In a recent development, Australian medicinal cannabis company Ecofibre has terminated the employment of Dr. Alex Capano, its former Chief Science Officer (CSO) and President of EOF Bio LLC. Dr. Capano had been leading the subsidiary focused on commercializing intellectual property related to treating endometriosis and ovarian cancer, developed by Ecofibre and the University of Newcastle in Australia.
The Allegations
Dr. Capano has filed a verified complaint against Ecofibre in the Court of Chancery for the State of Delaware. The complaint alleges that Ecofibre’s directors were “conflicted” in their dealings with the company. Specifically, it claims that the directors prioritized their interests and those of the parent company over the subsidiary (EOF Bio). The complaint highlights several instances of alleged self-dealing by the directors, including negotiating agreements that unfairly benefited the parent company.
EOF Bio’s Pre-Money Valuation Controversy
In July 2023, Ecofibre announced that EOF Bio had a pre-money valuation of $30 million. Dr. Capano claims that she was not consulted about this valuation, which she considers “baseless” and an attempt to artificially inflate Ecofibre’s stock value. Despite earlier commendations from Ecofibre’s health and government relations committee, Dr. Capano was subsequently placed on administrative leave.
Legal Action and Implications
Dr. Capano’s legal action not only targets Ecofibre but also its board members and executives. The case alleges that the conflicted directors enriched themselves at the expense of EOF Bio and its minority members. Ecofibre, which raised $5 million through the sale of part of its holding in EOF Bio LLC, now faces legal scrutiny over its handling of subsidiary matters.
