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Law360 (May 13, 2020, 6:07 PM EDT ) Nine law firms including Block & Leviton LLP and The Rosen Law Firm PA are competing to be lead counsel in a proposed stock drop class action against Inovio Pharmaceuticals, where investors allege the biotech company's statements it was ready to test a COVID-19 vaccine inflated the stock price before the company walked the statements back.
Patrick McDermid, the named plaintiff who initially filed the suit in Pennsylvania federal court in March, alleges that Inovio's CEO J. Joseph Kim made public statements Feb. 14 and March 2 claiming the company developed a vaccine in a few hours to fight the new coronavirus, with plans to start human testing in April.
But activist short-seller Citron Research called him out on March 9, when the company made a $50 million stock offering. Shares fell from an intraday high that day of $19.36 per share to $5.70 on March 10, the day Inovio acknowledged that it had not designed a vaccine but only a precursor to one, according to the suit.
McDermid seeks to represent a class of Inovio investors who bought stock between Feb. 14 and March 9.
On Feb. 14, as fears of the new coronavirus were growing in the United States, Kim said on Fox Business News that Inovio had developed a COVID-19 vaccine "in a matter of about three hours once we had the DNA sequence from the virus" and "our goal is to start phase one human testing in the U.S. early this summer," according to the suit.
On March 2, Kim repeated his claim about the vaccine and said the company could begin testing as early as April, the suit says.
Inovio stock prices rose, and the company announced plans to sell $50 million of its common stock beginning March 9, according to the suit. But that day, Citron Research tweeted that "SEC should immediately HALT this stock and investigate the ludicrous and dangerous claim that they designed a vaccine in 3 hours."
Inovio's stock hit $19.36 during the day March 9 but declined to $5.70 per share by the end of the next day, a drop of 71%, according to the suit.
"Inovio and Kim made false and misleading statements to the market, claiming unequivocally that the company had successfully developed a vaccine against the spread of COVID-19 and that it anticipated rapidly bringing that vaccine to market," the suit says. "Given the heightened anxiety surrounding this pandemic and the desperate demand for an effective COVID-19 vaccine, defendants knew and were deliberately reckless as to the falsity of their claims."
Block & Leviton LLP clients Stephen Brockway, Dwayne Lerna, Joseph Stefko, Scott E. Dahlstrom and Kenneth C. Ness say they lead the pack in financial harm with a collective $1,291,876 lost from the Inovio stock drop.
The Rosen Law Firm PA clients David Fields, Dmitry Kuznetsov, and Hao Cui say they collectively lost $922,938; Wolf Haldenstein Adler Freeman & Herz LLP clients Sal Isabella, the Sal Isabella Retirement Plan and Hao Cui say they lost $430,890; and Levi & Korsinsky LLP clients Gerard Candeloro, Arian Eskandari, Mark Ramkishun, Jerry Qu and Shahzad Riasat say they lost $252,025.
Other firms vying for lead counsel are Gainey McKenna & Egleston, Glancy Prongay & Murray LLP, Robbins LLP, Robbins Geller Rudman & Dowd LLP and Thornton Law Firm LLP.
Counsel for Inovio and Kim declined to comment Wednesday.
The firms seeking to be lead counsel didn't respond to requests for comment Wednesday.
Counsel for McDermid could not be immediately determined Wednesday. His counsel had been Berger Montague and Block & Leviton. Both law firms are representing other plaintiffs as proposed lead or additional counsel, according to the motions filed Tuesday.
Stephen Brockway, Dwayne Lerna, Joseph Stefko, Scott E. Dahlstrom, and Kenneth C. Ness are represented by Jeffrey C. Block, Jacob A. Walker and Stephen J. Teti of Block & Leviton LLP.
Michael Baumeister is represented by Thomas J. McKenna and Gregory M. Egleston of Gainey McKenna & Egleston.
Joshua Farazdel is represented by Lee Albert, Robert V. Prongay, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP.
Gerard Candeloro, Arian Eskandari, Mark Ramkishun, Jerry Qu, and Shahzad Riasat are represented by Shannon L. Hopkins of Levi & Korsinsky LLP.
Jeffrey Castro is represented by Brian J. Robbins and Gregory E. Del Gaizo of Robbins LLP.
Manuel S. Williams is represented by Darren J. Robbins, Danielle S. Myers and Michael Albert of Robbins Geller Rudman & Dowd LLP.
David Fields, Dmitry Kuznetsov, and Hao Cui are represented by Jacob A. Goldberg, Laurence Rosen and Phillip Kim of The Rosen Law Firm PA.
Thanh Vo is represented by Guillaume Buell and Madeline Korber of Thornton Law Firm LLP.
Sal Isabella, the Sal Isabella Retirement Plan and Hao Cui are represented by Mark C. Rifkin and Matthew M. Guiney of Wolf Haldenstein Adler Freeman & Herz LLP.
Inovio and Kim are represented by Koji Fukumura, Peter Adams and Craig TenBroeck of Cooley LLP.
The case is McDermid v. Inovio Pharmaceuticals et al., case number 2:20-cv-01402, in the U.S. District Court for the Eastern District of Pennsylvania.
--Additional reporting by Matthew Santoni. Editing by Brian Baresch.
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