The jury returned a positive verdict for our client in a rare securities class action trial for the case In re Vaxart Inc. Securities Litigation in the Northern District of California.
Retained by Akin Gump Strauss Hauer & Feld LLP
Our client, Armistice Capital, achieved a significant victory after a complex securities class action trial. Defense counsel retained Jennifer Marietta-Westberg of Cornerstone Research as an expert witness to address class certification, loss causation, and damages issues.
Allegations
Plaintiffs alleged that Vaxart, a clinical-stage biotechnology company, misrepresented the prospects of its COVID-19 vaccine program, and that Armistice Capital, by virtue of its majority stake in Vaxart, exerted control over Vaxart and the drafting of the alleged false and misleading statements. Plaintiffs claimed that these alleged misrepresentations inflated Vaxart’s securities prices during the class period and allowed Armistice Capital to reap significant insider trading profits from the purported scheme.
While the Vaxart defendants reached a settlement with plaintiffs, the case proceeded with the Armistice Capital defendants.
Economic Expert Testimony
Dr. Marietta-Westberg submitted two rebuttal reports in which she opined that plaintiffs’ expert failed to provide a damages methodology that can measure only the economic losses stemming from the alleged misrepresentations. She further opined that plaintiffs’ expert did not reliably demonstrate market efficiency of Vaxart options.
In July 2024, the judge denied plaintiffs’ motion for class certification without prejudice and requested supplemental briefing. After supplemental briefings, in December 2024, the judge granted plaintiffs their renewed motion for class certification, but with a shortened class period removing one alleged misrepresentation and one alleged corrective disclosure.
Rare Securities Class Action Trial
In April 2026, Dr. Marietta-Westberg testified at trial that plaintiffs’ expert had not established loss causation and had failed to reliably measure any price inflation and damages for the Vaxart securities at-issue.
After a two-week trial, the jury found that plaintiffs had not proven that the defendants had engaged in a scheme to defraud investors or that they had engaged in insider trading.
Washington
