NRX Pharmaceuticals, Inc. $2.675 Million Stockholder Settlement

NRX Pharmaceuticals agreed to a proposed $2.675 million settlement resolving claims arising from the SPAC merger between Big Rock Partners Acquisition and NeuroRx.

Outline:

Big Rock Partners Acquisition combined with NeuroRx in a SPAC transaction that created NRX Pharmaceuticals. Stockholders later challenged the merger process and information provided before the transaction. The lawsuit alleges that defendants breached fiduciary duties by rushing the sale process and providing materially misleading information that affected stockholders’ redemption decisions. The settling parties agreed to resolve the claims for $2.675 million.

Timeline:

• December 13, 2020: Big Rock Partners Acquisition Corp. entered into a business combination agreement with NeuroRx, Inc. under which NeuroRx would merge with and become a subsidiary of BRPA.

• May 21, 2021: BRPA filed a prospectus telling stockholders about the proposed NeuroRx transaction and their right to redeem shares for approximately $10.80 per share.

• May 24, 2021: BRPA stockholders voted to approve the merger with NeuroRx.

• June 8, 2021: The redemption deadline passed, leaving approximately 552,196 redemption-eligible shares that were not redeemed.

• April 2, 2024: Jacob Fulcher filed a stockholder class action alleging that defendants breached fiduciary duties in connection with the merger process and disclosures made to BRPA stockholders.

Background:

Big Rock Partners Acquisition Corp. was a SPAC that raised approximately $71.7 million through its 2017 initial public offering. Public stockholders were given the right to redeem their shares for their portion of the money held in the SPAC’s trust account before a business combination.

In December 2020, BRPA agreed to combine with NeuroRx, Inc. Before the merger, BRPA issued a prospectus explaining the proposed transaction and informing stockholders that they could redeem their shares for approximately $10.80 per share instead of remaining invested in the combined company.

The lawsuit alleges that the information provided to stockholders was materially incomplete or misleading. Among other things, the plaintiff claims BRPA failed to disclose its net cash per share and portrayed NeuroRx as having an approximately $500 million valuation based in part on the valuation of its partner, Relief Therapeutics, in connection with the development of a COVID-19 treatment.

According to the complaint, Relief had already indicated that the drug had failed to capitalize on the pandemic opportunity, had stopped cooperating with NeuroRx, and had refused to provide additional funding for the treatment. The plaintiff alleges that the prospectus nevertheless represented that the NeuroRx-Relief relationship remained intact.

The plaintiff claims these alleged misrepresentations and omissions impaired BRPA stockholders’ ability to make an informed decision about whether to redeem their shares before the merger.

The lawsuit also alleges that the defendants rushed the sale process and agreed to an unfair merger, resulting in claims for breach of fiduciary duties of loyalty and candor.

After mediation and extended negotiations, the parties agreed to resolve the settled claims for $2.675 million without any admission of liability.

What Can Investors Expect Now?

NRX Pharmaceuticals agreed to a proposed $2.675 million settlement resolving claims arising from the SPAC merger between Big Rock Partners Acquisition and NeuroRx.

If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section.