Class action securities fraud case against Amirys dropped

By Dee Thompson | Oct 5, 2017

SAN FRANCISCO -- Plaintiffs in a class action securities fraud case against a California biotechnology company have dismissed the case, with no reason given for the dismissal.

Defense attorney Michael Celio of Keker, Van Nest & Peters LLP told the California Record: “They declined in their court filing to tell me precisely why they were walking away. They wouldn’t tell me why they dismissed the complaint. That’s their right. They are not required to tell us why. They obviously didn’t think there was sufficient merit to it being worth investing their energy and time and the court’s energy and time in this. I respect what they did, a great deal.”

In April 2017, Kevin Ohren, individually and on behalf of all others similarly situated, brought suit against Amirys Inc., John G. Melo, and Kathleen Valiasek (individual directors of the company) in U.S. District Court for the Northern District of California. The case was a class action alleging violations of the federal securities laws.

The complaint alleged Amirys violated Section 10(b) of the 1934 Act and Rule 10b, artificially inflating the market price of the securities during the class period. 

Michael Celio said. “Amirys, a biotech company, had a deal with a company called Blue Cow, which is a sweetener company. Amirys makes fermented biological products used in a bunch of things.”

The original deal was a simple purchase. 

“Blue Cow was going to pay $10 million dollars," Celio said. "Ultimately, the deal didn’t work out, the $10 million dollars did not materialize, for whatever reason. Instead of taking nothing, Amirys agreed to take $10 millions dollars of stock from one of Blue Cow’s subsidiaries. 

"There were some accounting issues that the auditors had in terms of the timing. Instead of the revenue being recognized in the first quarter of 2016, which is when Amirys did its part of the deal, the revenue had to be recognized later when the deal was changed from cash to stock.”  

An experienced securities litigation attorney, Celio said the case was not strong. 

“The law requires if you’re going to accuse someone of fraud is to set forth the exact words of the Private Securities Litigation Reform Act of 1995 with particularity the facts giving rise to a strong inference that the person acted with, in this case, intent," he said. 

"The way you traditionally do that is to look [at a] person who sold a lot of stock before the price of the shares dropped. There’s no indication that anyone sold any stock. Sometimes you have a purported whistleblower and you quote them in the complaint. They didn’t have anything like that in the complaint. Sometimes company documents have been leaked. They didn’t have that. Sometimes there is an SEC investigation. Nothing like that occurred. ”

The case was dismissed without prejudice so it could be refiled but Celio doesn’t anticipate that will happen.

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