Bros Nation, I know, I know. I said we were going to be off this week for my birthday this weekend but news came across my desk about one of my favorite stocks, VXRT. This is good news/bad news depending on how you look at it but news nonetheless. The ongoing lawsuit with VXRT continues despite a much anticipated Sept 30 resolution date. The judge overseeing the case deals a blow to VXRT and investors respond in kind. For more on this stay tuned.   

Welcome to the Money Talk Sundayz podcast. I’m your Investment Bro Stevie Bee. Do the channel a solid and hit that like button. If you’re not already subscribed you can do so now or at the end of the video. Finally, if you have friends that are invested in Vaxart or VXRT share this video. The latest VXRT news leaves me with mixed feelings but still bullish.   

On September 30, 2021 Judge Vince Chhabria called Vaxart out on their dismissal claims accusing the biotech company and controlling owner, hedge fund Armistice Capital LLC of burying investors in an “avalanche of bs”. The judge did not outright rule that the defense were guilty of what they were being accused of but did go so far as to say that the allegations made against them were “plausible”.

Quick background as to the nature of the lawsuit. VXRT and Armistice are being sued for multiple materially misleading statements in June 2020 that claimed it was partnering with Attwill Medical Solutions Sterilflow LP to produce "a billion or more" COVID-19 vaccine doses per year, even though Attwill wasn't certified to produce the vaccines. Vaxart also claimed a day later that its Covid-19 vaccine had been "selected for the U.S. Government's Operation Warp Speed.” That wasn’t the case at all.

During a hearing held via Zoom, Judge Chhabria said it appears that the investors have plausibly alleged that Vaxart Inc. and its majority stockholder and controlling owner, hedge fund Armistice Capital LLC, intended to artificially prop up the price of the penny stock. It also appears that the investors have plausibly alleged that the defendants intended to make a series of misleading statements in order to prop up the stock price, the judge said.

"Is that what happened? I don't know," the judge said. "But I think that that has been plausibly alleged."

In VXRT’s defense, Riccardo DeBari of Thompson Hine LLP, argued that the allegations hinge on a mere "10 words" at the beginning of a press release that are unactionable, forward-looking statements that were aspirational and that only “nitwits” would have been duped by the numerous press statements released by Vaxart.

The judge disagreed pointing to the statements made back in June 2020 as seemingly credible intel for sophisticated investors. The judge went further revealing that at the time of the press statements Vaxart only had roughly 25 – 30 people working at the company making it highly unlikely they would have the capacity to produce billions of vaccines annually.

"It's just absurd," the judge said, adding that "clearly" the company should have known that they didn't have the capability to produce that many vaccines.

Now the judge did not issue a ruling at the end of the hearing instead asking both sides to submit additional case law citations for him to review before doing so.

Now from what I’ve read on the hearing an order date is not set so we’re playing the waiting game just like in the case of Ripple and XRP. What is notable is that shares of VXRT dropped to as low as 7.06 as of this recording. The drop is further fueled by another Covid-19 vaccine tablet shines in late stage trials from Merck & Co. Merk is leading the race in developing an oral pill for the virus with studies showing that their candidate greatly reduces chances of hospitalization or death among patients at risk of severe illness. Merk is currently trading at 81.40.