The Securities and Exchange Commission settled charges against Houston-based Kiromic BioPharma, Inc., and two of its C-Suite executives for misleading investors about U.S. Food and Drug Administration review statuses.
The biotherapeutics company, its former CEO, Maurizio Chivira-Internati, and its former CFO, Tony Tontat, failed to disclose that the company’s two cancer fighting drug candidates had been placed on a clinical hold prior to the company raising $40 million in a public offering.
According to the SEC, the charges were settled because of the company’s self-reporting, cooperation, and entering into remediation. Kiromic and Tontat have agreed to settle the charges in separate administrative proceedings and Chivira has agreed to settle the charges in federal district court, the commission said. Chivira and Tontat have agreed to pay civil penalties of $125,000 and $20,000 respectively to settle the SEC’s charges.
“These resolutions strike the right balance between holding Kiromic’s then-two most senior officers responsible for Kiromic’s disclosure failures while also crediting Kiromic for its voluntary self-report, remediation, proactively instituting remedial measures, and providing meaningful cooperation to the staff,” Eric Werner, director of the SEC’s Fort Worth Regional Office, said.
The SEC said Kiromic raised $40 million in public offerings on July 2, 2021 to fund prospective clinical trials for two cancer fighting drug candidates – ALEXIS-PRO-1 and the ALEXIS-ISO-1. However, the SEC found that the FDA had placed the drugs on clinical hold, delaying the proposed clinical investigations. The SEC found that Kiromic did not disclose the FDA clinical holds in SEC filings, investor roadshow calls or during due diligence calls leading up to the offering, despite the fact the company disclosed the hypothetical risk of a clinical hold and the potential risks a hold could have on its business.
Kiromic consented to the SEC’s order without admitting or denying the commission’s findings, and is required to cease and desist from committing or causing future violations of the reporting and disclosure control provisions of federal securities laws. Chivira, the SEC alleges, learned about the clinical holds in June of 2021, and did not disclose the information in subsequent calls and reports. Additionally, Tontat reviewed information about the holds after the July 2021 public offering, but still signed and certified Kiromic’s August 13, 2021 reporting.