Court Opinion

ID: 4680667
Source: CourtListenerOpinion
Date Created: 2021-04-23 19:03:45.435119+00
Date Added: 2024-06-11T08:03:56.646528
License: Public Domain

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

MAVERICK THERAPEUTICS, INC.,               )
                                           )
                   Plaintiff,              )
      and                                  )
                                           )
MILLENNIUM                                 )
PHARMACEUTICALS, INC.,                     )
                                           )
                   Plaintiff-Intervenor,   )
                                           )
      v.                                   ) C.A. No. 2019-0002-SG
                                           )
HARPOON THERAPEUTICS, INC.,                )
                                           )
                   Defendant.              )

                         MEMORANDUM OPINION

                      Date Submitted: December 17, 2020
                      Further Submission: March 24, 2020
                         Date Decided: April 23, 2021

Jody C. Barillare, of MORGAN, LEWIS & BOCKIUS LLP, Wilmington, Delaware;
OF COUNSEL: Rollin B. Chippey II and Benjamin P. Smith, of MORGAN, LEWIS
& BOCKIUS LLP, San Francisco, California, Attorneys for Plaintiff.

John P. DiTomo, Elizabeth A. Mullin, and Aubrey J. Morin, of MORRIS, NICHOLS,
ARSHT & TUNNELL LLP, Wilmington, Delaware; OF COUNSEL: John Ruskusky
and Lisa C. Sullivan, of NIXON PEABODY, LLP, Chicago, Illinois, Attorneys for
Plaintiff-Intervenor.

Gregory P. Williams, Steven J. Fineman, Nicole K. Pedi, and Angela Lam, of
RICHARDS, LAYTON & FINGER, P.A., Wilmington, Delaware; OF COUNSEL:
Martin S. Schenker and Lilia Lopez, of COOLEY LLP, San Francisco, California
and Jeffrey Karr, of COOLEY LLP, Palo Alto, California, Attorneys for Defendant.

GLASSCOCK, Vice Chancellor
      This matter involves fraud in the sale of a spin-off designed to develop anti-

cancer technology. The matter has been tried, and I issued a Memorandum Opinion

finding that the seller had committed fraud; 1 what follows is my decision on

damages.

      The foregoing is the gravamen of the legal action, but this will not, I hope,

cause the reader to become jaundiced to the (to a lay person) near miraculous

technology being developed by the entities involved. This is described in more detail

below (still at an elementary level) but involves recruiting the body’s natural

defenses, T cells, and inducing them to safely destroy cancerous tumors with

minimal damage to healthy cells. That there are people alive today who can recall a

time before the development of antibiotics is testament to the enormous advances

science has made in the preservation of human health, and the lessening of human

suffering. That those in this field are themselves human and subject to the human

failings that are the lot of mankind should not diminish this fact.

      The defendant, Harpoon Therapeutics, Inc. (“Harpoon”) spun off the

technology referred to above into a new entity, Maverick Therapeutics, Inc.

(“Maverick”).         Plaintiff-Intervenor       Millennium    Pharmaceuticals,     Inc.

(“Millennium”) is a wholly-owned subsidiary of Takeda Pharmaceutical Company

1
 See generally Maverick Therapeutics, Inc. v. Harpoon Therapeutics, Inc., 2020 WL 1655948
(Del. Ch. Apr. 3, 2020) [hereinafter Maverick I].
                                             1
Limited (“Takeda”).      Millennium agreed, through a complex “build-to-buy”

agreement, to fund Maverick’s research in exchange for the option to eventually

purchase the company. The fraud involved misrepresentations about the scope of

the protection the new entity would enjoy from competing with its parent and seller,

Harpoon. Millennium believed Maverick would be broadly free from Harpoon’s

competition in the inducible T cell field for four years. This was particularly

important to Millennium, as Harpoon had created the technology being sold, and

was thus in a position to create other such competing technology, and because

Harpoon had some of the most-recognized talent in the field in its employ, talent that

was supposed to assist in the development of the Maverick technology.                As

Millennium feared, Harpoon developed a new inducible T cell concept that may

ultimately compete with Maverick’s. I found that while this was contractually

permissible in terms of the complex non-compete agreed to by Harpoon and

Maverick, it was was contrary to the misleading representations Harpoon made to

Millennium to induce its investment.

      Resolution of the damages question is, in theory, simple.           What is the

difference between what Millennium thought it had purchased, and what it actually

got as a result of Harpoon’s fraud? Getting to a sum certain in practice is less simple,

as evidenced by the stark discrepancy between the valuations offered. The help

provided to me as finder of fact by the parties’ respective experts is reminiscent of

                                           2
that given me by valuation experts in those long-ago appraisal litigations of the

twenty-teens: here, Millennium’s expert opines that the damages derived (using the

Capital Markets Approach) are $146.65 million, far exceeding the investment price

itself. Harpoon’s expert reckons that damages are as low as $400,000; that is,

approximately 1/367th of the damages estimated by Millennium’s expert.

      Investment into such arcane medical arenas incorporates quite significant risk.

There are many hurdles, both technical and regulatory, before a novel treatment goes

from concept to actual application to human beings. Many ventures never provide

any return on investment. The build-to-buy investment Millennium agreed to make

in Maverick can thus be analogized to the purchase of a lottery ticket, a risky

investment with a low probability of a large pay-out. This limited analogy unfairly

omits the sweat and effort, even genius, required to bring to market a cancer

treatment that could, if successful, meaningfully change many human lives.

Nonetheless, in considering damages, it is a useful analogy, and I employ it here.

To calculate Millennium’s damages, then, is to calculate the difference between two

lottery tickets: the ticket Millennium thought it had purchased, and the ticket it

received as a result of Harpoon’s fraud.

      What was the value of that first lottery ticket? That is, what is the value of

Millennium’s investment in light of its reasonable belief that it was getting a broad

four-year non-compete from Harpoon? I find that the best evidence of the value of

                                           3
what Millennium thought it was getting comes from the arms-length negotiations

between Harpoon on the one hand, and Maverick/Millennium on the other.

Millennium invested in an entity that owned technology, and the facility to develop

it, that, if the lottery long-shot came through, could have enormous value. The price

to which these parties agreed necessarily factors in the low probability of ultimate

success as well as the potentially large pay-off upon such success. Thus, the value

of Millennium’s reasonable expectations is defined by what it agreed to invest,

reduced to present value as of the date of that agreement.

       More challenging is valuing the lottery ticket Millennium ultimately got. The

comparatively narrow non-compete Harpoon agreed to did not diminish Maverick’s

chances of successfully monetizing an inducible T cell engager. The reduced scope

of the non-compete does affect the potential pay-off, however. If Maverick had the

inducible T cell field to itself for four years, and if it was able to bring the technology

to commercial viability, it would likely be the first in the market, implying a lucrative

position for its product. With only the narrow non-compete, Maverick could find

itself in contemporaneous competition with Harpoon, which, as it turned out, is

precisely what transpired; Harpoon is developing a competing inducible T cell

cancer treatment. Thus, compared to the first lottery ticket, this second lottery ticket

has the same chances of winning, but potentially a smaller prize. Clearly, a lottery

                                            4
ticket with a 1% chance of winning $1,000 is worth less than one with a 1% chance

of winning $1 million.

       Neither Harpoon nor Maverick, today, is certain of monetizing these

products—both remain long shots. Similarly, at the time of Harpoon’s fraud, its

ability to develop a drug to compete with Maverick’s was only a possibility; still, it

was one foreseen and intended by Harpoon. It referred to that possibility—Maverick

and Harpoon entering the market as contemporaries—by the memorable name

“T[akeda]’s Nightmare,” Takeda being the parent of Millennium 2

       In summary, one of the things Millennium though it was paying for when it

invested in Maverick was the promise that Takeda’s Nightmare would never become

reality. The value of that promise was included in the price Millennium was willing

to pay, and if Millennium knew it wasn’t receiving that promise it would have paid

less, if it transacted at all. The narrower non-compete that Maverick and Harpoon

agreed to instead didn’t make that same promise, and while that didn’t ensure

Takeda’s Nightmare, it didn’t protect Millennium from it either. The possibility of

Takeda’s Nightmare, a possibility created by Harpoon’s fraudulent representations

as to the scope of the non-compete, decreased the value of Millennium’s investment.

Millennium got less than what it was promised and was damaged in the amount of

2
 Maverick I, at *11. I refer to the possibility that Maverick would find itself with Harpoon as a
contemporaneous competitor in the inducible T cell field as “Takeda’s Nightmare” throughout.
                                               5
the value of that unfulfilled promise. The difference between the value of the narrow

non-compete that Maverick ultimately got compared to the broader protection that

Harpoon caused Millennium to believe Maverick would enjoy represents the tort

damages here. Those damages must be derived as of the time of the tort, when

Takeda’s Nightmare was still only a possibility.

      Thus, Millennium has demonstrated it has been defrauded, and damaged as a

result. In reducing those damages to an award, I must have a rational basis to derive

them, but damages need not be proven with mathematical certainty, else the

tortfeasor would be potentially beyond the reach of justice. Here, I first value

Millennium’s investment in light of a broad Harpoon non-compete—represented by

the then-present value of what Millennium negotiated and agreed to invest in

contemplation of such a non-compete. Next, I value that investment in light of

Takeda’s Nightmare; that is, with Maverick entering the market with a

contemporaneous competitor, rather than a unique product, as made possible by the

actual, narrow non-compete. Such a splitting of the market would, logically but

simplistically, reduce the value of a monetized Maverick product—the pay-off if

Maverick wins the lottery—by half, I conclude. Because that potential pay-off drove

the present value of Millennium’s investment, I determine that the investment would

lose half its value in case Takeda’s Nightmare came to pass.

                                         6
      But half of the investment value overstates the damages. At the time of

investment, Harpoon’s ability to develop the technology leading to Takeda’s

Nightmare was not a sure thing—thus the value of the non-compete must be re-

reduced accordingly. At oral argument, Harpoon’s counsel referred to the possibility

of Harpoon becoming a contemporaneous competitor, even given the narrow non-

compete, as one-in-four, or less. I find Harpoon too modest in this assertion,

however. Harpoon pioneered the inducible T cell field. It employs some of the best

scientists in that field, cryptically working against Maverick’s interest. Harpoon

must have had confidence in its ability to compete, otherwise it would not have

bothered to defraud Millennium. In light of that record, I find that the value of the

non-compete should be discounted by no more that 20% to account for the fact that,

even with the narrow non-compete, Takeda’s Nightmare was not inevitable.

      In other words, I conclude that the value of Millennium’s investment in

Maverick with Harpoon as a contemporary competitor was half of what it would

have been with the market to itself, and that as of the time of the fraud, the

uncertainty that (absent a broad non-compete) Harpoon would become such a

competitor reduces the value of a prohibitory non-compete by 20%. I thus conclude

an investor would pay 80% of 1/2 (that is, 40%) less than the original investment in

light of the narrow non-compete. The result of the fraud, therefore, was that

Millennium received for its investment an entity reduced in value by 40%. That

                                         7
amount is derived below; Millennium is entitled to receive that amount in damages,

with pre-judgment interest.

                                     I. BACKGROUND 3

       A. Nature of the Action

       This post-trial Memorandum Opinion resolves the damages phase of a lawsuit

brought by plaintiff Maverick against defendant Harpoon. I previously found that

Harpoon had fraudulently induced Millennium, Takeda’s wholly-owned subsidiary,

to invest in Maverick by representing that Harpoon would not compete with

Maverick’s development of conditionally active T cell engager therapies for four

years. 4 A more abundant recitation of the facts leading to that finding can be found

in my Memorandum Opinion of April 3, 2020.5 Here, I recount only the facts

relevant to my finding on damages.

3
  I recite the facts as I find them based upon the evidence submitted by the parties. Unless
otherwise noted, the facts in this Background were stipulated by the parties or proven by a
preponderance of evidence. To the extent there was conflicting evidence, I have weighed the
evidence and made findings based on the preponderance of the evidence. In pursuit of brevity, I
sometimes omit from this Background discussion testimony in conflict with the preponderance of
the evidence. In such cases, I considered the conflicting testimony, and I rejected it. Citations to
Joint Trial Exhibits (“JX”) are expressed as JX __, at __. Page numbers for JXs are derived from
the stamp on each JX page. For clarity, certain citations to JXs reference the section number of a
document (§) instead of the JX page. Citations in the form “Tr.” refer to the trial transcripts.
Citations in the form “Stip. ¶ __” refer to the parties’ several stipulations of fact.
4
  See generally Maverick I. Capitalized terms not defined herein are defined in Maverick I.
5
  See id.
                                                 8
        B. Harpoon Develops TriTAC and ProTriTAC

        Harpoon was founded by non-parties Dr. Luke Evnin and Dr. Patrick Baeuerle

to develop marketable cancer treatments. 6 At the time Harpoon was founded, T cell

therapies were a growing area of cancer drug development.7 “T cells” are white

blood cells that target and kill other cells in the body, usually those that are infected

with viruses or pathogens.8 T cell therapies treat cancer by using the body’s own

defenses, the T cells, to kill cancer cells.9 A patient undergoing T cell therapy

receives injections of “T cell engagers,” protein molecules designed in a laboratory,

that bind to, or “recruit,” the body’s T cells to destroy the cancer.10 However,

because T cells are indiscriminate killers, T cell therapies also risk harming the

patient by destroying healthy cells. 11

        T cell therapy has only been approved by the FDA for treating one category

of cancers: blood cancers.12 In blood cancers, like leukemia, T cell therapies prove

successful because even though the T cells kill both malignant and healthy blood

cells, the body regenerates blood quickly enough to minimize harm to the patient.13

The same cannot be said for the other major category of cancer: solid tumor

6
  See id. at *2.
7
  See id.
8
  See id.
9
  See id.
10
   See id.
11
   See id.
12
   See id. at *3.
13
   See id. at *2.
                                           9
cancers.14 Harpoon’s goal was to solve this problem; it sought to produce a T cell

therapy that could safely treat solid tumor cancers while leaving most healthy cells

intact. 15

        As noted above, the T cell engagers used in T cell therapy work by binding

the body’s T cells and cancer cells together so that the T cells kill the cancer cells.16

The structure of the T cell engager, which is a protein molecule, includes “binding

domains,” protein structures that bind, or “engage” certain cells. 17 In the context of

cancer treatment, T cell engagers generally have a “T cell engaging domain” to bind

to T cells and a “cancer targeting domain” to bind to cancer cells.18 The term

“binding affinity” is used to describe how well the binding domain does its job.19

The stronger the bind, and/or the longer it lasts, the more binding affinity the binding

domain has.20

        T cell engagers are either “inherently active” or “conditionally active.”21

Inherently active T cell engagers are capable of binding T cells to cancer cells at all

14
   See id.
15
   See id. at *2–*3.
16
   See id. at *2.
17
   See id.
18
   See id.
19
   See id. at *4. Binding affinity can describe a molecule as a whole or individual binding domains
on a molecule. Id. at *4, n.53. Each binding domain, sometimes called a “binding site,” can have
a unique binding affinity and the binding affinity of each may differ from that of the others as well
as from that of the whole molecule, depending on context. Id. at *3, *4, n.53.
20
   See id. at *4.
21
   Maverick I at *3. Conditionally active therapies are also referred to as “inducible” therapies,
meaning the therapy drug’s active state is induced at the tumor site. Id.
                                                10
times, or, in other words, they always possess binding affinity. 22 In conditionally

active therapies, also referred to as “inducible” therapies, the T cell engager only

binds cells together when cancer cells are present.23 As of the initial trial in this

matter, the FDA had not approved any conditionally active T cell therapies.24

       In seeking to develop a successful conditionally active therapy, Harpoon’s

first innovation was to design a molecule with three binding domains.25 In addition

to binding T cells and cancer cells, this molecule bound to a protein normally found

in the blood called albumin. 26 This third binding domain, called the “half-life

extension domain” would prolong the T cell engager’s existence in the body, giving

it more time to work. 27 Harpoon called the first advancement—prolonging the life

of the therapy drug through albumin binding—its “TriTAC” platform.28 TriTAC is

an inherently active T cell engager.29

       Next, Harpoon designed a second molecule that, like TriTAC, had three

binding domains.         Unlike TriTAC, the new concept was conditionally active.

Cancer cells release certain unique enzymes, or “proteases.”30            Harpoon’s

22
   See id.
23
   Id. at *3.
24
   Id. at *3; Stip. ¶ 18, Dkt. No. 233 (granted orally).
25
   Maverick I at *3.
26
   Id.
27
   Id.
28
   Id.
29
   Id.
30
   Id.
                                                  11
conditionally active T cell engager would only recruit T cells in the presence of these

unique proteases. 31 Harpoon called the second advancement—keeping the drug

inactive until in the presence of a cancer cell—its “ProTriTAC” platform.32

        C. The Maverick Spin-Out

        Around the time of the patent filing, in early 2016, Harpoon began considering

selling off portions of its technology portfolio. 33 Of the companies it reached out to,

Takeda expressed the most interest. 34 The parties initially centered on a dual build-

to-buy structure—Harpoon would transfer certain technologies to a new company,

Maverick, and Takeda’s subsidiary Millennium would invest in both Harpoon and

Maverick in exchange for options to purchase either or both at a later date.35

        Much of the early negotiations centered on dividing the technologies that

Maverick would focus on from the technologies that Harpoon would focus on.36

Harpoon represented to Millennium that it would work on the TriTAC platform—or

inherently active technology—and Maverick would work on the ProTriTAC

platform—or conditionally active technology.37

31
   Id.
32
   Id. at *3–*5.
33
   Id. at *5.
34
   Id.
35
   Id.
36
   Id. at *6.
37
   Id. at *6–7.
                                          12
       Millennium eventually expressed interest only in Harpoon’s ProTriTAC

platform, in other words, the inducible technology to be spun out into Maverick.38

Instead of Millennium investing in both Harpoon and Maverick, the parties

proceeded with negotiations toward a single build-to-buy. 39 Millennium would

invest in Maverick and Harpoon would remain an independent company.40

       Harpoon spun off Maverick in December 2016. 41                       An Asset Transfer

Agreement (the “ATA”) between Maverick and Harpoon governed the spin-out.42

Under Section 7.5 of the ATA, Harpoon agreed that it would not compete with

Maverick in the “Maverick Field” for four years. 43 At the time Maverick and

Harpoon entered the ATA, its definition of the Maverick Field encompassed all then-

existing, conditionally active T cell engagers.44

       In addition to intellectual property, various assets related to the Maverick

Field were transferred to Maverick under the ATA.45 Several employees also joined

38
   Id. at *8.
39
   Id. at *7–*8.
40
   Id.
41
   Id. at *12.
42
   Id.
43
    Id. The ATA defines the Maverick Field “as multi-specific Antigen-binding molecules that
include: (a) at least one domain that binds to an Immune Effector Target that (i) is formed from
two domains, each of which is impaired for Immune Effector Target binding, and (ii) undergoes a
resultant increase in Immune Effector Target binding affinity of at least 50 fold after an activation
event; (b) at least one domain that binds to one or more Therapeutic Targets; and (c) at least one
half-life extension domain, which domains (a) through (c) may be linked in various orders.” See
id.
44
   Id. at *13.
45
   Id.
                                                13
Maverick from Harpoon: Evnin became the chair of the Maverick Board; Baeuerle

became an observer of the Maverick Board; and both of them joined the “Takeda-

Maverick Joint Steering Committee.” 46 They both also continued to serve on the

Harpoon Board.47

       As part of the spin-out, Millennium, which was not a party to the ATA,

acquired 19.9% ownership of Maverick via a $10 million investment in Maverick’s

Series B Shares. 48 Maverick and Millennium also entered into a Collaboration

Agreement (the “Collaboration Agreement”), which provided for regular infusions

of funding from Millennium, as well as a Warrant to Purchase Common Stock of

Maverick Therapeutics, Inc. (the “Warrant Agreement” and together with the

Collaboration Agreement and the ATA, the “Agreements”), which provided

Millennium the right to later acquire Maverick. 49

       D. Harpoon Announces the New ProTriTAC and Maverick Sues

       Prior to the spin-out, Harpoon never informed Millennium that it intended to

develop conditionally active T cell therapies that would potentially compete with

Maverick’s. 50 In public statements after the spin-out, Harpoon continued to describe

the companies in a way that confirmed Millennium’s understanding of each

46
   Id. at *12.
47
   Id.
48
   Stip. ¶ 63, Dkt. No. 401.
49
   Maverick I at *12.
50
   Id.
                                         14
company’s trajectory as distinct.51 However, Harpoon began generating ideas for a

new conditionally active T cell therapy that would be outside the scope of the

Maverick Field as early as January 2017.52 Less than two weeks before the spin-

out, Evnin and Baeuerle discussed how to avoid the scope of the noncompete the

parties were negotiating; an evasion Baeuerle memorably described as “T’s

[Takeda’s] Nightmare.” 53

        In June of 2017, Harpoon hired Dr. Jack Lin, in part to help develop

conditionally active therapies. 54 Although Lin came to Harpoon with no direct

experience with T cell engagers, he had experience with antibodies, proteases, and

“peptide masking,” a technique with the potential to make protease-activated

inducible therapies. 55 Within two weeks of employment at Harpoon, he had a

scientific epiphany—a “serendipitous eureka moment.”56           By incorporating a

peptide mask into part of the albumin binding domain (the third binding domain of

the TriTAC molecule), he could achieve conditional activity.57

        In contrast to Maverick’s T cell engager, since renamed COBRA, the T cell

binding domain on Harpoon’s new ProTriTAC molecule is sheathed behind a

51
   Id. at *13.
52
   Id.
53
   Id. at *12.
54
   Id. at *15.
55
   Id.
56
   Id.
57
   Id.
                                        15
peptide mask on the albumin binding domain that prevents it from recruiting T

cells.58 Instead of binding to T cells, the binding site is bound to the mask.59 When

introduced to unique proteases present in a cancerous tumor, the peptide mask is

removed and the binding site can freely recruit T cells. 60

        Harpoon informed Maverick of its newly-developed conditionally active

technology a few days before publicly announcing the platform at the 2018 annual

meeting of the Society for Immunotherapy of Cancer (“SITC”) in Washington,

D.C. 61 Baeuerle called Maverick CEO Jim Scibetta and told him that Harpoon was

developing a conditionally active T cell engager.62 Scibetta then spoke with Evnin,

who confirmed that Harpoon was in fact competing with Maverick. 63 At the SITC

conference, Harpoon announced its new molecule, ProTriTAC, and offered proof-

of-concept data. 64 Two days later, Harpoon announced the closing of a $70 million

Series C financing round, part of which would be used to develop its ProTriTAC

platform.65 Over the next week, Scibetta had several meetings and phone calls with

Harpoon, during which he learned that ProTriTAC had been in development ever

58
   See id. at *12, *16.
59
   Id. at *16.
60
   Id.
61
   Id. at *19.
62
   Id.
63
   Id.
64
   Id.
65
   Id.
                                          16
since the spin-out. 66 Maverick initiated this suit against Harpoon for, among other

claims, breach of contract and misappropriation of trade secrets on January 3,

2019. 67 In my prior Memorandum Opinion, I resolved these claims in Harpoon’s

favor based largely on the language of the ATA.68

       E. Millennium’s Fraud Claim

       Millennium intervened, asserting claims against Harpoon for: (1) tortious

interference with business relations; (2) tortious interference with contract; (3)

fraudulent inducement to contract; (4) unjust enrichment; (5) unfair competition; and

(6) fraud.69 After a six-day bench trial in September 2019 (the “Liability Trial”), I

found sufficient evidence that Harpoon fraudulently induced Millennium into

entering the Collaboration and Warrant Agreements, pending a determination of

damages. 70

       Prior to the spin-out, Harpoon knowingly made false statements to

Millennium with the intent to induce Millennium into investing in Maverick.71

Based on those representations, Millennium reasonably believed it was purchasing

rights to develop conditionally active T cell engagers without fear of competition

66
   Id.
67
   See generally, e.g., Verified Compl. in Intervention, Dkt. No. 135.
68
   Maverick I at *37.
69
   See Verified Compl. in Intervention, Dkt. No. 135.
70
   I denied Millennium’s claims for tortious interference with contract and business relations, for
unfair competition, and unjust enrichment. Maverick I at *25–*37.
71
   Id. at *26–*30.
                                               17
from Harpoon in that field. 72 Harpoon confirmed Millennium’s understanding of

the deal by representing Harpoon’s and Maverick’s trajectories as separate and

exclusive.73

       However, although Harpoon understood that Millennium had entered

negotiations with a broad concept of investing in conditionally active T cell

engagers, it clandestinely pursued Takeda’s Nightmare. 74 Harpoon negotiated the

ATA with the intent—which it took pains not to disclose—to limit the Maverick

Field to certain technologies so that it could compete in the inducible space in the

future.75 Knowing that if Millennium learned of this intent, the Maverick Field

would be renegotiated, Harpoon withdrew a patent application, postponed

inventions, and encouraged silence rather than communication to avoid “raising

the[] ire” of Millennium, who it had encouraged to interpret the Maverick Field

differently. 76   Thus, while affirming Millennium’s broad understanding of the

Maverick Field, Harpoon maintained, through concealment and silence, its intent to

continue innovation in the sector of immunotherapy that was proving attractive to

investors.

72
   Id. at *30–*36.
73
   See, e.g., id. at *28–*29; JX 430; JX 681; JX 748.
74
   See, e.g., Maverick I at *28–*29; JX 246; JX 474; JX 476.
75
   Id. at *28
76
   Id. (quoting JX 500 at 1).
                                              18
      The description of the Maverick Field in the ATA is arcane and complex but

not, I found, ambiguous. Nonetheless, based on the Defendant’s representations, I

found that Millennium reasonably believed that Harpoon’s and Maverick’s

trajectories were divergent and that Harpoon’s non-compete obligations were broad

despite the lack of ambiguity in the Maverick Field definition. 77 Millennium

witnesses also credibly testified at the Liability Trial that Millennium would not have

invested in Maverick without the broad “ring fence” around conditionality that it

believed Maverick would enjoy. 78 Accordingly, and assuming that Millennium

suffered damages subject to proof at an ensuing damages phase, I found that the

elements of fraud and fraudulent inducement were otherwise satisfied.79

      F. Millennium’s Damages Calculations

      Conditionally active T cell engagers rely on several components, each of

which requires effort and expenditure to develop. 80 The parties provided some

77
   Id. at *34–*36.
78
   Id. at *36.
79
   Id. at *36–*37. The elements of fraud and fraudulent inducement are the same:
         (1) a false representation, usually one of fact, made by the defendant;
         (2) the defendant’s knowledge or belief that the representation was
         false, or was made with reckless indifference to the truth; (3) an intent
         to induce the plaintiff to act or to refrain from acting; (4) the plaintiff’s
         action or inaction taken in justifiable reliance upon the representation;
         and (5) damage to the plaintiff as a result of such reliance.
Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 2018 WL 6311829,
at *32 (Del. Ch. Dec. 3, 2018); Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1074
(Del. 1983)).
80
    Maverick I at *17. Maverick witnesses estimated it spent 150,000 hours of research in
developing the COBRA molecule, including working over a year on the research necessary to
select the individual components. Id.
                                           19
evidence of damages at the Liability Trial and supplemented that evidence at the

subsequent damages trial on September 22, 2020 (the “Damages Trial”).

       Millennium’s damages expert, Mr. Gregory Nachtwey, presented two

approaches to calculating damages.81 The “Capital Markets Approach”—similar to

a contractual “benefit of the bargain” expectations analysis—estimated the

diminution in value of Millennium’s investment in Maverick due to Harpoon’s

fraud. 82 Nachtwey first determined an expected “enterprise value” for Maverick

without competition from Harpoon, including Millennium’s contributions under the

Collaboration and Warrant Agreements and the value of the Warrant.83 Nachtwey

next estimated an enterprise value for Maverick with Harpoon competing for half of

the same market and calculated the difference between the value of Millennium’s

investment in each scenario. 84 Nachtwey’s “Cost Approach” assessed damages

based on Millennium’s payments pursuant to the Collaboration and Warrant

Agreements.85 He suggested that Millennium be awarded damages in the amount of

the midpoint of the two approaches.86

81
   See generally JX 1059 (Nachtwey Expert Report).
82
   Liability Trial Tr. 1052:24–1053:8; JX 1059, 50–60.
83
   JX 1059, at 52–55.
84
   Id. 60.
85
   Liability Trial Tr. 1025:15–1026:16, 1048:1–1048:4.
86
   JX 1059, at 49.
                                              20
        Harpoon’s expert, Dr. Mohan Rao, did not originally testify to a damages

calculation that he believes is more accurate or appropriate. 87 Instead he rebutted

Nachtwey’s calculations by arguing, for example, that Nachtwey’s Capital Markets

Approach is “circular” and that he failed to account for how unlikely either Harpoon

or Maverick are to develop a successful final product, let alone compete in the same

market.88

        For the Damages Trial, both experts supplemented their original reports.89

Nachtwey’s supplemental report updated the calculations presented in his first report

to their 2021 value.90 Using the Capital Markets Approach, Nachtwey estimated

Millennium’s damages to be $146.65 million. 91                       Using the Cost Approach,

Nachtwey generated a damages estimate of $113.7 million. 92 Weighted equally,

these two approaches resulted in a blended damages calculation of $130.18

million. 93

87
   Rao testified on direct examination at the Liability Trial but, due to time constraints, the plaintiffs
submitted deposition designations in lieu of live cross-examination. See Liability Trial Tr. 1941–
1943, 1952–1973. In his deposition, Rao stated “I think it’s fair to say that I do not have an
affirmative damages number assuming liability.” Rao Dep. 73.
88
   Liability Trial Tr. 1968:17–1969:12. Rao suggested, at the low end, a 2% chance of success and
at best an 8% chance. Id. 1968:23–1969:4.
89
   See generally Tr. of Damages Trial via Zoom, Dkt. No. 387 [hereinafter Damages Trial Tr.]; JX
1421 (Nachtwey Suppl. Expert Report); JX 1424 (Nachtwey Sur-Rebuttal Report); JX 1622 (Rao
Suppl. Report).
90
   See, e.g., Damages Trial Tr. 10:7–68:1; JX 1421.
91
   Damages Trial Tr. 11:12–11:17.
92
   Damages Trial Tr. 11:18–11:21.
93
   Damages Trial Tr. 10:21–10:24, 67:18–67:23.
                                                   21
       Rao maintained that Nachtwey’s approach dramatically overestimates

Millennium’s damages. Based on his view of how unlikely the two companies are

to actually compete, Rao adjusted Nachtwey’s valuation under the Capital Markets

Approach down by his estimation of the probabilities that Harpoon commercializes

a product—two, six, and eight percent.94 This adjustment suggests Millennium’s

damages are between $4 million and $17 million.95 He also adjusted for a 10%

chance of direct competition between Maverick and Harpoon, suggesting that

Millennium is instead entitled to somewhere between $400,000 and $1.7 million. 96

       Under the Collaboration and Warrant Agreements, Millennium committed to

invest $112 million in Maverick.97 Some of that was to be paid over the next four

years. 98 It is undisputed that Millennium has made all the required payments through

the first quarter of 2021. 99 Millennium’s ownership interest in Maverick has

remained 19.9% since closing the transaction.100

94
   JX 1622, at 60.
95
   Id.; Damages Trial Tr. 186:13–190:2.
96
   JX 1622, at 63; Damages Trial Tr. 190:15–193:13.
97
   E.g., Stip. ¶ 64, Dkt. No. 401.
98
   Id.
99
   See Stip. ¶ 68, Dkt. No. 409.
100
    Stip. ¶ 63, Dkt. No. 401.
                                             22
       G. Procedural History

       Maverick filed its complaint and a motion for a temporary restraining order

(“TRO”) on January 3, 2019. 101 I denied the TRO on January 18, 2019.102 On April

30, Millennium filed a Motion to Intervene. 103 I granted the Motion to Intervene on

May 8, and Millennium filed its complaint on May 14. 104 The Liability Trial took

place September 9–13 and 17, 2019. 105 I heard post-trial argument on December 17,

2019 and issued my Memorandum Opinion on liability April 3, 2020.106 The

Damages Trial took place over one additional day, on September 22, 2020. 107 Post-

trial briefing concluded on November 25, 2020. 108 At post-trial oral argument on

December 8, 2020, I requested a supplemental stipulation from the parties with

respect to Millennium’s percent ownership of Maverick and the timing and amount

of payments made by Millennium pursuant to the Collaboration Agreement, which

I received on December 17, 2020.109 I considered this matter submitted for decision

as of that date. In March, the parties informed me by letter of Millennium’s intent

101
    See Verified Compl., Dkt. No. 1; Mot. for Temporary Restraining Order, Dkt No. 1.
102
    See, e.g., Judicial Action Form, Dkt. No. 26.
103
    See Mot. to Intervene, Dkt. No. 110.
104
    See, e.g., Judicial Action Form, Dkt. No. 130; Verified Compl. in Intervention, Dkt. No. 135.
105
    See, e.g., Judicial Action Form, Dkt. No. 279.
106
    See, e.g., Judicial Action Form, Dkt. No. 350.
107
    See generally Damages Trial Tr.
108
     Post-Trial Reply Br. on Damages Awardable to Millennium, Dkt. No. 397 [hereinafter
Millennium Reply Br.].
109
    See Tr. of Post-Trial Oral Argument via Zoom 126:12–127:3, Dkt. No. 402 [hereinafter
Damages Post-Trial Tr.]; see generally Stip., Dkt. No. 401.
                                               23
to exercise the Warrant to purchase Maverick.110 I requested another supplemental

stipulation of fact with respect to the status of that transaction and Maverick’s

ownership structure. 111 I received that supplemental stipulation on March 29,

2021. 112

                                      II. ANALYSIS

       A. Standard of Review

       The scope of fraud damages under our law is broad. However, while a

plaintiff may recover for “any injury” that is the direct and proximate result of the

defendant’s false representation, liability is generally limited to those injuries which

were “within [the defendant’s] contemplation when the fraud was committed.113

       In cases of fraud and fraudulent inducement, Delaware courts recognize two

primary approaches for measuring the harm proximately caused by the defendant’s

fraud—benefit-of-the-bargain damages and out-of-pocket damages.114 Benefit-of-

the-bargain damages are equal to “the difference between the actual and the

represented values of the object of the [fraudulent] transaction.” 115 This method

110
    See Ltr. from Steven Fineman, Dkt. No. 406; Ltr. From John P. DiTomo, Dkt. No. 407.
111
    Ltr. to Counsel, Dkt. No. 408.
112
    See generally Stip., Dkt. No. 409.
113
     Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1077 (Del. 1983); see also Harman v.
Masoneilan Int’l, Inc., 442 A.2d 487, 499 (Del. 1982) (“The damages available for deceit or
fraudulent misrepresentation are generally limited to those which are the direct and proximate
result of the false representation . . . ”).
114
    Stephenson v. Capano Dev., Inc., 462 A.2d at 1076 (citations omitted).
115
    Id.
                                             24
should “put the plaintiff in the same financial position that [the plaintiff] would have

been in if the defendant’s representations had been true.” 116 Out-of-pocket damages

are equal to “the difference between what [the plaintiff] paid and the actual value”

of what the plaintiff received. 117 Awarding out-of-pocket damages should “restore

the plaintiff to [their] financial position before the transaction occurred.”118

Regardless of the approach taken, the goal is to make the plaintiff whole. 119

       A plaintiff bears the burden of proving damages by a preponderance of the

evidence.120 Damages are measured at the time of the fraudulent transaction. 121

       The fact of damages must be proven “with reasonable certainty,” 122 but

mathematical certainty is not required. 123 Although the Court “may not set damages

based on mere speculation or conjecture,” 124 once the fact of damage has been

proven, “Delaware courts place the burden of uncertainty where it belongs.” 125 “[S]o

116
    Id.
117
    Id.
118
    Id.
119
    See, e.g., LCT Cap., LLC v. NGL Energy Partners LP, 2021 WL 282645, at *9 (Del. Jan. 28,
2021), corrected (Mar. 4, 2021).
120
    See, e.g., Medicalgorithmics S.A. v. AMI Monitoring, Inc., 2016 WL 4401038, at *26 (Del. Ch.
Aug. 18, 2016).
121
    Stephenson v. Capano Dev., Inc., 462 A.2d at 1077.
122
    SIGA Techs., Inc. v. PharmAthene, Inc., 132 A.3d 1108, 1111 (Del. 2015).
123
    See Total Care Physicians, P.A. v. O’Hara, 2003 WL 21733023, at *3 (Del. Super. July 10,
2003). (“The quantum of proof required to establish the amount of damage is not as great as that
required to establish the fact of damage.”)
124
    In re Mobilactive Media, LLC, 2013 WL 297950, at *24 (Del. Ch. Jan. 25, 2013) (quoting
Medek v. Medek, 2009 WL 2005365, at *12 n.78 (Del. Ch. July 1, 2009)).
125
    Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 2020 WL 948513, at
*20 (Del. Ch. Feb. 27, 2020).
                                              25
long as a plaintiff provides a reasonable method to calculate damages, the risk that

such cannot be determined with mathematical certitude falls on the wrongdoer, not

the wronged.” 126 A moment’s reflection demonstrates that the perpetrator of an

intentional tort should not get the benefit of uncertainty in the quantum of harm he

has caused.

       Here, Millennium seeks monetary damages for Harpoon’s fraud.

Accordingly, the burden is on Millennium to demonstrate the resulting damage,

which is an element of its fraud claim.127 There is no doubt that this element is

satisfied here; the only question is the appropriate amount of damages, which are

difficult but not, I find, impossible to quantify.

       B. Millennium has Proven the Fact of its Damages

       Millennium must prove the fact of its damages with reasonable certainty. I

previously found that Harpoon’s fraudulent representations as to the scope of the

Maverick Field induced Millennium to make a $10 million investment in Maverick’s

Series B preferred stock, to pay another $33 million under the Warrant Agreement,

and to commit $69 million for research and development funding over the four years

following the transaction date. 128 At the Liability Trial, Millennium witnesses

credibly testified that Takeda would have considered the investment absurd if it

126
    Great Hill, 2020 WL 948513, at *20.
127
    See id.
128
    See supra 13–15.
                                           26
imagined it was investing in the intellectual property around a single method or path

to conditionality while leaving the field open to competition from Harpoon.129

Additionally, following the Maverick spin-out, both Evnin and Baeuerle had

extensive access to Maverick’s research at the same time that Harpoon was

developing competing technology.130         Evnin and Baeuerle, while they were

principals at Harpoon, participated in Maverick board meetings, joint steering

committee meetings, and scientific advisory board meetings. 131 Baeuerle worked as

an “acting CSO” at Maverick, and Evnin also worked intimately with the scientists

at Maverick to develop Maverick’s COBRA molecule.132 Maverick witnesses

testified that the company only granted this level of access based on the

understanding that Harpoon was limiting its own work to inherently active

platforms. 133 Although I did not find sufficient proof that Baeuerle and Evnin

purloined Maverick technology on behalf of Harpoon, the level of access they

enjoyed at Maverick demonstrates that Millennium did not anticipate they would

compete with, rather than promote, Maverick’s COBRA molecule

       Harpoon disputes that this evidence is sufficient to prove the fact of

Millennium’s damages. 134 Specifically, per Harpoon, any damages calculation that

129
    Maverick I, at *36.
130
    Id. at *14.
131
    Id.
132
    Id.
133
    Id.
134
    Harpoon Pre-Trial Damages Br. 10–24.
                                           27
assumes Maverick and Harpoon will ultimately bring competing products to market

would be so speculative as to vitiate damages entirely.135 I agree that damages in

this case are difficult to quantify, but that difficulty alone cannot render the fact of

Millennium’s damages mere speculation.136 When it entered the build-to-buy,

Millennium made a risky bet, which I have described as similar to purchasing a

lottery ticket. It had expectations as to the odds of success, and as to what the prize

would be worth. Here, Millennium reasonably believed that the Maverick Field was

a broad ring fence protecting its investment from Harpoon. 137 Millennium also

expected to have the expertise of Baeuerle and Evnin and their associated industry

connections. 138 Due to Harpoon’s fraud, however, it did not receive the benefit of

that bargain.139 Harpoon’s fraud allowed it to compete directly with Maverick in the

inducible field. This altered the value of the potential prize and thus, the value of

the lottery ticket itself.

135
    Id. 14, 23; Damages Post-Trial Tr. 84:6–84:13. I note, however, that this argument does not
appear in the post-trial briefing.
136
    See, e.g., Tanner v. Exxon Corp., 1981 WL 191389, at *1 (Del. Super. Ct. July 23, 1981)
(“Reasonable certainty is not equivalent to absolute certainty; rather, the requirement that plaintiff
show defendant’s breach to be the cause of his injury with ‘reasonable certainty’ merely means
that the fact of damages must be taken out of the area of speculation.”) (citations omitted).
137
    See Maverick I at *26–*27, *102–*03.
138
     See id. at *95 (describing the access Millennium permitted Evnin and Baeuerle as
“inexplicable” if it knew that they intended to work on competing projects at Harpoon).
139
    See id. at *103 (noting that Millennium may not have invested in Maverick at all “without the
broad ‘ring fence’ around conditionality that it believed Maverick would enjoy”); see also Tam v.
Spitzer, 1995 WL 510043, at *10 (Del. Ch. Aug. 17, 1995) (finding “the record clearly
establishe[d] that the plaintiff was damaged” where the plaintiff “would never have purchased at
all,” but for the defendant’s fraud).
                                                 28
       To calculate Millennium’s damages, then, is to calculate the difference

between two lottery tickets: the ticket Millennium thought it had purchased, and the

ticket it received. Because I find that some damage to Millennium has occurred, it

has satisfied its burden to show the fact of its damages.

       C. The Amount of Damages

       Having proven the fact of its damages, Millennium must also provide a basis

from which this Court can make a “responsible estimate” of the amount of

damages. 140 Certainty is not required “where a wrong has been proven and injury

established.” 141 Damages are measured as of the date of the established injury.142 I

found the assistance from the parties’ experts in calculating damages of limited

utility—their respective estimates differ by, at best, over $100 million. Although I

decline to adopt the valuations offered by either party, expectation (or benefit-of-

the-bargain) damages are an appropriate remedy for fraud,143 and I employ that

methodology here. The proper measure of damages is thus the difference between

the value of Millennium’s investment in Maverick as it was represented to

140
    Beard Rsch., Inc. v. Kates, 8 A.3d 573, 613 (Del. Ch. 2010), aff'd sub nom, ASDI, Inc. v. Beard
Rsch., Inc., 11 A.3d 749 (Del. 2010).
141
    Id. (citations omitted); see also Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund
I, LLLP, 2020 WL 948513, at *20 (Del. Ch. Feb. 27, 2020); Medicalgorithmics S.A. v. AMI
Monitoring, Inc., 2016 WL 4401038, at *26 (Del. Ch. Aug. 18, 2016).
142
    Stephenson v. Capano Dev., Inc., 462 A.2d 1069, 1076 (Del. 1983).
143
    See Great Hill, 2020 WL 948513, at *18 (noting that “[b]oth contract and tort law . . . conceive
of damages as the pecuniary consequences of the breach or tort”).
                                                29
Millennium by Harpoon, and the value of what Millennium actually received—the

two lottery tickets I have previously described—as of 2017, when the fraud occurred.

       For context, I briefly revisit Nachtwey’s Capital Markets Approach and

Rao’s rebuttal to it.144 Nachtwey focused on the then-future value of Maverick in

2021 as the touchstone of Millennium’s damages. To calculate the value of what

Millennium reasonably expected, Nachtwey took Millennium’s projected

investment in Maverick as of the time of the tort, in 2017, and added value at what

he represents is Maverick’s cost of capital, 35%, up to the time for exercise of the

Warrant in 2021.145 Nachtwey thus values Millennium’s investment in Maverick,

sans fraud, at $220.19 million as of the Warrant’s exercise date in 2021. 146 He

then adds to this figure the implied value of the 80.1% of Maverick that

Millennium would acquire by exercise of the Warrant, based on the exercise price

of $350 million.147 This sum provides an enterprise value for Maverick itself, post-

exercise and absent fraud, of $500.54 million.148

       He then derives the value of Millennium’s investment from Maverick’s

enterprise value in the event of Takeda’s Nightmare. 149 He assumes that without the

144
    The Capital Markets Approach purports to quantify Millennium’s expectation damages. Supra
text accompanying note 85.
145
    See JX 1421, at 13–14.
146
    JX 1059, at 57.
147
    See id.
148
    See JX 1421, at 14.
149
    See id. 15–16.
                                             30
broad non-compete Maverick and Harpoon will split the inducible-field market,

reducing Maverick’s value by half, below the exercise price of the Warrant. 150 This

leaves Millennium with a 19.9% interest in a Maverick of diminished value.151

Maverick’s post-fraud value, under this theory, is slightly greater than $250 million,

of which Millennium’s share is around $50 million.152 Millennium’s damages are

the difference between Millennium’s interest in Maverick without fraud (over $220

million) and with (just under $50 million), i.e. $170.36 million.153 By adjusting to

present value as of the supplemental report, Nachtwey arrives at a damages figure

of 146.65 million.154

        I decline to adopt this valuation. First, computing Millennium’s damages as

of 2017 by deriving a value for Maverick in 2021 by applying a cost-of-capital value

of thirty-five percent does not value Millennium’s investment as of the time of the

tort—using Nachtwey’s methodology is effectively to award Millennium pre-

judgment interest at 35% from the time of the tort. Further, a measure of damages

that includes the Warrant exercise price and a component for non-exercise thereof is

speculative and shows, to my mind, the error of valuing Maverick, rather than

Millennium’s investment therein, as the measure of damages. We know the value

150
    See id.
151
    See id. 16.
152
    See id.
153
    See id.
154
    Id.
                                         31
of the Warrant at the time of the tort—$33 million was the negotiated price. That

gave Millennium a right—to exercise or not. In fact, Millennium has elected to

exercise this right. 155

       In any event, based upon what he finds to be the value of Maverick as of the

exercise time of the Warrant in 2021, deducted from the value as he opines it would

have been absent the fraud, Nachtwey arrives at a damages figure of $146.65

million. 156 In other words, per the Plaintiff, Millennium invested approximately

$100 million, has received 19.9% of Maverick, which has some value, and yet has

suffered $146 million in damages. I reject this analysis.

       Harpoon urges me to find that Nachtwey’s valuation is so convoluted that

Millennium is not entitled to damages because it has failed to carry its burden of

proof as a matter of law.157 “The quantum of proof required to establish the

amount of damage is not as great as that required to establish the fact of

damage.”158 I have already provided my reasons for finding that Millennium has

met its burden of proof with respect to damages.159 As a result of Harpoon’s fraud,

Millennium did not receive all that it reasonably expected from its investment.

155
    On January 7, 2021, Millennium served an exercise notice of its intent to purchase the remaining
80.1% of Maverick. See Stip. ¶¶ 66–67, Dkt. No. 409. This fact plays no part in my damages,
calculation, however.
156
    See JX 1059, at 60; JX 1421, at 16.
157
    See, e.g., Harpoon’s Post-Trial Damages Br. 36, Dkt. No. 394.
158
    Total Care Physicians, P.A. v. O’Hara, 2003 WL 21733023, at *3 (Del. Super. Ct. July 10,
2003).
159
    Supra 29–32.
                                                32
Furthermore, at oral argument, Harpoon conceded that it would not be

inappropriate for me to “start with Nachtwey’s $146 million, . . . pick a number”

representing the likelihood of competition, and reduce the award by that amount. 160

I take this to mean that the Plaintiff’s proof of damages is not so lacking, even in

Harpoon’s view, as to completely extinguish Millennium’s claim to damages.

Accordingly, I do not find that Millennium has failed to meet its burden of proving

a measure of damages by a preponderance of the evidence. Harpoon also argues

that any investment in Maverick is so speculative, and had such a low probability

of success, that damages are unsupportable. 161 I reject this argument as well.

       The parties, in an arm’s-length transaction between sophisticated entities

represented by counsel, had no trouble valuing Millennium’s investment as of 2017

with the broad non-compete Millennium expected. Millennium paid $10 million for

19.9% ownership of Maverick, $33 million for the Warrant exercisable in 2021, and

agreed to future investments in Maverick (the build-to-buy) that, discounted to then-

present value, total around $52 million. In other words, the parties negotiated the

value of Millennium’s investment, with the broad non-compete, at around $95

million. 162 Pace Harpoon, that valuation had the low probability of success built

160
    Damages Post-Trial Tr. 93:20–93:24. Harpoon suggested twenty-five percent. 93:24–94:1.
161
    See, e.g., Harpoon’s Post-Trial Damages Br. 9–11.
162
    This includes the three income streams Millennium contributed in 2017 at their then-present
value: the $10 million worth of shares in Maverick, the Warrant priced at $33 million, and the

                                              33
into the investment price.163 What, then, is the value of what Millennium actually

got, an investment in a Maverick unprotected by the broad non-compete? While

Millennium did not receive the protection that a broad, four-year non-compete would

have provided, it did not receive nothing. So, I find it helpful to return to my

simplistic model of two lottery tickets.

       What was the value of that first lottery ticket, with the expected broad non-

compete? As just described, the record reflects a negotiated value of $95.4 million.

Built into this value is the probability that the product will never be monetized, and

that the Warrant may prove valueless. To determine damages, I must deduct from

this figure the value of what Millennium actually got, the second lottery ticket with

the narrow non-compete foisted onto Millennium by Harpoon’s fraud. The odds of

winning the lottery with this second ticket do not change; monetization of the

technology is still a long shot. What does change is the potential payout of a win.

This is because the second lottery ticket permits the possibility, if Harpoon is able

to monetize its product, that Maverick will find itself with a contemporary

competitor. Thus, the value of the first ticket is determined by the risk of no pay-

out in light of the value of the pay-out: the value of a monetized product without

payments Millennium agreed to under the Collaboration Agreement. The payments continue until
the earlier of the Warrant Expiration Date or the Warrant Exercise, as defined in the Warrant
Agreement. See JX 2 §§ 1.65, 5.2. I reduce the payments to their 2017 value using a discount rate
of 6.25%, the legal interest rate in Delaware in January 2017. See 6 Del. C. § 2301(a). The sum
of these contributions is $95,376,949.51.
163
    Damages Post-Trial Tr. 91:18–92:13.
                                               34
competitors in its market.           The value of the second ticket is comparatively

diminished by the risk of a different pay-out; entering a market in competition with

a direct and better-known competitor, Harpoon, with its own product. That is

Takeda’s Nightmare—winning the lottery but finding the prize materially reduced

due to Harpoon’s competition.

          What is the difference in value of Maverick with the market to itself, versus

Maverick and Harpoon splitting the market? Nachtwey suggested that “splitting the

market” would diminish the pay-out for Millennium by half, and I adopt that metric.

I find this fifty-percent reduction reasonable in light of the record, which does not

permit a more precise determination. Accordingly, I conclude that the value of

Millennium’s investment, with Takeda’s Nightmare a certainty, would have been

$47.7 million.164

          I may not simply end the analysis there and assign fraud damages at half

Millennium’s investment.           That is because the fraud itself did not guarantee

Takeda’s Nightmare. As of 2017, the ability of Maverick to compete in the inducible

field—the possibility Millennium thought it was avoiding by negotiating for the

broad non-compete—was not 100%. If the broad non-compete is looked at as

insurance against Takeda’s Nightmare, the value of that insurance is determined by

the likelihood that the Nightmare would come to pass, as of the time of the

164
      Half of $95,376,949.51, representing Takeda’s Nightmare, is $47,688,474.75.
                                                35
agreement. That likelihood was less than 100% and the damages should be reduced

accordingly. Harpoon argues (despite the fact that Takeda’s Nightmare has now

come to pass) that Harpoon’s ability to develop competing technology as of the date

of the tort was limited—Harpoon’s counsel at argument put it at one-in-four, or

less.165 However, I find Harpoon too modest. Harpoon itself had developed the

inducible T cell technology, which it transferred to Maverick. Harpoon retained

essential know-how in the field, aided by Doctors Baeuerle and Evnin. Certainly,

the fact that Harpoon fraudulently structured a cryptic ability to compete showed it

has some confidence in its ability to do so. The fact that Harpoon has in fact created

a competing product, while not applicable to the damages analysis here, suggests

that Takeda’s Nightmare, as of 2017, was not such a long shot as Harpoon suggests.

A buyer might not pay full price to avoid the possibility of Takeda’s Nightmare, but

I do not perceive that applicable discount to be greater than 20%. Accordingly, I

reduce the damages figure of $47.7 million by that amount.

      Of course, this discount relies (as does the 50% competition-based reduction

of value) on inferences from the record, and not mathematical certainty. Such

certainty is not possible in these circumstances. That uncertainty cannot be used to

165
   See generally Post-Damages Trial Tr. 93:20–95:5. Rao assumed the chance was one-in-ten.
See JX 1622, at 63; Damages Trial Tr. 190:15–193:13.
                                           36
benefit a fraudster, however. 166 It is important to remember that Millenium did not

volunteer to invest in an entity in competition in the inducible field with Harpoon—

it did so involuntarily due to fraud.

          Accordingly, I find that what Millennium reasonably expected—an

investment that, if successful, would result in initial market dominance, to have been

worth $95.4 million when made. I find that what it got was an investment that risked

contemporaneous competition in that market from Harpoon, worth (if that

contemporaneous competition came to pass) $47.7 million. Millennium’s damages

are that difference, discounted by what a buyer would pay to avoid the possibility of

such competition, in light of the circumstances obtaining at the time of the tort,

which I find to require a 20% discount. Reducing the $47.7 million diminution by

20% results in damages for receiving the narrow rather than broad non-compete at

$38.2 million.167 Millennium’s expectation damages are $38.2 million, therefore.

                                     III. CONCLUSION

          I award damages to Millennium in the amount of $38.2 million, together with

pre-judgment interest, calculated as set forth in 6 Del. C. § 2301(a). The parties

should provide an appropriate form of Order.

166
   Great Hill Equity Partners IV, LP v. SIG Growth Equity Fund I, LLLP, 2020 WL 948513, at
*20 (Del. Ch. Feb. 27, 2020).
167
      80% of $47,688,474.75 is $38,150,779.80.
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