This class action centers around an April 26, 2017 report by Edison Investment Research Ltd. on clinical trials, for an Akari Therapeutics drug, after the report was withdrawn the day after its publication. The complaint alleges that the report contained false information and that the company’s CEO was possibly the one who provided it, in violation of Securities Exchange Act of 1934.
The class for this action is all persons and entities who acquired Akari’s securities between March 30, 2017 and May 11, 2017.
Akari is a clinical-stage biopharmaceutical company that develops inhibitors of acute and chronic inflammation, specifically the complement system, the eicosanoid system, and the bioanime system, for the treatment of rare and orphan diseases.
On March 30, 2017, Akari announced that the Food and Drug Administration (FDA) had permitted fast-track designation for Akari’s drug Coversin. The press release noted that the company was evaluating the drug in two Phase 2 clinical trials.
On April 24, the company issued a second press release announcing positive results in its ongoing Phase 2 clinical trials, indicating that patients had had a positive response and good results from the use of Coversin.
Two days later, Edison Investment Research Ltd. issued its report on Akari and the Phase 2 trials of Coversin, entitled, “Akari’s Coversin matches Soliris in Phase II.”
However, Edison withdrew the report the next day, saying that it contained material inaccuracies in relation to Akari’s interim analysis of its Phase 2 trials. Akari followed up with a statement of its own about the report’s inaccuracies, “including without limitation, with respect to Akari’s recently announced interim analysis of its ongoing Phase 2 PNH trial of Coversin. Investors should not rely upon any information contained in the Edison Report…”
On May 11, 2017, the company revealed that its Board of Directors had formed a committee to review if any company personnel had been involved with the Edison Report. It also revealed that the company’s CEO Gur Roshwalb had been placed on administrative leave during the review.
At this news, the company’s American Depository Receipts (ADRs) fell more than 20%.
According to the complaint, the company’s previous statements failed to disclose (1) that the company’s CEO, and possibly other executives, may have been involved in publishing false information about the company, and (2) that the company lacked adequate internal controls to prevent this.