California biotech company Vaxart, which is working on a Covid-19 vaccine, is under federal investigation and is being sued by a number of investors for allegedly exaggerating its involvement in the US government's Operation Warp Speed program for developing Covid-19 vaccines and treatments.
Vaxart stated in an October 14 Securities and Exchange Commission filing that it's being investigated by the SEC and federal prosecutors, and that it was served with a grand jury subpoena in July from the US District Court for the Northern District of California.
In June, Vaxart issued a press release that said "Vaxart's Covid-19 Vaccine Selected for the US Government's Operation Warp Speed." The news helped propel Vaxart's stock price to nearly $17, up from approximately $3, and hedge fund Armistice Capital, which partly controlled Vaxart, sold shares for a profit of more than $200 million, according to its SEC filings.
A few weeks before the announcement, Vaxart granted amendments to the warrants agreements, which allowed Armistice to sell almost all of their stock, which they did once the stock price skyrocketed.
In July, the US Department of Health and Human Services (HHS) told the New York Times that it had not entered into a funding agreement or negotiations with Vaxart. Armistice and HHS did not respond to requests for comment.
Vaxart has not been chosen by Operation Warp Speed to receive research funding, but instead had limited involvement, HHS told the New York Times in July. Vaxart's vaccine, an oral tablet, was only involved in preliminary studies on primates sponsored by Warp Speed.
In a statement to CNN Business Saturday, the company said, "The Vaxart non-human primate challenge study was organized and funded by Operation Warp Speed, as stated in the June 26, 2020 company press release. The statements made in that press release are accurate and any allegation to the contrary is baseless."
In its October SEC filing, Vaxart wrote that it has provided documents called for by the subpoena to demonstrate its role in Operation Warp Speed. "The company has voluntarily provided documents requested by the SEC and is cooperating with this informal inquiry," it stated.
Vaxart and its board have been sued several times by shareholders who accuse the company of allegedly inflating Vaxart's stock price by misrepresenting its role in Operation Warp Speed. Vaxart addressed those lawsuits in its filing, saying that it's seeking to have two of the suits dismissed, while another class-action suit is still proceeding.
On October 14, Vaxart announced encouraging results from its study on hamsters that received oral dosages of its Covid-19 vaccine.
The stock was down 3.5%, to approximately $6, as of Friday evening.