The U.S. Securities and Exchange Commission (SEC) has filed settled charges against Kiromic BioPharma, Inc., a Houston-based biotherapeutics company, along with its former CEO Maurizio Chiriva-Internati and former CFO Tony Tontat. The charges are related to their failure to disclose crucial information about two of Kiromic’s cancer-fighting drug candidates ahead of and during a public offering in July 2021, which raised $40 million. Despite being notified by the FDA that the clinical trials for the drugs, ALEXIS-PRO-1 and ALEXIS-ISO-1, were placed on clinical hold in June 2021, Kiromic did not disclose this in its filings or communications with investors.

Kiromic was not required to pay a civil penalty due to its voluntary self-reporting, cooperation, and remediation. However, Chiriva and Tontat have agreed to pay civil penalties of $125,000 and $20,000, respectively, to resolve the charges. The SEC emphasized the balance of holding the senior officers accountable while also acknowledging Kiromic’s efforts to rectify the situation.

The SEC’s order revealed that the company raised $40 million for the prospective trials, despite knowing that the FDA had placed the trials on hold. The company failed to disclose this critical information in its SEC filings and investor communications, which misled investors about the status of the drug candidates. Both Chiriva and Tontat were involved in filings and communications that did not disclose the holds, even after receiving detailed FDA communications on the matter.

Chiriva, in particular, participated in investor roadshow calls just days before the offering, failing to correct misstatements made by other Kiromic officers regarding the FDA’s review status. As part of the settlement, Chiriva has been barred for three years from serving as an officer or director of any public company, in addition to agreeing to the civil penalty.

The SEC’s investigation was led by Kendrack Lewis with support from Samantha Martin and B. David Fraser, with litigation efforts headed by Jennifer Reece.