All told, Emergent is facing at least four shareholder lawsuits, including three that are seeking class-action status. Plaintiffs include both individuals and institutional investors, such as retirement and pension funds.

A complaint filed by Lincolnshire Police Pension Fund, based in the US state of Illinois, alleges that executives and board members of the Maryland-based biotech, including several former officials of the US federal government, engaged in insider trading, in 2020. It alleges they sold stock worth more than $20 million while in possession of material, nonpublic information that artificially inflated the price.

Investors additionally claim that the value of the politically well connected company was also inflated because of a “too rosy “picture of the company’s financial status painted by executives before the contamination was publicly known.

After being tapped by Operation Warp Speed to be the sole US manufacturer of the J&J and AstraZeneca vaccines and awarded a contract worth $628 million, one lawsuit says Emergent promoted itself with paid posts in national media outlets and in an internal company presentation as having conducted a successful “corporate reputation campaign” that justified record bonuses,

The police fund‘s filing notes that a series of audits conducted in summer 2020 by customers, federal officials and Emergent’s own evaluators revealed serious quality problems, including inadequate procedures to prevent contamination. But rather than inform investors, executives and board members enriched themselves by selling stock while the price remained high.

According to the New York Times, Emergent’s founder and chairman, Fuad El-Hibri, sold shares worth $42 million during 2020. On top of this there were trades worth $10.5 million by board members since April 2020, including about $3 million in stock sold in September by Louis Sullivan, Secretary of Health and Human Services under former president George Bush Sr. who joined Emergent’s board in 2006. More recently, the lawsuits allege trades in January and February by CEO Robert Kramer worth more than $10 million.

Altogether, Emergent is seen to have ruined around 75 million doses of the Johnson & Johnson and AstraZeneca shots combined. The US Food and Drug Administration (FDA) has allowed some 40 million J&J doses doses manufactured at the affected Baltimore plant to be distributed, with a warning that the agency couldn’t guarantee that the CDMO had  followed good manufacturing practices.

Author: Dede Williams, Freelance Journalist