SEC charges Kiromic Bio with misleading investors about status of FDA reviews

The SEC announced that it has filed settled charges against Houston-based biotherapeutics company Kiromic BioPharma (KRBP), Inc., its former CEO, Maurizio Chiriva-Internati, and its former CFO, Tony Tontat, for failing to disclose material information about Kiromic’s two cancer fighting drug candidates before, during, and after a July 2021 follow-on public offering that raised $40 million. Kiromic and Tontat have agreed to settle the SEC’s charges in separate administrative proceedings and Chiriva has agreed to settle the charges in federal district court. Kiromic was not ordered to pay a civil penalty in light of its self-reporting, cooperation, and remediation, and Chiriva and Tontat agreed to pay civil penalties of $125,000 and $20,000, respectively, to settle the SEC’s charges. “These resolutions strike the right balance between holding Kiromic’s then-two most senior officers responsible for Kiromic’s disclosure failures while also crediting Kiromic for its voluntary self-report, remediation, proactively instituting remedial measures, and providing meaningful cooperation to the staff,” said Eric Werner, Director of the SEC’s Fort Worth Regional Office. According to the SEC’s order against Kiromic, the company raised $40M in a public offering on July 2, 2021, for the purpose of funding the prospective clinical trials for its two cancer fighting drug candidates, the ALEXIS-PRO-1 and the ALEXIS-ISO-1. However, the SEC’s order found that two weeks before the public offering, the FDA notified Kiromic that it had placed the drug candidates on clinical hold-an FDA order to delay the proposed clinical investigations. The SEC’s order also found that Kiromic did not disclose the FDA clinical holds in its SEC filings, investor roadshow calls, or during due diligence calls leading up to the offering, despite the fact that Kiromic disclosed the hypothetical risk of a clinical hold and the potential negative consequences on Kiromic’s business. Without admitting or denying the SEC’s findings, Kiromic consented to the SEC’s order, which requires Kiromic to cease and desist from committing or causing future violations of the antifraud, reporting, and disclosure controls provisions of the federal securities laws.