According to the Complaint, Progenity, Inc. is a biotechnology company focused on developing and commercializing molecular testing products and precision medicine applications. The Company provides in vitro molecular tests designed to assist parents in making informed decisions related to family planning, pregnancy, and complex disease diagnosis.
On or about June 22, 2020, Defendants conducted Progenity’s IPO. In the IPO, Defendants sold over 6.6 million shares of Progenity common stock to the investing public at a price of $15 per share, generating over $100 million in gross offering proceeds.
The Complaint alleges that the Registration Statement for the IPO was negligently prepared and, as a result, contained untrue statements of material fact, omitted material facts necessary to make the statements contained therein not misleading, and failed to make the necessary disclosures required under the rules and regulations governing its preparation. Specifically, the Complaint alleges the Registration Statement failed to disclose, inter alia, the following adverse facts that existed at the time of the IPO, rendering numerous statements provided therein materially false and misleading: (i) that Progenity had overbilled government payors by $10.3 million in 2019 and early 2020 and, thus, had materially overstated its revenues, earnings and cash flows from operations for the historical financial periods provided in the Registration Statement; (ii) that Progenity would need to refund this overpayment in the second quarter of 2020 (the same quarter in which the IPO was conducted), adversely impacting its quarterly results; and (iii) that Progenity was suffering from accelerating negative trends in the second quarter of 2020 with respect to the Company’s testing volumes, revenues and product pricing.