It is so interesting to me that, notwithstanding the passage of time since the initial coronavirus outbreak in the U.S. in March 2020, plaintiff shareholders continue to file COVID-19-related securities class action lawsuits — as we saw, for example, in the infrastructure overcapacity lawsuit filed last week against Amazon. In yet another case showing how COVID-related concerns are continuing to roil companies and attract securities suits, earlier this week a plaintiff shareholder filed a securities class action lawsuit against developmental-stage pharmaceutical company Molecular Partners AG in part owing to setbacks the company encountered in its efforts to develop a COVID-19 treatment candidate. A copy of the July 12, 2022 lawsuit filed against Molecular Partners can be found here.



Molecular Partners is a clinical-stage biopharmaceutical company based in Switzerland. Molecular Partners completed its U.S. IPO in June 2021. Its American Depositary Shares (ADSs) trade on Nasdaq. Among the company’s product candidates is ensovibep, which the company is developing in collaboration with Novartis for the treatment of COVID-19. The company is also developing MP0310 in collaboration with Amgen for the treatment of certain types of cancer.


In November 2021, Molecular Partners disclosed that the analysis of the ongoing ensovibep Phase 3 clinical study “has not met the thresholds required to continue enrollment of adults with COVID-19 in hospitalized settings.” According to the subsequently filed securities lawsuit, the company’s share price fell over 31% on this news.


On April 26, 2022, months after the company had applied for Emergency Use Authorization (EUA) from the Food and Drug Administration (FDA) for ensovibep, Novartis’s CEO disclosed that “given the latest feedback … in our discussion with the [FDA], we would expect to agency to require Phase 3 study before granting an EUA approval or a general approval” for ensovibep, and that “we need to make a kind of sober evaluation as to is it a doable study in light of the waning rates of COVID around the world.” According to the complaint, the company’s share price fell over 16% on this news.


Also on April 26, 2022, Molecular Partners announced that “Amgen has informed the company of their decision to return global rights of MP0310 to Molecular Partners following a strategic pipeline review.” The securities complaint alleges that the company’s share price fell a further 37% on this news.


The Lawsuit

On July 12, 2022, a plaintiff shareholder filed a securities class action lawsuit in the Southern District of New York against Molecular Partners and certain of its directors and officers. The complaint purports to be filed on behalf of two classes of claimants: investors who purchased the company’s ADSs in or traceable to the company’s June 16, 2021 IPO; and investors who purchased the companies ADSs between June 16, 2021 and April 26, 2022.


The complaint alleges that during the class period the defendants misled investors by failing to disclose that: “(i) ensovibep was less effective at treating COVID-19 than Defendants had led investors to believe; (ii) accordingly, the FDA was reasonably likely to require an additional Phase 3 study of ensovibep before granting the drug EUA; (iii) waning global rates of COVID-19 significantly reduced the Company’s chances of securing EUA for ensovibep; (iv) as a product candidate, MP0310 was less attractive to Amgen than Defendants had led investors to believe; (v) accordingly, there was a significant likelihood that Amgen would return global rights of MP0310 to Molecular Partners; (vi) as a result of all of the foregoing, the clinical and commercial prospects of ensovibep and MP0310 were overstated; and (vii) as a result, the Offering Documents and Defendants’ public statements throughout the Class Period were materially false and/or misleading and failed to state information required to be stated therein.”


The plaintiff alleges that the defendants violated Sections 11 and 12(a)(1) of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks to recover damages on behalf of the plaintiff classes.



According to my tally, this lawsuit is the 54th COVID-19-related securities class action lawsuit to be filed since the initial coronavirus outbreak in the U.S. in March 2020. Even though we are now well over two years since the outbreak, this lawsuit is also the 11th coronavirus-related securities suit to be filed so far this year. Indeed, the incidence of COVID-related suits so no sign of slowing down, notwithstanding the passage of time.


It is worth noting that in this lawsuit, as in many of the recently filed COVID-related suits, the allegations relating to COVID represent only part of what is alleged. In so many of the more recently filed lawsuits involving COVID, the allegations relating to the coronavirus are accompanied by allegations relating to other challenges, problems, and concerns that the defendant company is facing. This phenomenon would appear to be a simple reflection of the fact that there is a lot going on, and that COVID is only one of several macro factors affecting companies now – along with economic inflation, interest rate increases, the war in Ukraine, global supply chain disruptions, and labor supply shortages. For that reason, it is increasingly challenging to say with definitional certainty that a particular case is or is not coronavirus-related.


However, all of that said, and even though there are non-COVID-related allegations involved in this latest case, I have no hesitation saying that this case is COVID-related. The allegations in the complaint relating to the company’s efforts to develop a COVID treatment are at the center of this complaint. The main thrust of the lawsuit relates to the setbacks the company encountered in its efforts to develop a COVID therapy.


As the various COVID-related cases have been filed, I have noted that they generally have fallen into one of three categories: cases related to companies that experienced coronavirus-related outbreaks in their facilities (cruise ships, private prison systems); cases that related to companies that hope to profit from the coronavirus outbreak (developmental drug companies, diagnostic testing companies); and companies whose operations or financial performance were disrupted by the coronavirus outbreak (private hospital systems, real estate development firms.) More recently, I have noted a fourth category of cases involving companies that initially prospered at the outset of the pandemic but whose fortunes waned as the coronavirus outbreak evolved.


This case, involving the company’s efforts to develop a coronavirus therapy, clearly falls into the second of these categories. The price of the company’s ADSs rose based on the prospects for the company to be able to develop the COVID therapy. When the therapy development hit setbacks, the price of the ADSs declined. The ADS price increase reflected investors’ hopes about the company’s prospects based on its COVID therapy development efforts, and the decrease reflected investors disappointed hopes as the development efforts met with setbacks.


In looking at the recently filed COVID-related securities suits, including this latest one, it is clear that COVID remains a factor affecting many companies’ performances. In part this is due to the fact that over the course of the pandemic, many companies made critical business decisions based on the altered circumstances caused by the pandemic. For example, this company set in motion focused efforts to develop a COVID therapy.


For this company and other companies that made business decisions based on the pandemic, the consequences of those decisions continue to play out. To the extent the consequences have a negative impact on current company operations of financial performance, and to the extent the companies’ share prices decline as result, the companies may well get hit with securities lawsuits – even though we are now well over two years past the initial COVID-19 outbreak. For these reasons, I believe that we will continue to see COVID-19 related lawsuits for some time to come.