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Biopharmaceutical firm sued over COVID-19 vaccine statements

class action

A putative class-action securities lawsuit has been filed against a biopharmaceutical company that allegedly promised more than it could ultimately deliver in terms of a COVID-19 vaccine.

Malvern, Pennsylvania-based Ocugen Corp., which identifies itself as a company focused on developing gene therapies to cure blindness and developing a COVID-19 vaccine, said in February that it had reached an agreement with a biotechnology company in India to develop, manufacture and “commercialize” a COVID-19 vaccine, according to last week’s filing in Roberto Nicanor et al. v. Ocugen Inc., Shank Musunuri and Sanjay Subramanian.

The suit, filed in the Allentown, Pennsylvania-based U.S. District Court of the Eastern District of Pennsylvania, was first reported by the D&O Diary.

Ocugen also said in an 8-K filing with the U.S. Securities and Exchange Commission that its mission was to develop a COVID-19 vaccine, according to the lawsuit.

In March, the company said it intended to advance its vaccine’s development toward an emergency use authorization and ultimately a biologics license in the United States.

In June, however, it said that based on feedback from the U.S. Food and Drug Administration, it was no longer pursuing an emergency use application and was instead pursuing a biologics license application, which required an additional clinical trial and “will extend our timelines.”

Following this announcement on June 10 the company’s stock price dropped to $6.69 per share from $9.31 the previous day.

The lawsuit charges the company knew its statements had been “materially false and misleading” and that it violated federal securities law.

The company did not respond to a request for comment.

In June 2020, a putative class-action directors and officers liability lawsuit was filed in U.S. District Court against Salt Lake City-based Co-Diagnostics Inc. in Gelt Trading Ltd., a Cayman Islands limited company, v. Co-Diagnostic et al., charging the company had falsely claimed a 100% accurate COVID-19 test, while company officials made millions dumping their stock. 

In February, in comparable litigation, the U.S. District Court in Philadelphia granted in part and denied in part dismissal of a shareholder class-action lawsuit against Plymouth Meeting, Pennsylvania-based Inovio Pharmaceuticals Inc. in Patrick McDermid v. Inovio Pharmaceuticals Inc. The case was referred to a magistrate judge for settlement in March.

A motion to dismiss another lawsuit, In re Sorrento Therapeutics Inc. Securities Litigation was filed in U.S. District Court in San Diego in May, with a hearing set for Sept. 2.

More insurance and risk management news on the coronavirus crisis here.