ElectroCore Faces Class Action Headache | Chief Investment Officer

A class-action lawsuit has been filed against bioelectronic medicine company electroCore, Inc. and some of its officers and directors, alleging they violated federal securities laws by providing false and misleading information to investors about its lead product in the run-up to the company’s IPO. The lawsuit is intended to cover investors who purchased electroCore stock between June 22, 2018 and Sept. 25, 2019.

ElectroCore focuses on non-invasive vagus nerve stimulation therapy, and its lead product gammaCore is used for the acute treatment of pain associated with migraine and episodic cluster headache in adults. However, according to the complaint, the company and it’s its leadership team failed to disclose to investors that gammaCore did not have any advantages over other acute treatments for migraines and episodic cluster headaches.

“The company lacked sufficient clinical data demonstrating that gammaCore was effective and safe for migraine prevention,” said the complaint. “As a result, doctors and patients were unlikely to adopt gammaCore over existing treatments.”

In late June of 2018, electroCore held its IPO and sold just under 6 million shares of common stock at $15.00 per share, and received proceeds of approximately $79.5 million, according to court documents. The firm said the proceeds from the IPO were to be used to commercialize gammaCore products, expand its clinical program into additional indications in headache and rheumatology, and build its specialty distribution channel for the anticipated launch of gammaCore Sapphire.

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But in May of this year, the company announced first quarter 2019 financial results that missed expectations, reporting $410,000 net sales and an operating loss of $14.2 million. As a result of the disappointing results, electroCore’s shares fell $1.58, or nearly 30%, to close at $3.75 on May 15.

Adding to the company’s woes, it reported last month that the US Food and Drug Administration requested more information and analysis of clinical data for electroCore’s 510(k) submission, which was seeking an expanded indication for the use of gammaCore. As a result of the news, the company’s share price fell more than 23%, to close at $2.57 per share on Sept. 25.

According to the complaint, by the time lawsuit against electroCore stock was filed, its stock was trading as low as $1.25 per share, a nearly 92% drop from the $15 per share IPO price.

The plaintiffs argue that the company’s IPO registration statement was false and misleading and omitted material adverse facts.

“The company lacked sufficient resources to successfully commercialize gammaCore, and its business plan and strategy was not sustainable because electroCore lacked sufficient revenue to be profitable,” said the complaint. “As a result of defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the company’s securities, the plaintiff and other class members have suffered significant losses and damages.”

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Australian Regulator Loses Lawsuit Against Wealth Manager IOOF

By Michael Katz

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Tags: ElectroCore, IPO, Lawsuits

UK-based The Pension Regulator (TPR) has issued requests for the trustee boards of 400 pensions throughout the UK to review their data and recordkeeping practices within six months, because they “are believed to have failed to review their data in the last three years,” TPR said in a statement.

The institutions include defined benefit, defined contribution, and public service pensions in the country, the trustees of which are being asked to report to the TPR what proportion of their members they hold accurate common and pension-specific data for. “Those that fail to do so may face action, which could include an improvement notice about their inadequate internal controls. Failure to comply with the notice carries a fine of up to £5,000 for an individual or up to £50,000 in any other case.”

“Requiring trustees to carry out reviews will force them to look closely at their data and administration and take appropriate action to bring their systems up to scratch,” TPR’s Executive Director of Regulatory Policy David Fairs said in a statement.

The move is part of the organization’s efforts to drive up standards across a number of aspects for pension plans by strengthening their regulatory practices and improving conditions for pensioners.

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Any pensions that discover their data does not hold up to a satisfactory benchmark are expected to draw up improvement plans to rectify the problem. The authority did not list any penalties for plans who don’t follow through with such action.

TPR earlier this year concluded that a number of “badly-run” pensions in the UK should consider consolidating or taking effective measures to improve. “There is stark evidence that the current system doesn’t work for all and there is a clear disparity between the experience of savers in well-run and badly-run pensions. If trustees cannot meet the standards we expect, we believe they should wind up and consolidate savers into a better run scheme,” TPR said.