Most cancers drug firm accuses US market makers of inventory spoofing

A cancer-focused biotechnology firm has sued eight of the US’s largest market-making merchants together with Citadel Securities, Susquehanna and Virtu, alleging that they intentionally drove down its share worth by putting promote orders that they had no intention of executing.

The criticism, filed by Northwest Biotherapeutics in a federal court docket in New York on Thursday, claimed that the merchants “intentionally engaged in repeated spoofing that interfered with the pure forces of provide and demand” by putting tens of hundreds of thousands of faux orders between December 2017 and August of this 12 months.

The buying and selling corporations would then cancel these orders and purchase Northwest’s shares at an artificially cheaper price, the criticism alleged.

Legal professionals for the clinical-stage biotechnology agency claimed a “notably egregious instance” of this exercise happened in Could, after the publication of what they preserve had been constructive trial knowledge for Northwest’s DCVax-L mind most cancers drug. The research’s design had been questioned by scientists.

The information “ought to have triggered NWBO’s share worth to extend, absent manipulation out there”, they wrote, referring to the corporate’s inventory image. As an alternative it dropped from $1.73 to a low of $0.3862. 

“This staggering decline of 78 per cent within the worth on a day with extraordinarily constructive information concerning the firm was brought on by defendants’ relentless and brazen manipulation of the marketplace for NWBO shares,” legal professionals at Cohen Milstein Sellers & Toll added.

Nonetheless, the presentation of the DCVax scientific knowledge was not properly acquired by all commentators. “Total, sufferers handled with DCVax had a ten per cent larger danger of tumor development in comparison with placebo — an final result that’s the antithesis of what’s required from any efficient most cancers therapy,” business specialist publication STAT wrote on the time.

In March, the corporate had warned in regulatory submissions that “due to recurring working losses and working money move deficits, there’s substantial doubt concerning the firm’s means to proceed as a going concern inside one 12 months from the date of this submitting”.

Maryland-based Northwest Biotherapeutics has a market capitalisation of about $860mn and is traded on the US over-the-counter market. Its shares at present change fingers at about $0.83.

In 2019 the corporate settled an motion by the Securities and Alternate Fee after the regulator discovered it failed to keep up inner controls over its monetary reporting for 12 years.

Apart from Citadel Securities, Susquehanna and Virtu, the lawsuit named Canaccord Genuity, GTS, Instinet, Lime Buying and selling and Susquehanna subsidiary G1 as defendants.

Citadel Securities, the group based by Ken Griffin, objected to Northwest’s allegations.

“This frivolous lawsuit seems to be nothing greater than an try by Northwest Biotherapeutics to divert consideration away from its lengthy historical past of governance and administration failures, SEC fees for monetary reporting lapses, and lawsuits from its personal shareholders,” Citadel Securities stated in a press release.

“We intend to pursue any and all authorized motion in opposition to Northwest Biotherapeutics for making these false and baseless allegations, which solely undermine the integrity of our capital markets,” the buying and selling firm added.

Nomura, which owns Instinet, declined to remark, whereas the opposite buying and selling corporations didn’t instantly reply to requests for remark.

In its criticism, Northwest stated it bought 49mn of its shares at artificially deflated costs. It added that there was “an especially low statistical chance” that the value variations in every of the alleged spoofing incidents had occurred because of regular market strikes.

“It’s already underhanded to interact in market manipulation, however to take action on the expense of most cancers sufferers, a few of whom don’t have any different remedies to position their hopes on, is unconscionable,” stated Laura Posner, a associate at Cohen Milstein.