issue were “validly in litigation.”34 This rule protects

representative plaintiffs by preventing defendants from recomposing a board after a

derivative claim is filed to strengthen Rule 23.1 arguments.35

26. When Plaintiff filed this action, the Board comprised nine members:

Sidransky, Cabilly, Spiegel, Goldberg, Orbach, Appel, Bisker-Leib, Martel, and

Berlin, (together, the “Demand Board”).36 To show demand futility, Plaintiff must

allege particularized facts creating a reason to doubt that five of the nine Demand

Board members were capable of impartially considering a demand.37

33 Marchand v. Barnhill, 212 A.3d 805, 818 (Del. 2019).

34 Braddock v. Zimmerman, 906 A.2d 776, 785 (Del. 2006).

35 See Harris v. Carter, 582 A.2d 222, 231 (Del. Ch. 1990) (“When claims have been

properly laid before the court and are in litigation, neither Rule 23.1 nor the policy it
implements requires that a court decline to permit further litigation of those claims
upon the replacement of the interested board with a disinterested one.”); Park Empls.’
& Ret. Bd. Empls.’ Annuity & Benefit Fund of Chi. v. Smith, 2016 WL 3223395, at
*10 (Del. Ch. May 31, 2016) (describing as “problematic” a situation “where a
manipulation of board composition is employed to discourage meritorious derivative
litigation”), aff’d sub nom. Park Empls.’ & Ret. Bd. Empls.’ Annuity & Benefit Fund
of Chi. ex rel. BioScrip, Inc. v. Smith, 175 A.3d 621 (Del. 2017) (TABLE).
36 Am. Compl. ¶¶ 94, 137.

37 In re INFOUSA, Inc. S’holders Litig., 953 A.2d 963, 989–90 (Del. Ch.
2007)(“Plaintiffs must show that a majority—or in a case where there are an even
number of directors, exactly half—of the board was incapable of considering
demand.”).

11
27. Defendants concede that three of the nine Demand Board members—

Sidransky, Cabilly, and Orbach—are incapable of impartially considering a

demand.38 Plaintiff concedes that four of the remaining six—Appel, Bisker-Leib,

Martel, and Berlin—are capable of impartially considering a demand.39 To

demonstrate demand futility, therefore, Plaintiff must demonstrate that the

remaining two directors—Spiegel and Goldberg—are incapable of impartially

considering a demand. Plaintiff advances arguments as to each of Spiegel and

Goldberg under each of the three prongs of Zuckerberg.

28. Under Zuckerberg’s first prong, a director is disabled for demand futility

purposes if they received a material personal benefit from the wrongdoing that was

not shared equally with the stockholders.40 Whether a benefit is material is a

question of fact that takes into consideration the amount, the recipient’s wealth, and

the circumstances surrounding the benefit.

29. To allege that Spiegel and Goldberg received a material personal benefit

from the Notes Transaction, Plaintiff focuses on a single factual allegation: Spiegel

and Goldberg are “Venture Advisors” of Israel Biotech.41

30. Plaintiff contends that as Venture Advisors, Spiegel and Goldberg are

limited partners in Israel Biotech, giving them material financial interests in the

38 Director Defs.’ Opening Br. at 49–50 (failing to advance arguments as to those

directors)
39 Pl.’s Answering Br. at 26–47 (failing to advance arguments as to those directors).

40 Zuckerberg, 262 A.3d at 1058; Rales, 634 A.2d at 936.

41 See Pl.’s Answering Br. at 26–36, 46–47.

12
performance of Israel Biotech’s large investment in Ayala.42 But Plaintiff does not

plead the size of Spiegel’s or Goldberg’s investments in Israel Biotech. Rather,

Plaintiff relies solely on at statement by Sidransky from a 2019 news article that

Venture Advisors have “skin in the game” as investors in Israel Biotech.43 It is

unclear from the quote whether that “skin” comprises interests in Israel Biotech or

the portfolio companies. Only the former supports Plaintiff’s argument. And even

then, a vague statement quoted by the press in 2019 regarding Venture Advisors

generally is not sufficiently particularized to demonstrate that Spiegel and Goldberg

had material interests in the Notes Transaction.

31. Plaintiff also cites to Venture Advisors’ key management roles at Israel

Biotech’s portfolio companies. Israel Biotech markets Venture Advisors as “changing

the equation” in its portfolio companies through hands-on involvement, including

“strategic drug development leadership,” “recruiting additional key personnel[,]” and

“financial help[.]”44 But those allegations do not support a reasonable inference that

Spiegel and Goldberg had hands-on involvement in Israel Biotech itself as opposed to

its portfolio companies—here, Ayala. And that fact does not impugn their ability to

impartially consider a demand.

42 Id. at 37.

43 Id. at 38; Am. Compl. ¶ 34.

44 Am. Compl. ¶ 36; Pl.’s Answering Br. at 36–38.

13
32. The Amended Complaint’s allegations regarding Spiegel’s and

Goldberg’s ties to Israel Biotech fail to plead that either director received a material

personal benefit under Zuckerberg’s first prong.

33. Plaintiff also alleges that Spiegel and Goldberg received material

benefits from approving the Notes Transaction because they each have a material

personal interest in serving as directors. According to Plaintiff, each would avoid

taking action against Israel Biotech or Arkin to preserve their Board positions.45

Further, Spiegel and Goldberg each received a payment of $70,000 upon the closing

of the Immunome Transaction. Plaintiff claims that the payments constitute

material benefits to Spiegel and Goldberg.46

34. Generally, “Delaware law recognizes that directors will be paid a fair

and reasonable amount. For that reason, when director fees are not excessive, mere

allegations of payment of director fees [or their continuation] are insufficient to create

a reasonable doubt as to the director’s independence.”47

35. The Amended Complaint lacks any allegations—pled with particularity

or otherwise—suggesting that Spiegel’s or Goldberg’s director compensation is

excessive. Nor does the Complaint allege that the $70,000 payments were material

to them. These allegations also fail to satisfy the first prong of Zuckerberg.

45 Am. Compl. ¶ 139.

46 Id. ¶¶ 143–44.

47 In re Trade Desk, Inc. Derivative Litig., 2025 WL 503015, at *16 (Del. Ch. Feb. 14,

2025), aff’d, 350 A.3d 1223 (Del. 2025) (quoting Simons v. Brookfield Asset Mgmt.
Inc., 2022 WL 223464, at *15 (Del. Ch. Jan. 21, 2022)).

14
36. Under Zuckerberg’s second prong, Plaintiff must plead particularized

factual allegations demonstrating that Spiegel or Goldberg faces a substantial

likelihood of liability for the Notes Transaction.48 Plaintiff’s arguments under

Zuckerberg’s second prong focus on its argument that the Notes Transaction was not

entirely fair to Ayala’s stockholders.49 But the Complaint makes no allegations

particular to Spiegel and Goldberg that relate to the Notes Transaction.50 The

Complaint does not even state whether Spiegel or Goldberg voted on the transaction,

much less voted to approve it.51 Given the dearth of allegations concerning them

specifically, it is difficult to understand what liability either director faces. The

Complaint fails under the second prong of Zuckerberg.

37. Zuckerberg’s third prong requires Plaintiff to plead “facts from which

the director’s ability to act impartially on a matter important to the interested party

can be doubted because that director may feel either subject to the interested party’s

dominion or beholden to that interested party.”52 Doubts about a director’s

independence may arise “because of financial ties, familial affinity, a particularly

close or intimate personal or business affinity or because of evidence that in the past

48 Los Angeles City Employees’ Ret. Sys. v. Sanford, 352 A.3d 276, 325–28 (Del. Ch.

2026) (discussing the relationship between stating a claim under Rule 12(b)(6) and
demonstrating that demand is futile based on a substantial likelihood of liability
under Zuckerberg).
49 Pl.’s Answering Br. at 39–46.

50 See generally Am. Compl.

51 See Pl.’s Answering Br. at 41–44.

52 In re Carvana Co. S’holders Litig., 2022 WL 2352457, at *8 (Del. Ch. June 30, 2022)

(quoting Sandys v. Pincus, 152 A.3d 124, 128 (Del. 2016)).

15
the relationship caused the director to act non-independently vis à vis an interested

[party].”53

38. To satisfy Zuckerberg’s third prong, Plaintiff relies on its allegations

around Spiegel’s and Goldberg’s positions as Venture Advisors to Israel Biotech.54

Plaintiff relies on the same allegations on which Plaintiff bases its prong-one

argument. Plaintiff alleges that Spiegel and Goldberg are Venture Advisors to Israel

Biotech. This means that Israel Biotech places them on boards of portfolio companies,

where they are “hands-on.”55 These board positions give Spiegel and Goldberg

opportunities to earn “skin in the game.”56 Again, it is unclear whether this “skin in

the game” refers to interests in Israel Biotech or the portfolio companies. Israel

Biotech appointed Spiegel and Goldberg to Ayala and its various iterations. Plaintiff

identifies no other boards on which Spiegel or Goldberg serve. Effectively, Plaintiff’s

theory boils down to the idea that Spiegel and Goldberg lack independence from Israel

Biotech because Israel Biotech appointed them to the Board and might appoint them

to other boards. This is not enough to demonstrate demand futility under Delaware

law.57

53 Beam, 845 A.2d 1040, 1051.

54 See Pl.’s Answering Br. at 46–47.

55 Am. Compl. ¶ 37.

56 Id. ¶ 34.

57 In re KKR Fin. Hldgs. LLC S’holder Litig., 101 A.3d 980, 996 & n.64 (Del. Ch. 2014),

aff’d sub nom. Corwin v. KKR Fin. Hldgs. LLC, 125 A.3d 304 (Del. 2015) (“It is well-
settled Delaware law that a director’s independence is not compromised simply by
virtue of being nominated to a board by an interested stockholder.” (collecting cases));
see also Flannery v. Genomic Health, Inc., 2021 WL 3615540, at *16 (Del. Ch. Aug.

16
39. Because the Complaint fails to satisfy any of the prongs of Zuckerberg’s

three-part test, Plaintiff cannot demonstrate that demand is futile as to the Demand

Board.

40. Defendants’ motions to dismiss the Amended Complaint under Rule

23.1 are GRANTED. The court need not reach Defendants’ other dismissal

arguments.

/s/ Kathaleen St. J. McCormick
Chancellor Kathaleen St. J. McCormick
Dated: May 27, 2026

16, 2021) (granting dismissal, noting that “the fact the [investor] appointed [the
director] to these various boards does not, alone, cloud her independence as a
[company] fiduciary”).

17