Court green-lights Clo­vis case af­ter de­tail­ing ev­i­dence the board ‘ig­nored red flags’ on false safe­ty and ef­fi­ca­cy da­ta

Clo­vis in­vestors have cleared a ma­jor hur­dle in their long-run­ning case against the board of di­rec­tors, with a Delaware court mak­ing a rare find­ing that they had a strong enough case against the board to pro­ceed with the ac­tion.

In a de­tailed rul­ing at the be­gin­ning of the month that’s been get­ting care­ful scruti­ny at firms spe­cial­iz­ing in biotech and cor­po­rate gov­er­nance, the Delaware Court of Chancery found that the at­tor­neys for the in­vestors had made a care­ful case that the board — a col­lec­tion of ex­perts that in­cludes high-pro­file biotech en­tre­pre­neurs, a Har­vard pro­fes­sor and well-known in­ves­ti­ga­tor as well as Clo­vis CEO Patrick Ma­haffy — re­peat­ed­ly ig­nored ob­vi­ous warn­ings that Ma­haffy’s ex­ec­u­tive crew was tout­ing in­flat­ed, un­con­firmed da­ta for their big drug Ro­ci. Se­ri­ous safe­ty is­sues were al­so re­port­ed­ly over­looked while the com­pa­ny con­tin­ued a fundrais­ing cam­paign that brought in more than a half-bil­lion dol­lars. And that leaves the board open to claims re­lat­ed to their role in the fi­as­co.

The bot­tom line:

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