In a Feb. 12 order, U.S. District Judge Anthony J. Battaglia granted Robbins Geller client Andrew Zenoff's lead counsel bid and at the same time consolidated two suits making similar allegations against the biotech company.
With the lead counsel appointment, Zenoff and his legal team beat out five other groups that had sought to lead the litigation. Three of the movants decided not to oppose appointment of litigants with a greater financial interest in the matter and Judge Battaglia found that the two other would-be plaintiffs didn't meet federal requirements for representing the proposed class.
In his order, the judge first shot down the lead plaintiff request filed by Pomerantz LLP and the Schall Law Firm client Jing Li, who claimed she lost $454,341 in connection with Sorrento's alleged fraud. Judge Battaglia said it wasn't clear from Li's lead plaintiff motion that she would be an adequate class representative, citing in particular the fact that she is a relative newcomer to investing, with only three years' experience.
Judge Battaglia also found that a group of four investors, dubbed the SRNE investor group and represented by Kirby McInerney LLP, wouldn't be a proper lead plaintiff group, noting "when unrelated investors are cobbled together, the clear implication is that counsel, rather than the parties, are steering the litigation."
The judge mentioned the SRNE investor group's joint declaration that "there was no preexisting relationship between the group members prior to communication with counsel." Together, the group claimed it lost nearly $381,000 in connection with the alleged fraud.
Finally, Judge Battaglia said Zenoff, who claims he lost $195,500 in connection with the allegations, seemed well-positioned to lead the suit, citing the movant's 20 years of experience investing and his work running three different companies.
"His experience in investing in securities, coupled with his extensive background with leadership and management, makes him a suitable candidate for lead plaintiff," the judge said.
The judge also noted three other investors, respectively represented by Wolf Haldenstein Adler Freeman & Herz LLP, Faruqi & Faruqi LLP and Bragar Eagel & Squire PC, had already thrown in the towel when they realized their financial stake in the matter was significantly lower than the other proposed plaintiffs'.
An additional movant who was represented by Levi & Korsinsky claimed she lost $170,195.88, but withdrew her lead plaintiff bid.
Investors took Sorrento to court in May 2020 after the company put out a press release claiming it had discovered an antibody that "demonstrated 100% inhibition of SARS-CoV-2 virus infection." On the same day, the company's Chief Executive Henry Ji was quoted in a media report characterizing that development as a "cure."
The investors claim as a result of the alleged misrepresentations, trading prices for the company's shares were artificially inflated until first a short-seller's report and then a quote from Ji stating the new antibody "potentially is a cure" allegedly caused the company's shares to trade at lower prices.
Ji and Mark R. Brunswick, the company's vice president of regulatory affairs and quality, are named as defendants alongside Sorrento.
Representatives for the parties did not immediately respond to requests for comment Tuesday.
Zenoff is represented by Danielle Myers and Michael Albert of Robbins Geller Rudman & Dowd LLP.
Counsel information for Sorrento, Ji and Brunswick was not immediately available Tuesday.
The case is Wasa Medical Holdings v. Sorrento Therapeutics Inc. et al., case number 3:20-cv-00966, in the U.S. District Court for the Southern District of California.
--Additional reporting by Dean Seal. Editing by Stephen Berg.
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