SEC v. Maurizio Chiriva-Internati — U.S. Securities and Exchange Commission Litigation Release No. 26184, dated December 3, 2024.
The SEC charged Maurizio Chiriva-Internati, former CEO of Kiromic BioPharma, Inc., for misleading investors about the status of FDA reviews for two cancer drug candidates. He failed to disclose clinical holds placed by the FDA before and during a $40 million public offering, despite knowing about them. Chiriva-Internati settled the charges with a $125,000 civil penalty, an officer and director bar, and an injunction.
In Plain English
Imagine a company is selling shares to raise money for a new project. Before selling, they learned the project hit a major roadblock (like a permit being denied). Instead of telling investors about the roadblock, they went ahead and sold the shares, making it seem like everything was fine. This case is about a CEO who did just that, hiding bad news about drug trials to get investors to buy company stock.
Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.
How the Alleged Scheme Worked
- Company Submits Drug Candidates for Approval In May 2021, Kiromic BioPharma, Inc. announced it had submitted Investigational New Drug (IND) applications to the FDA for two cancer drug candidates, ALEXIS-PRO-1 and ALEXIS-ISO-1. The company stated that FDA feedback was expected within 30 days, anticipating clinical trials to begin in Q3 2021.
- FDA Places Drug Candidates on Clinical Hold Approximately two weeks before a planned public offering, the FDA notified Kiromic that it had placed both the ALEXIS-PRO-1 and ALEXIS-ISO-1 drug candidates on clinical hold. Specifically, Chiriva-Internati learned of the hold for ALEXIS-PRO-1 on June 16, 2021, and for ALEXIS-ISO-1 on June 17, 2021.
- CEO Signs Misleading SEC Filing Despite knowing about the FDA clinical holds, Maurizio Chiriva-Internati, as CEO, reviewed, signed, and contributed content to an SEC filing on June 25, 2021. This filing failed to disclose the critical FDA clinical holds.
- Company Conducts Investor Roadshow Three days before the public offering, Chiriva-Internati participated in investor roadshow calls. During these calls, he allegedly did not correct misstatements made by another Kiromic officer regarding the status of the FDA review, thereby omitting the fact of the clinical holds.
- Company Raises $40 Million On July 2, 2021, Kiromic BioPharma, Inc. completed a follow-on public offering, raising $40 million. The funds were intended for prospective clinical trials for the drug candidates.
- CEO Certifies Another Misleading Filing Even after the public offering, Chiriva-Internati signed and certified a Form 10-Q filed with the SEC on August 13, 2021, for the fiscal quarter ended June 30, 2021. This filing also failed to disclose the FDA clinical holds.
The Enforcement Action
The SEC filed settled charges against Maurizio Chiriva-Internati, former CEO of Kiromic BioPharma, Inc., for misleading investors about the status of FDA reviews for two cancer drug candidates. Chiriva-Internati agreed to a $125,000 civil penalty, a permanent injunction from violating antifraud, reporting, certification, and disclosure provisions, and a three-year bar from serving as an officer or director of a public company. The settlement is subject to court approval.
Named in this action: Maurizio Chiriva-Internati.