A shareholder has sued Immunovant, Inc. and several of its officers after the company’s stock price tumbled earlier this month. The approximately 42% drop reportedly occurred after the clinical-stage biopharmaceutical company announced a “voluntary pause” of the trial of its myasthenia gravis and thyroid eye disease drug, known as IMVT-1401, in light of concerning side effects.
According to the Feb. 19 Eastern District of New York complaint, Immunovant develops “monoclonal antibodies for the treatment of autoimmune diseases.” In September 2019, the filing explains, Health Sciences Acquisitions Corporation (HSAC) proposed a special acquisition of Immunovant Sciences Ltd. (Legacy Immunovant). Legacy Immunovant subsequently became a wholly-owned subsidiary of HSAC, and when the deal closed, HSAC changed its name to “Immunovant, Inc,” now a defendant in this lawsuit.
The plaintiff argued that throughout the proposed class period, the defendants made false and misleading statements regarding Immunovant’s business, operations, and compliance policies. In particular, the complaint states, HSAC performed inadequate due diligence into Legacy Immunovant prior to the merger and failed to disclose it. In addition, the company and its executives reportedly ignored, did not disclose, and/or misled investors about safety issues associated with IMVT-1401. In turn, the plaintiff claims, these risks diminished the drug’s prospects for regulatory approval, commercial viability, and profit.
As evidence, the complaint points to several press releases and Securities Exchange Commission (SEC) filings that touted IMVT-1401’s safety and efficacy. However, on Feb. 2, Immunovant issued a press release announcing a voluntary pause of dosing in its ongoing clinical trials because “[t]he Company ha[d] become aware of a physiological signal consisting of elevated total cholesterol and LDL levels in IMVT-1401-treated patients.…”
As a result, Immunovant halted the trials in order to “inform patients, investigators, and regulators as well as to modify the monitoring program.” The same day, its stock price allegedly fell from $43.30 to $18.22 per share.
The plaintiff seeks to represent a class of people who purchased or otherwise acquired the company’s stock between the HSAC-Immunovant Legacy merger on Oct. 2, 2019 and Feb. 1, 2021. The complaint’s two counts seek to hold both Immunovant and the individual defendants accountable for the alleged securities fraud.