Hagens Berman and its clients beat out three other investor groups for the lead role in a case that accuses the company of lying about its participation in the federal Operation Warp Speed initiative to develop a coronavirus vaccine. In a one-page order devoid of detail, U.S. District Judge Vince Chhabria also appointed investors Langdon Elliott and Wei Huang lead plaintiffs.
"We are pleased by the appointment and look forward to obtaining a great recovery for our class," Steve Berman of Hagens Berman told Law360 on Wednesday.
Counsel for the other parties did not immediately respond to requests for comment.
Vaxart shareholder Kirk Himmelberg filed the suit in August, alleging the company "exaggerated the prospects of its COVID-19 vaccine candidate, including its purported role or involvement in OWS."
Vaxart was working on a COVID-19 vaccine but wasn't selected to participate in the U.S. Department of Health and Human Services' Operation Warp Speed to receive funding for the effort. That program to produce at least 3 million doses of a COVID-19 vaccine by January was funded with almost $10 billion from Congress for companies working on a vaccine.
"Vaxart's COVID-19 vaccine candidate had no reasonable prospect for mass production and marketing and was not among the companies selected to receive significant financial support from OWS to produce hundreds of millions of vaccine doses," Himmelberg said in the lawsuit.
His proposed class action seeks to represent people who bought the company's stock between June 25, when Vaxart announced plans for the vaccine production, and July 25, when media reports said the company publicly misled investors about Operation Warp Speed, according to the suit.
In addition to Vaxart, the suit names as defendants CEO Cezar Andrei Floroiu and Dr. Wouter W. Latour, former president and CEO and current chairman of the board of directors, as well as hedge fund Armistice Capital LLC and two of its managers, Steven J. Boyd and Keith Maher.
The competing motions for lead plaintiff and lead counsel asked to combine with a similar proposed class action in the district filed by investor Ani Hovhannisyan against Vaxart and its executives.
Elliott and Huang filed an opposition to the other three motions vying for lead roles from investors Pierce Parker and Trudy York and Jiri Kubanek, Zayn Lim, Najaf Zaidi and Syed Nabi. The pair called Kubanek, Lim, Zaidi and Nabi "an unwieldy group of internationally-dispersed investors that have not demonstrated that they are able to effectively work together to adequately oversee this litigation and monitor counsel."
Referred to as "an improper amalgamation of investors," that group shouldn't be allowed to combine its losses to form a greater loss of $626,573.52, Elliott and Huang argued, instead assessing group losses on an individual basis.
The four members of that group live in Singapore, Pennsylvania, Georgia and the Czech Republic, and aren't considered a "cohesive, functioning group" that the Private Securities Litigation Reform Act calls for, Elliott and Huang said.
"Given their respective locations, it is difficult to imagine how these four widely dispersed individuals will be able to effectively manage and collectively oversee the efforts of counsel — as opposed to counsel overseeing them," Elliott and Huang said.
The two investors from California and Texas, the self-proclaimed Vaxart Investor Group, argued they have the largest loss at $455,378.
"Vaxart Investor Group's interests are perfectly aligned with those of other class members and are not antagonistic in any way," the filing said.
York claims a loss of $177,920, and Parker, whose counsel at The Rosen Law Firm PA was seeking lead counsel status, claims a loss of $54,285.
York's and Parker's losses are substantially less than Elliott and Huang's, the latter pair argued, "and neither have rebutted the presumption that Vaxart Investor Group is the most adequate plaintiff. Therefore, Vaxart Investor Group remains the presumptive lead plaintiff," they said.
York filed her own opposition, arguing she is the only proposed lead plaintiff with the greatest financial loss that satisfies all of the PSLRA's requirements.
She argued both the Kubanek, Lim, Zaidi and Nabi group, whose lawyers at Scott+Scott Attorneys at Law LLP sought lead counsel status, and the Huang and Elliott pairing "are both inadequate and fail to satisfy Federal Rule of Civil Procedure 23(a) because they are composed of unrelated investors with no workable decision-making structure and no connection other than counsel."
She has the next-highest loss and should be named the lead plaintiff, and her counsel at Johnson Fistel LLP named lead counsel, she argued.
Elliott and Huang are represented by Reed R. Kathrein, Lucas E. Gilmore, Danielle Smith and Steve W. Berman of Hagens Berman Sobol Shapiro LLP.
Kubanek, Lim, Zaidi and Nabi are represented by John T. Jasnoch, Thomas L. Laughlin IV and Rhiana L. Swartz of Scott + Scott Attorneys at Law LLP.
York is represented by Frank J. Johnson, Brett M. Middleton and Reed F. Baker of Johnson Fistel LLP.
Parker is represented by Laurence M. Rosen of The Rosen Law Firm PA.
Vaxart, Floroiu and Latour are represented by Daniel Martin and Jonathan A. Shapiro of Baker Botts LLP and Menachem M. Piekarski, Renee M. Zaytsev and Riccardo M. DeBari of Thompson Hine LLP.
Armistice Capital LLC, Maher and Boyd are represented by Neal R. Marder, Ali R. Rabbani and Josh A. Rubin of Akin Gump Strauss Hauer & Feld LLP.
The case is Kirk Himmelberg at al. v. Vaxart Inc. et al., case number 3:20-cv-05949, in the U.S. District Court for the Northern District of California.
--Additional reporting by Rachel O'Brien and Mike LaSusa. Editing by Orlando Lorenzo.
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