After reading this opinion, I am definitely going to start my own business and follow the same gameplan.
Sorrento Therapeutics is a San Diego biotech company that was rapidly going broke; it has a ton of high-interest debt and its auditor had issued a "going concern" qualification that said it had a huge cash burn rate and might have to shut down. So at the height of the COVID epidemic, it issued a press release that discussed a recent small-scale test of one of its products, and its CEO gave a statement to Fox News in which he said:
“We want to emphasize there is a cure. There is a solution that works 100 percent. . . . If we have the neutralizing antibody in your body, you don’t need the social distancing. You can open up a society without fear.”
Wow. That's awesome. There's a cure for COVID!
The company's CEO backs up that statement, that same day, in a different interview, saying: "One of the antibodies is so powerful that at a very low concentration it is able to 100% completely prevent infection or inhibit the infection . . . . So what we’ve done is identified an antibody that recognizes the COVID-19 virus and completely inhibits its binding to the specific receptor.” The company's VP also joins the chorus, telling Fox News (again, that same day): "As soon as it is infused, that patient is now immune to the disease . . . . For the length of time, the antibody is in that system. So, if we were approved [by the FDA] today, everyone who gets that antibody can go back to work and have no fear of catching COVID19.”
You can imagine what happens to the stock price. That same day, it triples.
You've probably already figured out the problem, right? There is, in fact, no cure for COVID, and the company hasn't found one in any event. Once that gets out, the stock price tanks.
So investors sue. And the Ninth Circuit holds . . . .
That the company's statements were true. Or, at worst, Optimistic puffery.
Plus there's insufficient evidence of scienter either.
Because, in context, no one could possibly believe that the company was really saying that they'd found a cure.
Which is why that's going to be the foundation of my next business as well.
I'm going to dump hundreds of thousands of different things into beakers until one of them seems like it slightly slows down the growth of a particular cancer cell. Then I'm issuing a press release and going on the networks -- Fox News sounds good to me too -- and am telling everyone "I want to emphasize that there's a cure for cancer. There is a solution that works 100 percent. If we have the neutralizing agent in your body, you don't need to worry about cancer. You can smoke, get unnecessary x-rays, visit Chernobyl, and do whatever you like. No cancer!"
Then I'll add some random words like inhibition, STI-1399, experiment, oxidizing, Fahrvergnugen, etc. and the like for "context". 'Cause no one's really reading much of anything after seeing the word "cure" anyway.
Let's see if that gives my company's stock the bump I'm looking for.
Then I'll see you guys in the Hamptons and Newport in the summer.
