NEW YORK, July 6, 2020 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against Chembio Diagnostics, Inc. ("Chembio" or the "Company") (NASDAQ: CEMI) and certain of its officers. The class action, filed in United States District Court for the Eastern District of New York, and indexed under 20-cv-02961, is on behalf of a class consisting of all persons and entities other than Defendants who purchased or otherwise acquired Chembio securities between April 1, 2020, and June 16, 2020, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
If you are a shareholder who purchased Chembio securities during the class period, you have until August 17, 2020, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at [email protected] or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
Chembio, together with its subsidiaries, develops, manufactures, and commercializes point-of-care ("POC") diagnostic tests that are used to detect or diagnose diseases.
Amidst the SARS-CoV-2, or COVID-19, pandemic, the Company focused on the development and commercialization of a serological or antibody test.
In April 2020, Chembio's DPP COVID-19 antibody test was among the first such tests to be granted Emergency Use Authorization ("EUA") by the U.S. Food and Drug Administration (the "FDA").
The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Chembio's DPP COVID-19 test did not provide high-quality results and there were material performance concerns with the accuracy of the Company's DPP COVID-19 test; (ii) the Company's DPP COVID-19 test generates a higher than expected rate of false results and higher than that reflected in the authorized labeling for the device, and was not effective in detecting antibodies against COVID-19; (iii) accordingly, it was not reasonable to believe that the test may be effective in detecting antibodies against COVID-19 and, as a result, there was a material risk to public health from the false test results; (iv) all the foregoing, once revealed, was foreseeably likely to have a material negative impact on the Company's financial results; and (v) as a result, the Company's public statements were materially false and misleading at all relevant times.
On June 16, 2020, after the market closed, the FDA issued a press release disclosing that it had revoked Chembio's EUA for the Company's DPP COVID-19 Igm/IgG System, stating in relevant part: "Today, the U.S. Food and Drug Administration revoked the emergency use authorization (EUA) of the Chembio Diagnostic System, Inc. (Chembio) DPP COVID-19 IgM/IgG System, a SARS-CoV-2 antibody test, due to performance concerns with the accuracy of the test . . . . Data submitted by Chembio as well as an independent evaluation of the Chembio test at NCI showed that this test generates a higher than expected rate of false results and higher than that reflected in the authorized labeling for the device. Under the current circumstances of the public health emergency, it is not reasonable to believe that the test may be effective in detecting antibodies against SARS-CoV-2 or that the known and potential benefits of the test outweigh the known and potential risks of the test, including the high rate of false results." (Emphasis added).
As a result of the disclosure of the FDA letter, Chembio's stock price fell $6.04 per share, or 60.83%, to close at $3.89 per share on June 17, 2020, on heavier than usual volume of over 25 million shares.
The Pomerantz Firm, with offices in New York, Chicago, Los Angeles, and Paris, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 80 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com
Robert S. Willoughby
SOURCE Pomerantz LLP