ImmunityBio has agreed to pay $10.5 million to settle a class action lawsuit filed by investors who accused the company of concealing manufacturing problems that ultimately led to the FDA's rejection of its cancer drug Anktiva. The settlement, announced in January 2025, resolves claims stemming from the regulatory setback that wiped out over half of the company's market value in 2023.
FDA Rejection Triggers Market Collapse
The controversy began on May 11, 2023, when the FDA issued a complete response letter rejecting ImmunityBio's Biologics License Application (BLA) for Anktiva. The rejection cited serious manufacturing deficiencies at third-party facilities used by the company, with the FDA finding that these facilities failed to meet critical good manufacturing practice standards.
The regulatory decision had immediate and severe market consequences. ImmunityBio's stock crashed more than 55% following the announcement, erasing $1.5 billion in market value. The dramatic decline reflected investor shock at the unexpected manufacturing issues that derailed what had been positioned as a promising cancer treatment.
Investor Claims of Misleading Statements
In the years leading up to the FDA rejection, ImmunityBio had promoted Anktiva as a breakthrough in cancer treatment, projecting strong chances of FDA approval. The company repeatedly reassured investors that the drug's path to approval was on track, according to the lawsuit filed in the Southern District of California.
Just weeks after the stock crash, shareholders filed the class action lawsuit under case number 23-CV-01216, accusing ImmunityBio of hiding manufacturing problems that led to the FDA's rejection. The investors claimed that the company's positive public statements didn't reflect the actual regulatory risks and that this misled the market while inflating the stock price.
Settlement Terms and Investor Recovery
The $10.5 million settlement covers all investors who purchased or acquired ImmunityBio securities during the period from March 10, 2021, through May 10, 2023, and were damaged as a result. Eligible investors do not need to have sold their securities to participate in the settlement and can retain their shares while claiming compensation.
The final payout amount will depend on individual trades and the total number of investors participating in the settlement. If 100% of eligible investors file claims, the average payout would be $0.14 per share. However, given that typically only 25% of investors file claims in such settlements, the average recovery is projected to be $0.56 per share for those who do participate.
Regulatory Path Forward
The FDA indicated that ImmunityBio would need to resolve the manufacturing deficiencies before any resubmission of the BLA could be considered. The complete response letter effectively reset the regulatory timeline for Anktiva, requiring the company to address the good manufacturing practice violations at its third-party manufacturing facilities.
The settlement process is expected to take 4 to 9 months after the claim deadline, with the exact timing dependent on court procedures and settlement administration. The distribution will be based on the number of claims filed, with early submission potentially increasing an investor's share of the total payout.
