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NantHealth Faces Investor Lawsuits Alleging False Statements Around IPO

NEW YORK (GenomeWeb) – Several law firms said this week that they have filed class action lawsuits against NantHealth alleging the company made false and misleading statements in connection with its initial public offering.

At least three class action lawsuits were filed on Tuesday and Wednesday claiming the firm made misleading statements on its registration statement and prospectus for its June 2, 2016 IPO. A fourth lawsuit filed on Tuesday seeks investors who purchased shares of NantHealth between Feb. 19, 2013 — before the firm went public — through March 1, 2017, and who suffered a loss during that period.

The actions follow a story published on March 6 by Stat saying that a contract tied to a $12 million donation to the University of Utah by NantHealth Chairman and CEO Patrick Soon-Shiong effectively forced the school to boomerang $10 million of the gift back to NantHealth for services it would provide.

Stat further said that the deal provided NantHealth with valuable data that was used to build a product for evaluating a patient's risk of rare and inherited diseases, and "made it possible for [Soon-Shiong's] company to inflate, by more than 50 percent" the number of test orders for GPS Cancer that were reported to investors in late 2016.

GPS Cancer leverages whole-genome sequencing, whole-transcriptome sequencing, and quantitative proteomics to profile patients and provide doctors with information that can be used to create personalized treatment strategies.

The law firm Pomerantz alleges that NantHealth failed to disclose and/or made misleading statements about the University of Utah donation and artificially inflated the number of test orders reported to investors. Additionally, the firm's donation violated federal tax law, Pomerantz alleged.

The law firms Bronstein, Gewirtz & Grossman; Glancy Prongay & Murray; and Goldberg Law made similar allegations against NantHealth.

Since Stat published its story through the end of the trading day on Tuesday, NantHealth's shares on the Nasdaq have plummeted 31 percent. In late morning trading Wednesday, the firm's shares slipped 6 percent to $4.66. 

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