Cocrystal Pharma

Kurta Law is investigating broker recommendations of Cocrystal Pharma (COCP). This stock is high-risk, as disclosed in the company’s prospectus. Recommendations of risky investments may be in violation of SEC and FINRA rules and regulations.

If you lost money on Cocrystal Pharma stock, consider reaching out to a securities attorney. You may be required by your brokerage firm to seek remedy through FINRA arbitration, and a securities attorney can help you through the process.

Contact us to review your case today: (877) 600-0098 or info@kurtalawfirm.com.

What is Cocrystal Pharma?

Formerly BioZone Pharmaceuticals, Cocrystal Pharma Inc. (COCP) is a biotechnology company focused on developing antiviral therapeutics to treat Hepatitis C, influenza, norovirus, and other viral diseases.

As these antiviral therapeutics are intended to “inhibit the essential replication function of various viruses,” Cocrystal Pharma has also developed a proprietary system to examine the molecular structure of viruses.

What are the Risks Associated with Cocrystal Pharma?

Pharmaceutical and biotechnology companies often face high start-up costs as they develop and seek regulatory approval for their products.

Similarly, Cocrystal Pharma describes a history of losses, financial and operational dependence on its collaborators, and other significant risks in its prospectus.

Uncertainty as a Going Concern

Cocrystal Pharma states that it lost “$185.6 million from inception through June 30, 2019, and expect[s] to continue losing money in the future,” adding that it may never yield income or positive cash flow from its operations.

With no commercialized drugs at the time of its prospectus, Cocrystal Pharma had not generated any revenue from sales. Instead, it “financed [its] operations primarily through the sale of equity securities and entering into research collaborations.”

These factors make it difficult for investors to evaluate how successful the company may be in the long-term.

Dependence on Merck Sharp & Dohme Corporation

In January 2019, Cocrystal Pharma entered into an agreement with Merck Sharp & Dohme Corporation “to research, develop, and commercialize certain proprietary influenza A/B antiviral agents.” These efforts “will depend substantially” on Merck Sharp & Dohme’s contributions, and Cocrystal Pharma will receive milestone payments totaling $156 million as these product candidates progress through development and testing.

However, the termination or failure of this collaboration and other research collaborations could have a significant impact on Cocrystal Pharma’s financial situation and ability to continue developing its product candidates.

Past and Potential Litigation

On August 20, 2020, Cocrystal Pharma settled a lawsuit alleging that certain executives had breached their fiduciary duties, or aided and abetted in such breaches, in the following ways:

• Making and/or causing Cocrystal Pharma to “make misrepresentations and/or omissions of material fact in public statements”
• Failing to maintain internal controls at the company
• Engaging in “improper promotion or manipulation of the market” for Cocrystal Pharma’s securities (during its time as BioZone Pharmaceuticals)

On September 20, 2018, a class action lawsuit filed against Cocrystal Pharma alleged that “certain current and former executive officers and directors” and other individuals violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder.

These regulations concern the making of misleading statements and omissions of material fact. This lawsuit was settled in 2021 for $1.265 million.

Cocrystal Pharma may be subject to additional litigation in the future, which may be costly and time-consuming for the company.

Potential Delisting from Nasdaq

The prospectus lists potential delisting from the Nasdaq Capital Market as a risk that could limit the stock’s liquidity and render it a penny stock, a designation that imposes unique restrictions under SEC rules.

On November 16, 2021, Nasdaq informed Cocrystal Pharma that it was not compliant with the required minimum closing price of $1.00 per share for 30 consecutive trading days. In response, the company initiated a 1-for-12 reverse stock split on October 11, 2022, to raise its stock price.

Aegis Capital Corp. Underwriting  

Investors should know that Aegis Capital Corp. served as the underwriter for this offering. Underwriters take on risk in exchange for a fee, which could motivate certain investment banks to underwrite investments that pose too much risk for the average retail investor. Additionally, brokers may have conflicts of interest when they recommend shares that are underwritten by an affiliate of their brokerage firm. 

Do You Have Concerns Related to Your Shares of Cocrystal Pharma?

If you have concerns about your investment in Cocrystal Pharma, reach out to a Kurta Law securities attorney today. Our securities attorneys have experience achieving fair settlements for our clients in cases of unsuitable investment recommendations. Call (877) 600-0098 or email info@kurtalawfirm.com.