Vaxart, a California biotech firm that is attempting to develop a Covid-19 vaccine, has come under scrutiny from federal prosecutors and the Securities and Exchange Commission.
The company announced in June that it had been selected to participate in Operation Warp Speed, the U.S. government’s flagship effort to develop cures and treatments for Covid-19. That sent Vaxart’s stock price soaring, allowing a hedge fund that controlled the company to reap an instant $200 million profit by selling shares.
The New York Times reported the following month that Vaxart appeared to have overstated its involvement in Operation Warp Speed.
Vaxart said it had received a subpoena from the Justice Department concerning its role in Operation Warp Speed and the stock sales in July, the company disclosed in a securities filing this week.
In August, the S.E.C.’s enforcement division requested documents from the company about the same matter, Vaxart said in the filing, which was first reported by Fierce Pharma, a trade publication.
“We are cooperating with the U.S. Attorney’s Office regarding these requests and have provided documents and information in response,” Vaxart said in the securities filing. It added that it had “voluntarily provided documents requested by the S.E.C. and is cooperating with this informal inquiry.”
A number of shareholder lawsuits have also been brought against Vaxart, its executives and its board, accusing the company of misleading investors by overstating its role in Operation Warp Speed.
Vaxart is one of dozens of companies pursuing coronavirus vaccines. But the company, which had just 15 employees this summer, is not among the drug makers that have received substantial funding for their research and production efforts through Operation Warp Speed.
Nonetheless, the company in June issued a news release that stated: “Vaxart’s Covid-19 Vaccine Selected for the U.S. Government’s Operation Warp Speed.” That sent shares of the company soaring, and within days, a hedge fund, Armistice Capital, had sold shares worth more than $200 million.
But Vaxart’s involvement in Operation Warp Speed was limited. Its vaccine candidate was one among those being tested in an animal trial sponsored by the federal initiative. Officials at the Department of Health and Human Services, which is coordinating Operation Warp Speed, distanced the department from the company, saying it was involved only in preliminary studies but had not yet won government support.
The value of Vaxart stock has fallen by more than 50 percent since mid-July, when it hit new highs on the heels of its Operation Warp Speed announcement.