Risk & Compliance

SEC Questions COVID Drug Claims of Biotechs

The commission has halted trading in the shares of three companies that have said they are developing a drug candidate for treating COVID-19.
Matthew HellerMay 5, 2020
SEC Questions COVID Drug Claims of Biotechs

The U.S. Securities and Exchange Commission has temporarily halted trading in the shares of three biotech companies because of concerns over the accuracy of statements they have made about a drug candidate for treating COVID-19.

Houston-based CNS Pharmaceuticals and WPD Pharmaceuticals of Vancouver, B.C., have said they are developing a COVID-19 drug labeled WP1122, with Moleculin Biotech, also of Houston, as their license partner.

The trading suspensions are the SEC’s latest move “to crack down on false information regarding tests, therapies or equipment relating to the [coronavirus], which has infected more than 3.5 million people worldwide and killed more than 248,000,” MarketWatch said.

The commission has put temporary halts on the shares of at least 29 companies and last week sued Florida health-care company Praxsyn for fraud, alleging it made “blatantly false” claims that it had secured a supply of N95 masks.

According to the SEC, it suspended trading in CNS, WPD, and Moleculin through May 15 “because of questions regarding the accuracy and adequacy of information in the marketplace” about the companies.

Those questions relate to statements made by the firms in a series of press releases since March 19 concerning the status of the development and testing of WP1122 and their ability to expedite regulatory approval of the treatment.

CNS shares have gained about 28% in the past month while Moleculin, thinly-traded nano cap, has gained 88% and WPD has fallen 10%.

Moleculin announced on April 8 that 2-deoxy-D-glucose (2-DG) reduced the replication of the novel coronavirus by 100% in in vitro testing.

“Even though 2-DG is active against a range of viruses, including [the novel coronavirus], it isn’t useful as a clinical therapy because it’s too rapidly metabolized,” Moleculin Chief Science Officer Don Picker said in the release. “WP1122 appears to solve this problem because it is a ‘prodrug’ of 2-DG’” that is metabolized to produce 2-DG.

Picker is also chief science officer of CNS and an advisor to WPD.