Rosen Law Firm, an investors rights law firm, announced Monday afternoon that it would investigate potential securities claims on behalf of MEI Pharma shareholders resulting from allegations that the company “may have issued materially misleading business information to the investing public.”
MEI Pharma, a late-stage pharmaceutical company focused on developing new therapies for cancer, announced on Friday after market hours that it would restate its financial statements following errors in revenue recognition during quarters in 2020 and 2021.
The disclosure indicated that errors were related to the recognized revenue from a commercialization agreement with Kyowa Kirin Co., a Japanese pharmaceutical company. MEI stated that it estimates the errors “were material” on a cumulative basis and will analyze the materiality linked to each reporting period as part of the restatement.
“[R]evenue was overstated in some quarters and understated in other quarters in the Company’s financial statements during 2020 and 2021. The Company will therefore restate its previously filed annual and quarterly financial statements for periods from June 30, 2020 forward,” the company wrote.
MEI Pharma stated that it expects the errors and required restatement will “have no effect” on its previously reported operating expenses, cash flows or cash and short-term investments. Additionally, the company said its financial statements and other related financial information covering the non-reliance periods should “no longer be relied upon.”
According to Rosen, the share prices of MEI Pharma fell 4.6% and opened at $0.4958 per share on Monday, “damaging investors.” MEI Pharma’s stock finished down 7.22% at the end of the trading session Monday.
As part of the same revenue restatement disclosure, MEI Pharma announced that it received a deficiency letter from Nasdaq’s Listing Qualifications Department since the closing price for the company’s stock was below the minimum of $1 per share for the past 30 days. However, this will have no immediate impact since MEI Pharma has received an additional 180 calendar days to regain compliance with the requirement.
