An investor in GXDX shares filed a lawsuit in State Court against Novartis Finance Corp, Novartis AG, Genoptix and certain of its officers and directors in effort to block Novartis from taking over Genoptix at an alleged unfair price via an unfair process.
The plaintiff alleges that the defendants breached their fiduciary duties arising out of their efforts to complete the sale of Genopitx to Novartis

A media report in December 2010 quoted already two anonymous people who said that Carlsbad, California based Genoptix, Inc. (NASDAQ:GXDX) seeks buyers and therefore hired Barclays Plc to run an auction. Then on Monday, January 24, 2011 before the market opened Basel, Switzerland based Novartis announced that it has entered into an agreement for the acquisition of Genoptix, Inc. (NASDAQ: GXDX). Under the terms of the proposed agreement, Novartis will commence a tender offer for all outstanding shares of common stock of Genoptix at USD 25.00 per share in cash or a total equity value of USD 470 million and an enterprise value of USD 330 million. The Novartis said the offer represents a premium of 39% over Genoptix's unaffected share price of USD 17.98 on December 13, 2010 and an implied 27% premium over the closing price of USD 19.76 on January 21, 2011.

Shares of Genoptix, Inc. (NASDAQ:GXDX) rose in response to the takeover rumors in December to almost $21 per GXDX shares on December 12, 2010. Then GXDX shares slipped slightly before raising to $21.80 per share on January 11, 2011.

At first sight the offer by Novartis might look like a significant premium to recent trading prices of Genoptix, but GXDX shares have traded as high as $38.66 as recent as April 29, 2010. During 2009 GXDX shares have never been lower than $24.42 per share and traded as high as $37.94 per share. Thus the plaintiff alleges that the $25 per share significantly undervalue Genoptix’s value and is plainly unfair to Genoptix’s shareholders. Additionally Genoptix, Inc has performed well in the past for its shareholders. Genoptix’s 12 months Total Revenue increased from $24.02million in 2006 to $184.38million in 2009. Its Net Income over the same time frame went from a Net Loss of $3.76million to a Net Income of $30.63million in 2009. Genoptix reported for the first 9months in 2010 a combined Total Revenue of $147.86million with a combined Net Income of $15.35million.
Further the plaintiff alleges that the transaction was driven by materially interested insiders, including the CEO of Genoptix and defendant Dr. Tina Nova, who according to the company’s filings with the SEC, holds 375,295 GXDX common shares in unvested stock options and otherwise illiquid holdings and will cash out her illiquid holdings in the proposed acquisition to the tune of nearly $10million. In fact, so the plaintiff, Genoptix’s executive officers and Board, as a group, hold 854,821 shares in Genoptix stock and are thus set to receive over a collective $21million in the proposed acquisition.