New York's Akari Puts CEO on Administrative Leave

New York's Akari Puts CEO on Administrative Leave May 12, 2017
By Mark Terry, Breaking News Staff

Something odd is going on with New York-based Akari Therapeutics , although it’s difficult to see exactly how the puzzle pieces match up. It appears that, using data provided by Akari, Edison Investment Research published a research note. Shortly afterwards, Edison withdrew the note. While an investigation is ongoing, Edison’s director of Research suspended coverage of Akari. Meanwhile, Akari’s board has suspended its chief executive officer pending its own internal investigation.

On April 24, Akari held an R&D day at which it announced interim data from its Phase II clinical trial of Coversin for paroxysmal nocturnal hemoglobinuria (PNH).

Akari published a press release on April 27 and a filing with the U.S. Securities and Exchange Commission (SEC) on May 11. The April 27 press release stated “that Edison Investment Research Ltd. has withdrawn its report issued yesterday titled ‘Akari’s Coversin matches Soliris in Phase II” (the ‘Edison Report’) because it contains material inaccuracies, including without limitation, with respect to Akari’s recently announced interim analysis of its ongoing Phase II PNH trial Coversin.”

The statement goes on to say that investors shouldn’t rely on the Edison Report and should instead view Akari’s statement made on April 24. That filing indicated that its interim Phase II PNH data showed a positive response with Coversin and the Phase III program was expected to commence in the fourth quarter of 2017.

In a statement today, Edison Investment Research noted that its analysts use a well-defined and extensive review process prior to the publication of its report and Akari had reviewed and provided feedback on it. Edison received specific written approval for the publication of the Note.

“Following the publication of the Note on April 26, 2017,” Edison states, “Akari management contacted Edison to notify that ‘certain errors’ were found in the Note without providing Edison with further explanation regarding the alleged errors. Akari management subsequently requested Edison retract the Note and announced ‘material inaccuracies’ were found in the Note.”

Edison further states that is had made an in-depth investigation and has found no inaccuracies, and despite multiple requests of Akari by both Edison and its attorneys, no details have been forthcoming.

Meanwhile, Akari has indicated in an SEC filing that its chief executive officer Gur Roshwalb, has been placed on administrative leave. Roshwalb is being temporarily replaced by Ray Prudo, currently executive chairman. Akari’s board, according to Reuters, “has established ad hoc special committee to review involvement, if any, of company personnel with Edison investment research report.”

Because the original Note has been pulled, it’s difficult to know exactly what the issues are. FierceBiotech wrote, “The withdrawal of the report means no record of what Edison wrote exists online. But the title of the report suggests it reached conclusions the data may not support.”

The title of the Edison report suggests that Coversin matched Alexion ’s Soliris, which is the only drug approved for PNH. In its own press release, Akari did not claim how Coversin compared to Soliris based on the Phase II data.

Nick Paul Taylor, writing for FierceBiotech, says, “The fallout from the inaccurate report could affect both companies. Edison is primarily funded by the companies it covers, a business model that has raised concerns about conflicts of interest. Speaking in defense of the model in 2014, Neil Shah, director of research at Edison, told the Financial Times my business would blow up if we wrote bad-quality product.’”

On the part of Akari, it has no chief executive and is undergoing an investigation when it would otherwise be focused on taking Coversin into a Phase III trial.

Akari dropped from $20.50 on April 21 to a current price of $9.49.

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