Chembio Diagnostics, Inc. (CEMI) Accused of Misleading Shareholders
In March 2020, Chembio entered into a strategic partnership to begin the development of a diagnostic test for the detection of the COVID-19 virus and IgM and IgG antibodies. Throughout the relevant period, Chembio touted that its antibody test provides high sensitivity and specificity, and was 100% accurate. As a result of these positive representations, Chembio’s stock price soared from a closing price of $5.12 per share on March 31, 2020 to a closing price of $15.54 per share on April 24, 2020. Chembio took advantage of the stock’s trading success and closed the public offering of 2.6 million shares at $11.75 per share for gross proceeds of approximately $30.8 million on May 11, 2020. Despite Chembio’s purported success, on June 17, 2020, the Company disclosed that the FDA had revoked its Emergency Use Authorization of Chembio’s antibody test “due to performance concerns with the accuracy of the test.” On this news, Chembio’s shares fell $6.04, or 60%, to close at $3.89 per share.
