Kiromic BioPharma, Inc.

Investigation
01/27/2022

Initial Lawsuit
08/05/2022

Lawsuit Progression
10/04/2022

Investigation

Continous Holding
June 25, 2021 to August 13, 2021
Proposed Claim
Securities Violation

Did Kiromic mislead investors about its knowledge of clinical holds prior to conducting a $40 million public offering? Were the former CEO’s credentials fake? Was the company issuing misleading statements at the direction of its former CEO?

This post is open for investors to gather facts, and findings and track their exposure to related lawsuits. We invite investors and shareholders to contribute to this investigation for their own benefit, add events to the factual timeline below and vote on events’ pertinence.

A lawsuit was subsequently filed. We update this post regularly.

Main Event

Undisclosed Clinical Hold & Fake Credentials

02/02/2022

SEC Filing

Kiromic discloses an internal investigation following complaints by its former chief financial officer (CFO) about potential misleading statements issued to the company’s shareholders by the company and its executives.

“The Board approved certain actions to address the fact that the Company had received communications from the FDA on June 16 and June 17, 2021 that the FDA was placing the Company’s IND applications that the Company submitted to the FDA on May 14 and May 17, 2021 for the ALEXIS-PRO-1 and ALEXIS-ISO-1 product candidates, respectively, on clinical hold (the “June 16 and 17, 2021 FDA Communications”).

On July 13, 2021, the Company received the FDA’s formal clinical hold letters, which asked the Company to address key components regarding the chemical, manufacturing, and control components of the IND applications.

On July 16, 2021 the Company issued a press release disclosing that it had received comments from the FDA on its two INDs, but did not use the term “clinical hold.”

On August 13, 2021, the Company issued a press release announcing that these INDs were placed on clinical hold. The Company did not disclose the June 16 and 17, 2021 FDA Communications in (i) its Registration Statement on Form S-1 (Registration No. 333-257427) that was filed on June 25, 2021 and declared effective on June 29, 2021, nor the final prospectus contained therein dated June 29, 2021 (collectively, the “Registration Statement”); or (ii) its Form 10-Q for its fiscal quarter ended June 30, 2021 that was filed with the Securities and Exchange Commission on August 13, 2021. The Company consummated a public offering of $40 million of its common stock pursuant to the Registration Statement on July 2, 2021.

In the course of the Internal Review, the Special Committee also identified that Mr. Tontat submitted incorrect information regarding his educational background to the Company. Specifically, although Mr. Tontat represented to the Company that he held a BA in Economics from Harvard University, it was determined that he had actually received an ALB, a degree conferred by the Harvard Extension School. The Company has implemented changes to its vetting process for prospective director and officer candidates including the implementation of thorough background checks to verify background information provided by such candidates.“

The stock impact compares the closing price immediately preceding the date of the event and the following closing price. The price difference also reflects the overall mix of information.

Stock Impact

Close	Previous close	Price variation	Percentage variation
$0.87	$1.03	$-0.16	-15.83%

See more on Factual Timeline

Initial Lawsuit

First Complaint - 08/05/2022

A Kiromic BioPharma, Inc. (KRBP) investor filed this federal securities class action on behalf of a class consisting of all persons and entities (other than the defendants) that purchased or otherwise acquired: (a) Kiromic common stock pursuant to the offering documents issued in connection with the initial public offering in July 2021 (as defined in the complaint) and/or (b) Kiromic common stock between June 25, 2021, and August 13, 2021, both dates inclusive.

Filing Date
08/05/2022
Class Period
06/25/2021 to 08/13/2021
Transgression
Securities Violation
Filing Firms
Gainey McKenna & Egleston
Case Title
Karp v. KIROMIC BIOPHARMA, INC. et al
Docket Number
1:22-cv-06690
Court
New York Southern District Court
Free File
Complaint

Allegations

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

In late June 2021, Kiromic conducted an initial public offering (IPO) which closed on July 2, 2021. At the time of the IPO, Kiromic presented itself as a target discovery and gene-editing company which utilized artificial intelligence to create immunotherapy products. Although Kiromic had no immunotherapy products on the market at the time, it had applications to begin human clinical trials for two new drug candidates, known as Investigational New Drug (IND) applications, pending with the FDA. The company’s public filings in connection with the IPO stated that Kiromic could commence clinical trials within thirty days of those IND applications unless the FDA imposed a clinical hold.

Kiromic, however, had received communications from the FDA on June 16 and 17, 2021, prior to the IPO, informing the company that the FDA was placing the IND applications for its two candidate products on clinical hold. The IPO documents failed to disclose this information, instead representing that clinical testing was expected to proceed in the third quarter of 2021. Clinical testing did not proceed in the third quarter of 2021, nor was it likely given the FDA’s imposition of a clinical hold.

On July 16, 2021, two weeks after the closing of Kiromic’s IPO, Kiromic issued a press release revealing that it had received “comments” from the FDA regarding its IND product, “ALEXIS.” Additionally, on August 13, 2021, Kiromic issued another press release wherein Kiromic made passing reference to “clinical hold issues” by the FDA regarding Kiromic’s IND products, but did not otherwise expand on what those issues were. Since the true details of Kiromic’s misrepresentations and omissions entered the market, the price and value of Kiromic’s stock has declined significantly.