Chembio investors may receive additional information about the case by clicking the link "Submit Your Information" above.
According to the complaint, Chembio develops diagnostic solutions and offers products for treatment, detection, and diagnosis of infectious diseases. Chembio claims to have developed and patented a new and innovative technology called the Dual Path Platform (“DPP®”), which allows for rapid diagnostic testing of a variety of chemical substances. On its website, Chembio maintains that its products “meet the highest standards for accuracy and superior performance to help prevent the spread of infectious diseases” and that its “innovative solutions, like the Chembio Dual Path Platform (DPP®), make [point-of-care] testing faster, more accurate, and more cost effective.”
On March 12, 2020, Chembio entered into a worldwide strategic partnership with LumiraDx Limited, a company focused on developing, manufacturing, and commercializing industry-leading point-of-care diagnostic platforms, with the aim of developing a diagnostic test for the detection of the COVID-19 virus and IgM and IgG antibodies on both of their DPP® platforms (the “DPP COVID-19 Test”). Following this news, Chembio’s shares jumped 65% during pre-market trading. Throughout the Class Period, the defendants touted their progress in developing the DPP COVID-19 Test, representing that it: (i) successfully aided in determining current or past exposure to the COVID-19 virus; (ii) provided high sensitivity and specificity; and (iii) was 100% accurate. The defendants’ overly positive progress updates convinced some entities to place purchase orders for the DPP COVID-19 Tests worth millions of dollars. These events further boosted the price of Chembio shares, including on March 20, 2020, when Chembio’s shares rose 54%.
Chembio’s representations ultimately drove its stock from a closing price of $3.10 per share on March 11, 2020, to a Class Period high of $15.54 per share on April 24, 2020, an increase of more than 400%.
The complaint alleges that, on June 16, 2020, after the market closed, the U.S. Food and Drug Administration (“FDA”) issued a press release disclosing that it had revoked Chembio’s Emergency Use Authorization (“EUA”) for its DPP COVID-19 Test. In a public announcement, the FDA informed that its decision was “due to performance concerns with the accuracy of the test.” More specifically, the FDA informed that the DPP COVID-19 Test “generate[d] a higher than expected rate of false results and higher than that reflected in the authorized labeling for the device.” As a result, the FDA concluded that the “test’s benefits no longer outweigh its risks.” The next day, on June 17, 2020, Chembio publicly acknowledged the receipt of the FDA’s June 16, 2020 letter and informed the public of the FDA’s revocation of its EUA. Following this news, Chembio shares declined from a closing price on June 16, 2020 of $9.93 per share to close at $3.89 per share on June 17, 2020, a decline of more than 60%.
The complaint alleges that throughout the Class Period, the defendants made false and/or misleading statements and/or failed to disclose that Chembio’s DPP COVID-19 Test did not provide high-quality results and there were material performance concerns with the accuracy of its DPP COVID-19 Test.
If you are a member of the class described above, you may no later than August 17, 2020 move the Court to serve as lead plaintiff of the class, if you so choose.
A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
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