Inovio agrees to shell out $44M to settle Covid-19 vaccine lawsuit
Three months after bringing on a new CEO, Inovio has reached a settlement with investors over accusations that it exaggerated progress on its Covid-19 vaccine candidate.
The biotech, once claiming to be at the heart of Operation Warp Speed, has agreed to shell out $44 million in a mix of cash and stock to end a class action lawsuit in which investors alleged that the company misrepresented its efforts on INO-4800, causing the biotech’s share price to plunge.
The case dates back to March 2020, when Patrick McDermid filed an initial complaint. Almost half a million pages of documents and more than a dozen depositions later, the parties started looking to resolve the case in July 2021, bringing in a mediator of securities class actions and failing. A second negotiation in February this year also failed.
According to court documents, the mediator, Gregory Lindstrom, then issued a “mediator’s proposal” on May 18, which was accepted by all parties. The settlement totals $30 million in cash plus 7 million shares of $INO at $2 a share. The company’s stock is currently trading at $2.56 a share.
An Inovio spokesperson told Endpoints News on Wednesday that the biotech does not comment on ongoing litigation. It’s also worth noting that the settlement still has to be approved by a judge before it can go into effect and the lawsuit officially ends.
This new development takes place after new CEO Jacqueline Shea announced last month that 18% of the company’s full-time staffers will be let go, plus 86% of all contractors in a bid to reduce operational expenses and extend its cash runway into Q3 of 2024. The previous CEO, Joseph Kim, left the company in May after steering the company for years and claiming in the early days of the pandemic that Inovio had “developed a vaccine in a matter of hours.”
Kim was among a select group of CEOs who met with President Donald Trump early in the Covid-19 pandemic to discuss the development of vaccines and therapeutics against the coronavirus. However, Inovio encountered hurdle after hurdle with its vaccine candidate, including a clinical hold, funding withdrawal and a standoff with contract manufacturer VGXI. INO-4800 remains in clinical trials, but Inovio has said it will focus on testing it as a booster to other vaccines rather than a primary series vaccine option.