Vaccine company Vaxart faces federal investigation for allegedly exaggerating role in Operation Warp Speed
Vaxart, a small California biotech working on a COVID-19 vaccine, is currently under investigation by the government and sued by investors for allegedly playing its role in the Trump administration's Operation Warp Speed, a multi-billion dollar acceleration program of the COVID-19 vaccine and treatment, research has exaggerated.
Biotechnology's experimental vaccine candidate is unique in that it is an oral tablet, as opposed to being administered by injection like many of the others under development. Operation Warp Speed has granted billions of dollars to more than half a dozen drug companies based on the promise of their vaccine technology.
However, in June of that year, Vaxart claimed it was "one of the few companies selected by Operation Warp Speed and our company is the only oral vaccine currently under evaluation".
MORE: Faster development of the COVID-19 vaccine could increase global income by $ 9 trillion, the IMF says
The announcement sent the stock price up from less than $ 3 per share prior to the press release to $ 17. In a matter of days, a hedge fund that partially controlled the company, Armistice Capital LLC, sold shares and made a profit of $ 200 million from alleged insider trading.
The problem, however, is that Vaxart was not among the drug companies selected by the US government as part of Operation Warp Speed to raise significant funding to support their research and manufacturing efforts. Rather, participation in the program was limited as the vaccine candidate was selected as a sponsor in its preliminary animal testing studies.
On October 14, Vaxart announced in a filing by the US Securities and Exchange Commission that the prosecution and the SEC are investigating the disclosure of their involvement in Operation Warp Speed.
"In August 2020, the Commission's Enforcement Department requested the company to voluntarily provide a wide variety of documents that largely relate to the same subjects as those provided to the US Attorney General and related matters," it said Company wrote in its SEC filing. "The company has voluntarily provided documents requested by the SEC and is cooperating with this informal investigation."
PHOTO: A woman in medical clothing holds a syringe and a vial. (STOCK IMAGE Grejak / Shutterstock)
Additionally, the SEC filing lists several similar lawsuits filed since August in California and one in Delaware for violating federal securities laws by Vaxart and a number of its officers and directors.
A grand jury subpoena was served on the company in July in the US District Court for the Northern District of California. "We are working with the US Attorney's Office on these inquiries and have provided documents and information," she wrote.
Such lawsuits are not uncommon, according to Efthimios Parasidis, professor of law and public health at Ohio State University.
MORE: COVID-19 Vaccine: Lessons From The 2001 Anthrax Attacks
There are "classic pump and dump systems" on occasion when a smaller company makes an exaggerated claim, as alleged in the Vaxart lawsuits, Parasidis told ABC News. "The market realizes that the claims are exaggerated, the stock falls and then these lawsuits arise."
It's important to note that the company's actions may not always be intentionally wrong, Parasidis added. Sometimes "startup companies are so excited about the prospect of making money that they sometimes shoot press releases without proper scrutiny".
PHOTO: The Vaxart logo displayed on a smartphone. (STOCK IMAGE / Sopa Images via Getty Images)
In a statement to ABC News, a spokesperson for Vaxart denied the allegations, writing, "The Vaxart study into the challenge of non-human primates was organized and funded by Operation Warp Speed, as stated in the company's news release dated June 26, 2020 therein Press releases are accurate and any claim to the contrary is unfounded. "
Despite the ongoing controversy, Vaxart shares rose again this week after the company announced a major milestone in its COVID-19 vaccine research.
The company said it had started the first phase of the study on 48 volunteers aged 18 to 54 years after initial tests on hamsters showed promising results. This week, Vaxart said he gave his first oral dose to a volunteer.
The company is not currently receiving federal funding from Operation Warp Speed.
Vaccine company Vaxart is facing a federal investigation for allegedly playing an exaggerated role in Operation Warp Speed, which was originally posted on abcnews.go.com
Click to receive the most important news as a notification!
'Pioneer' octogenarian Vietnamese artist gets first solo exhibit
Ex-Seahawks rookie cut for sneaking woman into hotel signs practice squad deal with Raiders
Rory McIlroy, Justin Thomas among Whoop Series E financing investors
This Is the Worst Horror Movie of All Time, According to Critics
CCLEX more than halfway through—MPTC
Rams release rookie kicker Samuel Sloman after rough start