LOS ANGELES, July 03, 2020 (GLOBE NEWSWIRE) -- The Portnoy Law Firm advises investors that a class action lawsuit has been filed on behalf of Chembio Diagnostic System, Inc. (“Chembio” or the “Company”) investors that acquired Chembio securities (NASDAQ: CEMI) between April 1, 2020 through June 16, 2020, inclusive (the "Class Period").
The complaint filed in this action alleges that defendants misled investors regarding the accuracy of the Company's Dual Path Platform ("DPP Test") COVID-19 serological point-of-care test for the detection of IgM and IgG antibodies aided in determining current or past exposure to the COVID-19 virus.
The Complaint further alleges that on May 11, 2020, Defendants took advantage of Chembio's inflated stock price, and closed a public offering of approximately 2.6 million shares of Chembio stock at $11.75 per share for gross proceeds of approximately $30.8 million.
On June 16, 2020, the U.S. Food and Drug Administration revoked the emergency use authorization of the DPP Test due to performance concerns with the accuracy of the test, and on this news the Company’s shares fell sharply in value. The FDA further stated that:
The Chembio antibody test was one of the first antibody tests authorized by the FDA during the COVID-19 public health emergency. At the time of authorization, based on the information that Chembio submitted to the FDA at that time, the agency concluded that the test met the statute’s “may be effective” standard for emergency use authorization, and that the test’s known and potential benefits outweighed its known and potential risks.
As the FDA has learned more regarding the capability for performance of SARS-CoV-2 serology tests during the pandemic, and what performance is necessary for users to make well-informed decisions—through both the continued review and authorization of serology tests as well as through a research partnership with the National Institutes of Health’s National Cancer Institute (NCI)— the FDA was able to develop general performance expectations for these tests, which are listed in our serology templates.
Data submitted by Chembio as well as an independent evaluation of the Chembio test at NCI showed that this test generates a higher than expected rate of false results and higher than that reflected in the authorized labeling for the device. Under the current circumstances of the public health emergency, it is not reasonable to believe that the test may be effective in detecting antibodies against SARS-CoV-2 or that the known and potential benefits of the test outweigh the known and potential risks of the test, including the high rate of false results.
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