Biotechnology company PepGen Inc., CEO James McArthur, and CFO Noel Donnelly have been named in a class action lawsuit accusing them of misleading investors about the efficacy and safety of its lead product candidate.
According to the lawsuit filed by plaintiff Johnny Karam, PepGen, a clinical-stage biotech firm developing treatments for severe neuromuscular diseases, misrepresented the potential of its drug PGN-EDO51, intended to treat Duchenne muscular dystrophy (DMD). From March 7, 2024, to March 3, 2025, the company allegedly made false statements about the drug’s ability to produce dystrophin protein and overstated its clinical outlook. In July 2024, PepGen announced “positive” results from its CONNECT1 study, but analysts reportedly found the data underwhelming. The complaint also claims that subsequent press releases failed to disclose safety issues that led to regulatory scrutiny and the suspension of clinical trials.
The plaintiff contends that PepGen violated Sections 10(b) and 20(a) of the Securities Exchange Act by making materially false and misleading statements that inflated stock prices. When adverse information—including FDA-imposed holds on clinical trials—came to light, PepGen’s stock price dropped significantly. Investors who purchased shares during the class period allegedly suffered financial losses.
Karam is seeking damages for those losses and requests a jury trial, along with any other relief deemed appropriate by the court.
The plaintiff is represented by attorney Jeremy A. Lieberman of Pomerantz LLP. The case was filed in the United States District Court for the Eastern District of New York under Case No. 1:25-cv-03221.