Pomerantz Secures $47 Million Settlement for Defrauded Novavax Investors

By the Editors

In May 2024, Pomerantz achieved final approval of a $47 million settlement on behalf of defrauded investors in a securities class action against American biotechnology company Novavax, Inc.

In January 2020, as the novel coronavirus spread globally and the death toll rose, so too did peoples’ fears. While many companies diligently shared information about their new risks with shareholders, others, such as Novavax, sought to profit from the widespread anxiety. 

In early 2020, a government grant put Novavax in prime position to capitalize on the market for a Covid-19 vaccine. However, the company's vaccine production efforts allegedly fell short of FDA safety requirements due to severe manufacturing problems, including undisclosed contamination events at its U.S. facilities; failure to manufacture the vaccine at scale; and supply chain issues. These issues led to delays in regulatory submissions and an inability to produce vaccines at scale. Despite these challenges, defendants continued to reassure investors of the vaccine program's success, causing Novavax's stock to remain high.

As stated in the amended complaint, “Defendants personally made millions because of their rosy statements touting the successful vaccine development and manufacturing process that caused Novavax stock to remain at near record levels based on investors’ belief that the Company was in pole-position to sell billions of doses in the near future.”

The truth about the vaccine's failure surfaced in October 2021 when Politico published an article titled, “They rushed the process: Vaccine maker’s woes hamper global inoculation campaign.” Politico reported that Novavax “faces significant hurdles in proving it can manufacture a shot that meets regulators’ quality standards” and cited anonymous sources as stating that Novavax’s manufacturing problems and regulatory hurdles “are more concerning than previously understood” and that the company could take until the end of 2022 to resolve its manufacturing issues and win regulatory authorizations and approvals. This revelation caused Novavax's stock to plummet, injuring investors who relied on defendants' false statements. Over the class period, Novavax stock collectively fell over 50% in response to revelations about the company’s issues.

Partner Brian Calandra led the litigation with Managing Partner Jeremy A. Lieberman.