The CEO of Akari Therapeutics has quit amid a probe into the release of phase 2 data and a related analyst report. An investigative committee ruled that ex-CEO Gur Roshwalb, M.D., had contravened company policy and found an Akari statement falsely claimed a patient met the primary endpoint in a phase 2 trial.
Akari convened the ad hoc committee in response to the publication and subsequent withdrawal of a report by Edison Investment Research. Edison drafted a report for Akari to describe data from a phase 2 trial of Coversin, the biotech’s rival to Alexion’s Soliris. The committee found Roshwalb reviewed and approved the Edison report. One day after publication, Edison pulled the report after learning it contained “material errors.”
At that time, Akari pointed investors to its own press release for an accurate write up of the data. But it has now emerged that the errors extend beyond the Edison report. Akari’s latest statement flags up a false claim in its own press release to unveil the phase 2 data. That release claimed one of the five patients met the primary endpoint before withdrawing from the study. The committee found the patient did not meet the primary endpoint.
Akari focused its positive spinning of the data on the four patients who remained in the study, not the fifth who withdrew. Yet, while that dampens the significance of the error on the prospects of Coversin, the inability of Akari to accurately report results from a five-patient study reflects badly on the company. It has also contributed to Akari lacking a permanent leader and facing lawsuits at a time when it should be fully focused on advancing Coversin into phase 3.
Akari framed Roshwalb’s decision to resign as a consequence of him having contravened company policy by reviewing and approving the Edison report. The analyst report claimed the phase 2 data showed Coversin was a match for Soliris, a statement that looked flimsy even before Akari revealed one of the five patients missed the primary endpoint.
With Roshwalb quitting, Ray Prudo, M.D. will serve as acting CEO until a permanent replacement is found. Prudo, the executive chairman of Akari, has filled in as CEO since Roshwalb was placed on administrative leave pending the conclusion of the probe.
The interim CEO has a lot on his plate. When Akari unveiled the phase 2 data it set its sights on getting Coversin into phase 3 by the end of the year. Akari began 2017 with $44 million. The recent slide in the company’s stock price has diminished its ability to add to that pile. And it is subject to two class action lawsuits that could distract it and eat into its cash reserves. Akari plans to “vigorously defend” itself against the lawsuits.
Shares in Akari fell 17% in after-hours trading. The stock is down more than 45% since the Edison report was withdrawn, causing its market cap to sink below $70 million.