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Akari CEO exits abruptly amid probe of Phase 2 trial data

May 31, 2017

A little more than two weeks after being placed on administrative leave, Gur Roshwalb, chief executive officer of Akari Therapeutics, has resigned his position, the company announced late Tuesday.

Investors have reacted negatively, sending share prices down more than 10 percent in pre-market trading. Share prices hit a low of $4.50 before bouncing back a little to $4.90 as of about 8 a.m.

Roshwalb’s resignation comes in the wake of Akari’s investigation into whether or not Roshwalb, or any other company executive, was involved with an April 27 report issued by Edison Research Ltd. (and later retracted) regarding Akari’s Phase II clinical trial of Coversin for paroxysmal nocturnal hemoglobinuria (PNH). In its Tuesday statement, Akari said it reviewed the note and determined that the report issued by Edison was approved by Roshwalb in violation of company policy. Roshwalb tendered his resignation on May 29 and it was publicly announced on May 30.

Akari’s board of directors launched an executive search to find a new CEO for the company. Ray Prudo, chairman of the board of directors, will serve as interim CEO until a replacement can be found, the company said.

While Akari is seeing a shakeup over the Edison note, the company did update its interim analysis of the Phase II PNH trial. Akari said the previous analysis released on April 24 was inaccurate with respect to one patient mentioned in the data release. Originally, Akari said the “fifth patient” who had an LDH of 3.7 X ULN at baseline achieved the primary endpoint at day 14. The patient was withdrawn from the trial at day 43 due to a suspected co-morbidity unrelated to treatment, which would have excluded the patient from the trial protocol, the company said. Akari said that patient did not meet the primary endpoint.

“While on Coversin, the patient met the primary endpoint (day 14), and achieved and maintained a CH50, Akari expects to release additional results with respect to the four continuing patients in the Phase II PNH trial of Coversin in approximately four weeks.

Akari expects to release additional results with respect to the four continuing patients in the Phase II PNH trial of Coversin in approximately four weeks.

In the Edison note that was retracted, the company said Akari’s lead drug Coversin matched Alexion Pharmaceutical (ALXN)’s Soliris in efficacy. Soliris is the only drug approved by the U.S. Food and Drug Administration for PNH. Akari did not suggest the same thing in its April announcement about Coversin. Also, when Akari announced that Edison had withdrawn its note, the company said investors should not rely on what Edison had said.

Despite that warning though, some investors apparently did rely on the Edison note. As a result, Akari now faces two class action lawsuits. On May 12, a putative class action captioned Derek Da Ponte v. Akari Therapeutics, PLC, Gur Roshwalb, and Dov Elefant (Case 1:17-cv-03577) was filed in the U.S. District Court for the Southern District of New York against Akari, its CEO and chief financial officer. Additionally, a putative class action lawsuit, Sherli Shamoon v. Akari Therapeutics, PLC, Gur Roshwalb, and Dov Elefant (Case 1:17-cv-03783), was filed on May 19 in the U.S. District Court for the Southern District of New York. In both cases the plaintiffs pointed to the Edison report and asserted claims alleging federal securities laws violations relating primarily to the April 24 release. Akari said no summons has yet been issued in relation to the lawsuits.

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