CV Sciences, Inc.
- Company Name
- CV Sciences, Inc.
- Stock Symbol
- Class Period
- June 19, 2017 to August 20, 2018
- Motion Deadline
- October 23, 2018
- District of Nevada
The complaint charges CV Sciences and certain of its officers with violations of the Securities Exchange Act of 1934. CV Sciences’ pharmaceutical division develops synthetically formulated cannabidiol-based medicine.
The Company’s “lead drug candidate” is CVSI-007, a chewing gum product that combines cannabidiol and nicotine for the treatment of smokeless tobacco use and addiction, for which the Company has estimated there is a market worth “greater than $2 billion.” On May 16, 2016, CV Sciences filed a patent application for CVSI-007, titled “Pharmaceutical Formulations Containing Cannabidiol and Nicotine for Treating Smokeless Tobacco Addiction.” In February 2017, the Company filed a continuing patent application under the same title, Patent #15/426,617 (the “Patent”).
The complaint alleges that during the Class Period, defendants made false and misleading statements and/or failed to disclose material adverse information about the Company's business, operations and prospects. Specifically, defendants failed to disclose that the Company had received a non-final rejection from the U.S. Patent and Trademark Office (“USPTO”) on April 27, 2017 for the Patent, and a final rejection from the USPTO on December 14, 2017 for the Patent. Since the rejection of the Patent on April 27, 2017, CV Sciences has discussed CVSI-007 in numerous filings with the SEC, including Reports on Form 8-K, Form 10-Q and Form 10-K. As a result of this information regarding the rejection of the Patent for CV Sciences’ lead product candidate being withheld from the market, CV Sciences shares traded at artificially inflated prices.
Then on August 20, 2018, Citron Research published a report on twitter alleging that CV Sciences’ management had misrepresented the status of the Patent for CVSI-007, even as it had continued to hype the prospects of CVSI-007. On this news, CV Sciences stock plunged over 63%, from $9.20 per share to $3.40 per share.