Investigation regarding Novavax’s statements made in connection with the manufacturing capabilities and ability to meet regulatory timelines for approval of its NVX-CoV2373 Covid-19 vaccine candidate under Emergency Use Authorization (EUA).
Politico reports that, with respect to NVX-CoV2373, not only does Novavax “faces significant hurdles in proving it can manufacture a shot that meets regulators’ quality standards” but “the company’s issues are more concerning than previously understood, according to two of the people with direct knowledge of the matter.”
“The Food and Drug Administration works out purity levels with each manufacturer according to June 2020 guidance for coronavirus vaccines, but it is generally understood that each vaccine batch should reach at least 90 percent. The company has struggled to attain anywhere close to that, one of the people with direct knowledge of the situation said. Another person familiar with the company’s manufacturing process said Novavax has recently shown purity levels hovering around 70 percent. . .”
|Close||Previous close||Price variation||Percentage variation|
This is a federal securities class action on behalf of a class consisting of all persons and entities other than defendants that purchased or otherwise acquired Novavax securities between March 2, 2021 and October 19, 2021, both dates inclusive.
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:
(i) Novavax overstated its manufacturing capabilities and downplayed manufacturing issues that would impact its approval timeline for NVX-CoV2373;
(ii) as a result, Novavax was unlikely to meet its anticipated EUA regulatory timelines for NVX-CoV2373;
(iii) accordingly, the Company overstated the regulatory and commercial prospects for NVX-CoV2373; and
(iv) as a result, the Company’s public statements were materially false and misleading at all relevant times.
The court issued an order appointing the lead plaintiff and lead counsel.
Lead Plaintiffs, individually and on behalf of all persons and entities who or which, during the period from February 24, 2021 through October 19, 2021, inclusive, purchased the publicly traded common stock of Novavax, Inc. and were damaged thereby, bring this Consolidated Amended Class Action Complaint for Violations of the Federal Securities Laws against Defendants Novavax and several of Novavax’s senior executives—President and Chief Executive Officer (CEO) Stanley C. Erck, former Treasurer, Chief Financial Officer (CFO) and Executive Vice President (EVP) Gregory F. Covino, former CFO and current Chief Commercial Officer, Chief Business Officer, and EVP John J. Trizzino, and President of Research and Development Gregory Glenn.
A motion to dismiss was filed with the court.
Court Denied in part the motion to dismiss.
This case has a motion for class certification.
A securities class action lawsuit is a lawsuit on behalf of investors considered in a similar position, who purchased or sold securities of a company during a certain period and suffered losses because of an alleged wrongdoing. Security is often broadly defined to include bonds, stocks, options, derivatives, and other instruments.
Section 10b of the Securities Exchange Act of 1934 makes it unlawful to “use or employ, in connection with the purchase or sale of any security” a “manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” 15 U.S.C. § 78j(b). It is therefore forbidden to: employ any device, scheme, or artifice to defraud; make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made not misleading; or engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person.
Generally, to be successful, the plaintiff must plead the following:
We invite you to read this article from the American Bar Association which, although from 2014, provide ample information to explore the world of class actions brought under section 10b of Securities Exchange Act of 1934.
Section 11 of the Securities Act of 1933 provides “an express right of action for damages . . . when a registration statement contains untrue statements of material fact or omissions of material fact.” (Thomas Lee Hazen, Treatise on the Law of Securities Regulation, §7.3 at 581 (4th ed. 2002)). Practically, buyers in an initial public offering (IPO), relying on the registration statement and prospectus, are given the right to file a complaint against the company and other signatories for losses sustained as a result of the deficient registration statement and prospectus.
Generally, at least four elements must be plead for the claim to survive:
A shareholder derivative lawsuit is a lawsuit brought by a shareholder of a company, on behalf of the company, against an insider (director, board of directors, executives) or a third-party to redress wrongs and harms to the company. Simply speaking, this mechanism exists because one cannot expect directors and insiders to sue themselves for harms they have done to the company.
The Private Securities Litigation Reform Act (PSLRA) of 1995 was enacted to tighten requirements for securities class actions to be brought in the United States. One of the mechanism put in place was a 60-day period, following the filing of the initial securities class action, for any shareholder considered in similar position to the one filing the initial class action complaint, to ask to be named lead plaintiff. Practically, any time a securities class action falling under the PSLRA is filed with a court, law firms advertise their willingness to pursue the case and invite other investors similarly situated to contact them.
The lead plaintiff in a securities class action is a shareholder who suffered losses related to the purchase or sale of a company’s security during a certain period of time, that is appointed with its choice of counsel to represent the rest of the similarly situated shareholders. To be appointed lead plaintiff, you need to contact a law firm, have them examine your losses and agree to be represented by them and ask to make a motion with the court to be appointed lead. The court will then look at all the motions from the different shareholders and make its decision based on a certain set of criteria. Your inability to be lead plaintiff shall not prevent you from any potential recovery in the event of a settlement.
A class period is a set period of time during which the purchasers or sellers of a company’s security claim in a class action lawsuit to have suffered losses. Class periods are based on the merits of the case and may evolve with the litigation.
A class action complaint will define the initial class of investors: the class period and the persons included in the class. You should look at the definition of the class to determine whether you are included or not. However, the class definition will evolve with the litigation. Its definition is very likely to change between the initial complaint filed and the possible settlement. Generally speaking, you should rely on the definitions of the class stated in a stipulation of settlement to determine whether or not you will be entitled to any recovery (see below about the opting-out mechanism).
You may. The mechanism is called opting-out of class. A lead plaintiff will agree on the potential recovery ratio in a settlement. You may have an interest in opting-out of a class if you have sustained large losses and believe bringing a separate lawsuit would entitle you to a larger ratio of recovery.
You may be able to bring a claim to arbitration in certain scenarios. We encourage you to contact a law firm of your choice to inquire about such alternative dispute resolution mechanism.