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Case 1:14-cv-01343-RGA Document 35 Filed 04/06/15 Page 1 of 35 PageID #: 448

UNITED STATES DISTRICT COURT DISTRICT OF DELAWARE

VAMSI ANDAVARAPU, Individually And On Behalf Of All Others Similarly Situated,

Case No. 14-1343-RGA Plaintiff,

JURY TRIAL DEMANDED v.

iBIO, INC., ROBERT B. KAY, and ROBERT ERWIN,

Defendants .

AMENDED CLASS ACTION COMPLAINT

Lead Plaintiff Vamsi Andavarapu and named plaintiffs Ziad Ekwaneen, Frank

DiMartino, and Kenneth Gordon (“Plaintiffs”), individually and on behalf of all other persons

similarly situated, by their undersigned attorneys, allege in this first amended complaint (the

“Complaint”) the following upon knowledge with respect to their own acts, and upon facts

obtained through an investigation conducted by their counsel, which included, inter alia: (a)

review and analysis of relevant filings made by iBio, Inc. (“iBio” or the “Company”) with the

United States Securities and Exchange Commission (the “SEC”); (b) review and analysis of

defendants’ public documents, conference calls, and press releases; (c) review and analysis of

securities analysts’ reports and advisories concerning the Company; (d) information readily

obtainable on the Internet; and (f) consultation with an advisor on medical, scientific, and

regulatory issues concerning iBio and the production of ZMapp. Plaintiffs believe that further

substantial evidentiary support will exist for the allegations set forth herein after a reasonable

opportunity for discovery. Most of the facts supporting the allegations contained herein are

known only to defendants or are exclusively within their control.


NATURE OF THE ACTION

1. This is a federal securities class action on behalf of a class consisting of all

persons and entities other than defendants, who purchased the common stock of iBio between

October 13, 2014 and October 23, 2014, inclusive (the “Class Period”), seeking to recover

damages caused by defendants’ violations of federal securities laws (the “Class”)

2. iBio purports to engage in the development and manufacture of plant-made

pharmaceutical products using its trademark iBioLaunch platform. iBio claims that its

iBioLaunch platform is a unique plant-based technology that produces therapeutic proteins and

vaccines. By utilizing this plant-based platform, iBio touts that it has advantages over other

systems by reducing capital investment, has lower operating costs, less risk of contamination by

animal pathogens, and has the ability to synthesize complex proteins when the other systems

have failed.

3. iBio has incurred significant losses and consistently had negative cash flows since

its operations were spun off from a company called Integrated BioPharma, Inc. in August of

2008. In its SEC filings throughout its existence, the Company has stated that because of its

history of significant losses, negative cash flow, limited cash resources, and dependence on the

ability to obtain additional financing to fund its operations, there is substantial doubt about its

ability to continue as a going concern.

4. iBio’s reported accumulated deficit was $41.2 million as of June 30, 2014. By the

end of the 2014 its accumulated deficit ballooned to $44.3 million. While iBio used $4.1 million

in cash for operating activities in 2014 it had cash on hand of only approximately $3.6 million.

See iBio Form 10-K for the fiscal year ended June 30, 2014, filed with the SEC on September

29, 2014 (“2014 10-K”) at 30. iBio’s net loss for its fiscal year ended June 30, 2014 was $3.7

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million. iBio had no cash flow from operations, but it obtained $3.6 million in net cash from

financing activities. 2014 10-K at 30.

5. iBio has continually been strapped for cash and has barely kept its head above

water. Its stock has traded as low as $0.29 per share in October of 2013 and currently trades in

the $0.70 -$0.80 range.

6. As a result of its precarious financial position since its inception, iBio has

continually depended on raising additional capital through the sale of its stock. Indeed, iBio has

consistently acknowledged in its SEC filings that its ability to continue operations depended on

raising additional capital and that it has financed its operations primarily through the sale of its

common stock. As a result, keeping its share price up in order to raise additional capital has

been a top priority for iBio.

7. In keeping with this tradition of funding its operations through stock sales to keep

afloat on August 25, 2014, iBio entered into an agreement to sell nearly $10 million of its

common stock to Aspire Capital Fund, LLC (“Aspire”). In this agreement (the “Aspire

Agreement”), Aspire bought 1,136,354 shares of iBio for $500,000 which equated to about $0.44

per share.

8. The Aspire Agreement states that after the registration statement for the Aspire

Agreement is declared effective by the SEC, Aspire would purchase up to $9.5 million in

additional shares of iBio stock over a 24 month period. The sale price for these shares is

calculated as the lesser of: (i) the lowest sale price of the Company’s common stock on the

purchase date or (ii) the arithmetic average of the three lowest closing sale prices for the

Company’s common stock during the ten consecutive trading days ending on the trading day

immediately preceding the purchase date.

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9. Thus, the Aspire Agreement gives iBio the right to force Aspire to purchase its

stock whenever iBio demands over the 24 month period. The iBio shares Aspire purchases are

covered by a registration statement that became effective on October 17, 2015 and thus Aspire

could immediately sell those shares on the public market.

10. Under the Aspire Agreement, iBio can force Aspire to purchase up to 150,000

shares per day. Because the sale price is based on the market price, the higher iBio’s share price

trades, the more money iBio will receive for these 150,000 iBio shares it sells to Aspire each

trading day. 1

11. Thus, iBio had a strong incentive to inflate its share price to obtain more money

from Aspire in return for its shares, as iBio was desperate for capital.

12. To cash in on the Aspire Agreement, iBio took advantage of an opportunity to

mislead investors as to its role in providing a treatment for the deadly Ebola virus which had

been receiving wide-spread media attention.

13. Well before the start of the Class Period and before the start of the crisis related to

the spread of the Ebola virus, iBio entered into a “license and collaboration agreement” in

February of 2013 with Caliber Biotherapeutics LLC (“Caliber”), to develop a monoclonal

antibody for oncology indications – not for any other use.

14. In the summer of 2014, a widespread panic in the United States erupted which

consumed the American public at large when several individuals in the United States became

infected with the extremely contagious and lethal virus Ebola.

1 iBio’s 2014 10-K contains an explanatory paragraph by its auditor stating that “[t]he extent to which the Company utilizes the purchase agreement with Aspire Capital as a source of funding will depend on a number of factors, including the prevailing market price of the Company’s common stock and the volume of trading in its common stock .” 2014 10-K at F-7 (emphasis added)

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15. There are no drugs on the market designed specifically to treat Ebola, but during

the recent outbreak and risk of Ebola, ZMapp – an experimental drug produced by Mapp

Biopharmaceutical (“Mapp”) and Kentucky BioProcessing – was used, and was seemingly

successful, in treating Ebola.

16. Mapp exhausted its limited supplies of ZMapp in August 2014, and rushed to

make more, receiving help from the federal government to seek additional facilities affiliated

with the Texas A&M Center for Innovation in Advanced Development and Manufacturing to

increase supply.

17. Caliber, the company with which iBio had a 2013 license agreement related to an

oncology indication, is affiliated with the Texas A&M Center and was one of the companies

being considered to help manufacture additional supply of ZMapp.

18. Seeking to cash in on the Ebola crisis, iBio and its Chief Executive Officer

(“CEO”) Robert Kay (“Kay”) issued materially misleading public statements misrepresenting

iBio’s role in producing ZMapp and responding to the Ebola crisis.

19. In reality, iBio had no role in producing ZMapp and no role in responding to the

Ebola crisis, but was able to massively inflate the value of its stock price by misrepresenting to

investors its relationship with Caliber and its prospects for commercializing a product used in

ZMapp production, portraying to investors that its relationship with Caliber at the time related to

ZMapp production. In truth iBio’s then existing license agreement had nothing to do with

ZMapp production and iBio had no reasonable prospects for commercializing any product

relating to ZMapp. Additionally, iBio had no history or experience with Ebola related treatments

and any connection iBio possibly had to ZMapp production at the time was at best far flung.

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20. On October 6, 2014, iBio president Robert Erwin (“Erwin”) gave a promotional

interview on the SmallCap Network. The stated purpose of the interview was to evaluate

promising companies whose value might increase as a result of their role in providing a

treatment for the deadly Ebola virus. In the interview, Erwin was asked whether Caliber’s plant-

based vaccine process requires use of iBio’s technology, and if so, whether that means Caliber

will pay royalties to iBio if it is awarded an Ebola related contract. Erwin stated that yes, iBio

will receive royalties according to its agreement – while concealing that the agreement does not

cover use for Ebola, but only for oncology indications.

21. When asked “if Caliber wins the Ebola contract would iBio be in a position to

confirm its use in a press release?,” Erwin responded by misrepresenting that “Technology used

to produce the ZMapp antibodies in plants is covered by issued U.S. patents owned by iBio. . . .”

In short, Erwin misled investors to believe that any contract that Caliber receives to produce a

plant-based treatment for Ebola required Caliber to use iBio’s technology and hence pay

royalties to iBio pursuant to their licensing agreement.

22. On October 10, 2014, SeekingAlpha.com reported that iBio’s share price had

increased 83% as a result of iBio’s statements that it would play a role in government efforts to

ramp up production of the ZMapp Ebola treatment. Seeking Alpha also provided a link to

Erwin’s interview on the SmallCap Network indicating the statements that created the

expectation that iBio would be a player in increasing ZMapp production.

23. On October 11, 2014, defendant Kay was quoted in a Washington Post article

concerning Caliber and ZMapp’s role in providing an Ebola treatment. Kay stated that any

increased production of ZMapp’s Ebola treatment would require the involvement of Caliber –

suggesting that since Caliber’s drug delivery system relies on iBio’s plant-based iBioLaunch

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platform, iBio would have a prominent role in ramping up production of a much needed

treatment for the Ebola virus.

24. The next trading day, iBio’s share price shot up in response to Kay’s suggestion

that Caliber, and by implication, iBio’s technology, would play an important role in increasing

production of the ZMapp treatment for Ebola. iBio’s share price continued to increase daily as

media coverage of iBio’s important role in providing an Ebola treatment spread. iBio’s share

price reached a high of $2.73/share on October 12, 2014 before closing at $1.39/share on

October 15, 2014.

25. In an effort to fan the flames of investor misperception and continue the artificial

inflation of its stock price, on October 16, 2014, iBio issued a press release following up on

media inquiries resulting from Kay’s statement in the Washington Post which had created the

false impression that because iBio had a technology license agreement with Caliber and Caliber

was involved in producing ZMapp, iBio’s technology would be used to increase production of

ZMapp.

26. iBio’s October 16, 2014 press release was titled “iBio Responds to Inquiries

About its Role in Emergency Response to Ebola Virus Disease Outbreak.”

27. iBio’s press release “confirmed (i) the applicability of its issued U.S. iBioLaunch

platform patents and related proprietary technology to further development and production of

antibodies that target the Ebola virus, and (ii) that iBio has an ongoing relationship with Caliber

Biotherapeutics . . . pursuant to which iBio and Caliber have been collaborating on commercial

opportunities. . . .”

28. iBio’s positive news that it would somehow play a role in producing a drug to

treat Ebola in a market that was clamoring for a commercial product to aid in the crisis, caused

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iBio’s stock price to skyrocket again, on extraordinary trading volume with investors buying up

massive amounts of iBio stock. iBio’s share price shot back up to over $3.40/share.

29. The effect of iBio’s misleading press release was short lived because on October

20, 2014, an article on SeekingAlpha.com revealed the truth, that iBio was never involved in

ZMapp production and its license with Caliber had nothing to do with Ebola, but rather was

solely for treatments related to oncology.

30. When it was revealed that iBio had no role in providing a treatment for the Ebola

virus or in producing ZMapp, the Company’s stock price fell by more than $1.03 per share, or

32%, from its prior closing price of $3.21 per share, on extraordinary volume. The next day as

the truth spread, iBio’s share price fell to $1.63/share and has since dropped to the level it traded

it before Kay’s misleading statements to the Washington Post.

31. However, defendants’ gambit was successful in inflating its share price long

enough to sell 3,994,754 shares of iBio stock at prices more than three times what iBio would

have otherwise received absent its misleading statements.

32. iBio’s Form S-3 filed with the SEC on November 20, 2014 states that “[a]s of

November 14, 2014, the Company had sold 3,994,754 shares of common stock pursuant to the

Common Stock Purchase Agreement and received net proceeds of $5,211,680 therefrom.” 2 This

means that Aspire purchased 3,994,754 shares of common stock at an average purchase price of

$1.30 per share.

33. Prior to October 10, 2014, iBio’s share price never exceeded $0.90/share. Based

on an analysis of the trading prices of iBio stock between October 1 and November 14, 2015 (the

period during which the purchases were made), iBio had to have sold the 3,994,754 shares to

2 See iBio Form S-3 filed with the SEC on November 20, 2014 at 9.

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Aspire at prices that were based on trading prices during the Class Period that were inflated by

iBio’s misleading statements concerning its role in producing a treatment for Ebola.

34. Thus, defendants’ misleading statements helped iBio earn an additional $2.6

million from sales of stock to Aspire during the Class period.

JURISDICTION AND VENUE

35. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of

the Exchange Act (15 U.S.C. § 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder (17

C.F.R. § 240.10b-5).

36. This Court has jurisdiction over the subject matter of this action pursuant to

Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331.

37. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange

Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b) as a substantial part of the conduct complained

of herein occurred in this District.

38. In connection with the acts, conduct and other wrongs alleged herein, defendants

either directly or indirectly used the means and instrumentalities of interstate commerce,

including but not limited to the United States mails, interstate telephone communications and the

facilities of the national securities exchange.

PARTIES

39. Court appointed Lead Plaintiff Vamsi Andavarapu purchased iBio common stock

during the Class Period and has suffered damages as a result. Lead Plaintiff’s PSLRA

certifications were previously filed with the Court, and are incorporated by reference herein.

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40. Plaintiffs Ziad Ekwaneen, Frank DiMartino, and Kenneth Gordon purchased iBio

common stock during the Class Period and have suffered damages as a result. Their PSLRA

certifications are attached hereto, and are incorporated by reference herein.

41. iBio is a Delaware corporation headquartered in Newark, Delaware. During the

Class Period iBio’s common stock was actively traded on the NYSE MKT, under ticker “IBIO.”

iBio owns the iBioLaunchTM platform, which is a proprietary, transformative technology for

development and production of biologics using transient gene expression in unmodified green

plants.

42. Defendant Kay, at all relevant times herein was the Company’s Executive

Chairman and CEO.

43. Defendant Erwin, at all relevant times herein was the Company’s President.

44. Kay and Erwin are also referred to as the “Individual Defendants.”

45. The Individual Defendants:

(a) Directly participated in the management of the Company;

(b) Were directly involved in the day-to-day operations of the Company at the

highest levels;

(c) Were privy to confidential proprietary information concerning the

Company and its business and operations;

(d) Were involved in drafting, producing, reviewing and/or disseminating the

false and misleading statements and information alleged herein;

(e) Were aware of or recklessly disregarded the fact that the false and

misleading statements were being issued concerning the Company; and

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(f) Approved or ratified these statements in violation of the federal securities

laws.

46. As an officer, director, and controlling person of a publicly-held company whose

common stock is and was registered with the SEC pursuant to the Exchange Act, and was traded

on the NYSE MKT and governed by the provisions of the federal securities laws, the Individual

Defendants had a duty to disseminate accurate and truthful information promptly with respect to

the Company’s financial condition and to correct any previously-issued statements that had

become materially misleading or untrue to allow the market price of the Company’s publicly-

traded stock to reflect truthful and accurate information.

47. iBio is liable for the acts of the Individual Defendants and its employees under the

doctrine of respondeat superior and common law principles of agency as all of the wrongful acts

complained of herein were carried out within the scope of their employment with authorization.

48. The scienter of the Individual Defendants and other employees and agents of the

Company is similarly imputed to iBio under respondeat superior and agency principles.

SUBSTANTIVE ALLEGATIONS

The 2014 Ebola Crisis and ZMapp

49. In the spring of 2014 West Africa experienced an outbreak of the virus Ebola.

Several cases of Ebola were also reported in the United States and Europe, causing a

tremendous amount of fear and panic within the American public and nearly 24-hour a day

news media coverage on the issue.

50. The pharmaceutical industry invested relatively little in researching Ebola since

the first known outbreak in humans in 1976. The 2014 outbreak was the worst ever, with over

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4400 deaths. See Ebola Drug Race Ramps Up in Earnest, Wall Street Journal, October 17,

2014.

51. There are no drugs on the market today designed specifically to treat Ebola,

however several experimental drugs have been used to treat Ebola-infected individuals during

the recent crisis. One of those experimental drugs is ZMapp, manufactured by Mapp, a small

nine-employee firm in San Diego, California, that along with Leaf Bio and Defyrus, Inc. in

Toronto, Canada, collaborated to create the trademarked “ZMapp.” See Meet the Tiny Company

Behind the Experimental Antibodies for Ebola , ABC News, August 14, 2014, available at:

http://abcnews.go.com/Business/meet-tiny-company-experimental-drug -

ebola/story?id=24838694.

52. ZMapp is a cocktail of three Ebola fighting monoclonal antibodies (“MAbs”) that

in animal studies showed the ability to help infected animals recover. According to Mapp’s chief

executive, Kevin Whaley (“Whaley”), “‘It’s actually three separate manufacturing runs for each

antibody. . . . Each antibody must have its own certificate of analysis as a drug prior to being

combined into a single drug product. We’re trying to increase the level of expression per plant,

that by and large is molecular biology.’” See Ebola drug manufacturing ramping up , U-T San

Diego, October 9, 2014, available at: http://www.utsandiego.com/news/2014/oct/09/zmapp -

kevin-whaley-mapp-ebola/?#article-copy.

53. Mapp has long-standing close business relationships with a consortium of

scientists from the Public Health Agency of Canada, Defyrus, Inc., the U.S. Army Medical

Research Institute for Infectious Disease, and Kentucky BioProcessing.

54. At the time of the Ebola outbreak, Mapp manufactured ZMapp with Kentucky

BioProcessing in genetically modified tobacco plants. In order to manufacture and produce

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ZMapp, Mapp developed three MAbs derived from chimeric (mouse-human) hybridomas (i.e.

hybrid cells). Defyrus developed a mixture of three mouse MAbs. Mapp and its consortium

members then cloned and tested their antibodies in guinea pigs, and later, in primates in order to

determine the best combination, and found that the optimal MAb “cocktail” consists of two

cloned antibodies from the mouse group and one from the chimera group.

55. Then, in order to produce the material with which to “infect” the tobacco plants,

the genes’ coding for the MAbs were inserted into plant viruses which were then used to infect

the tobacco plants. The plants were grown for a few months and the MAbs produced were

extracted and purified from the harvested tobacco plants.

56. This process is very slow and time consuming. As a result, Mapp ran out of its

limited supplies of ZMapp in August of 2014.

57. On October 9, 2014, Mapp’s chief executive Whaley, in a rare interview stated

that Mapp had teamed up with an unnamed pharmaceutical partner who would scale up a more

traditional biotech process using genetically modified mammalian cells, a process which uses

“CHO” cells derived from Chinese hamster ovaries grown in sterile tanks. Accordingly, while

Mapp would continue to make ZMapp with Kentucky BioProcessing using tobacco plants its

then-unnamed partner would concurrently make ZMapp using mammal cells.

58. Responding to the need for any potentially effective treatment for Ebola in light

of the crisis, on October 16, 2014, the U.S. Government’s Biomedical Advanced Research and

Development Authority (“BARDA”) issued a task order asking three advanced biology

laboratories to submit plans for producing ZMapp. BARDA asked that detailed plans, including

budgets and timetables, be submitted by November 10. The three labs, called Centers for

Innovation in Advanced Development and Manufacturing, were established by the U.S.

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government in 2012 with $440 million in seed money. The labs are required to develop flexible

manufacturing capabilities allowing them to produce countermeasures to chemical, biological

and other threats. See U.S. requests production plans for Ebola drug ZMapp, Reuters, October

17, 2014.

59. One of the three labs is run by Texas A&M Health Science Center in partnership

with GlaxoSmith Kline Plc. Dr. Brett Giroir (“Giroir”) is the CEO of the Texas A&M Health

Science Center. In an October 17, 2014 Reuters interview, Dr. Giroir said that Texas A&M was

swiftly responding to the government’s request and would submit detailed proposals for scaling

up ZMapp production. Giroir stated that he believed that there were “substantial opportunities to

increase the yield of ZMapp” in plants but emphasized that the products would have to be kept

the same. The reason the compound would have to be identical to what Mapp had already vetted

in animals is because otherwise “you would have to go back to the beginning for safety testing.”

Id. Dr. Giroir said that if it did win the government contract for ZMapp production it would

likely tap Caliber Biotherapeutics as a subcontractor.

60. While the terms of the license and collaboration agreement between iBio and

Caliber were never disclosed, the Company’s January 15, 2014 press release makes clear that

Caliber and iBio “have designated a proprietary fusion protein for cancer treatment as the first

product target for advancement on the iBioLaunch platform under the License and Collaboration

agreement between the company and Caliber dated February 14, 2013.” (Emphasis added).

Misleading Statements

61. On October 6, 2014, iBio president Erwin gave a promotional interview on the

SmallCap Network. The interview focused on promising companies expected to profit from the

U.S. government’s plan to fund increased production of ZMapp. In the interview, Erwin touted

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iBio’s agreement with Caliber, concealing that it was limited to an oncology indication having

nothing to do with Ebola. When asked whether Caliber’s production of the treatment requires

use of iBio’s technology, and whether this means iBio will receive payments/royalties from

Caliber’s use of the technology to manufacture ZMapp, Erwin stated that yes, the agreement

calls for royalty payments from Caliber. When Erwin was asked “if Caliber wins the Ebola

contract would iBio be in a position to confirm its use in a press release?,” Erwin responded by

misrepresenting that “Technology used to produce the ZMapp antibodies in plants is covered by

issued U.S. patents owned by iBio. . . .” Erwin concluded “We expect to perform an important

role in the emergency response to the current outbreak. . . .”

62. Erwin’s statements in the October 6 article created the false impression that iBio’s

patented technology was necessarily required by Caliber to fulfill any contract that it might

obtain from the U.S. government to help increase production of ZMapp.

63. On Saturday, October 11, 2014, the Washington Post ran an article about efforts

to produce commercial quantities of an Ebola treatment. The article highlighted a drug called

ZMapp produced by Mapp as the most promising treatment available. The article focused on the

difficulty of increasing production of the drug because it is manufactured using a plant-based

process that is very time consuming. The article stated that Caliber was being considered to help

expand production of ZMapp. Defendant Kay was quoted in the article appearing in The

Washington Post, “Increase of Ebola Drug Sought in Push for New Production Method” by

Robert Langreth and Makiko Kitamura, in relevant part stating:

Caliber Biotherapeutics “is by far the largest facility in the world” for producing pharmaceuticals in tobacco plants, said Robert Kay, CEO of iBio Inc., a Newark, Delaware-based biotechnology company that owns one of the technologies used to make drugs in tobacco plants. “If anybody is going to produce this, it is almost axiomatic it has to be with Caliber involved.” Caliber didn’t immediately return a phone message left at its offices.

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64. The import of Kay’s statements was that since Caliber licenses its plant-based

technology from iBio, if Caliber is involved in ramping production of ZMapp to treat Ebola, then

iBio would also necessarily be involved.

65. Kay’s statements had the effect of inflating the price of iBio stock, which more

than doubled as investors took notice and believed that iBio would play a role in providing a

much needed treatment for Ebola.

66. Then, on October 16, 2014, the Company further capitalized on the misleading

information in the stock market concerning iBio’s role in manufacturing ZMapp and issued a

materially false and misleading press release entitled: IBIO RESPONDS TO INQUIRIES

ABOUT ITS ROLE IN EMERGENCY RESPONSE TO EBOLA VIRUS DISEASE

OUTBREAK. In the press release the Company stated that it was confirming, in response to

“shareholder and media inquiries”:

(i) the applicability of its issued U.S. iBioLaunchTM platform patents and related proprietary technology to further development and production of antibodies that target the Ebola virus, and (ii) that iBio has an ongoing relationship with Caliber Biotherapeutics LLC reflected by a License and Collaboration Agreement dated February 14, 2013 pursuant to which iBio and Caliber have been collaborating on commercial opportunities for recombinant antibodies and antibody-related proteins based on the speed, efficiency, and cost advantages of producing pharmaceutical proteins in plants instead of with bioreactor-based manufacturing methods.

Based on published scientific data, the superior homogeneity of antibody glycosylation (the addition of sugars to proteins) in plants can provide significant efficacy advantages over similar antibodies produced in Chinese hamster ovary (CHO) cells.

iBio has offered to assist the U.S. government by making its proprietary technology available for emergency use to enable the manufacture and yield optimization of certain experimental antibody-based drugs that address the current Ebola virus outbreak, to the extent such assistance is requested by the government.

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(Emphasis added).

67. iBio’s statements above were materially false and misleading because: (i) iBio’s

license with Caliber at the time had nothing to do with ZMapp or Ebola; and (ii) iBio had

absolutely no history of using its platform in connection with the manufacture of treatments

targeting Ebola. Nor was iBio’s patented technology necessary for Caliber to fulfill its

anticipated contract to increase supply of ZMapp. Defendants intentionally misled investors into

believing that its technologies were actively being used, via its relationship with Caliber to

produce ZMapp, in an effort to inflate the price of iBio stock and attach greater prestige and

importance to their platform and technology.

68. The title of the press release itself “IBIO RESPONDS TO INQUIRIES ABOUT

ITS ROLE IN EMERGENCY RESPONSE TO EBOLA VIRUS DISEASE OUTBREAK” was

materially misleading because iBio had no role in any “emergency response to Ebola.”

69. iBio also could not have been Mapp’s “un-named partner” referred to in the

October 17, 2014 Reuters article, because as Mapp’s CEO stated, that un-named partner would

be manufacturing Mapp using mammal cells, not plants. Second, iBio could not possibly be

involved in manufacturing ZMapp from plant-based cells in response to the current Ebola crisis

because it did not have a product with the identical compound to what Mapp had already vetted

in animals and could not produce one in order to timely respond to the current Ebola crisis. As

Dr. Giroir of Texas A&M stated without a current identical compound iBio would “have to go

back to the beginning for safety testing.”

70. In order to produce ZMapp, iBio would first need to identify and procure the

DNA/genes used to produce ZMapp. As noted above, this involved not one but there different

genes. Even if iBio were to somehow find a combination of monoclonal antibodies that were

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identical to those used in ZMapp, iBio would still need to test the material for safety, which

involves administering high doses to animals while monitoring for adverse effects, among other

things. This process could not be completed in time to respond to the current Ebola crisis in line

with the government’s directive.

71. The statements in the October 16 press release, in defendant Kay’s statement in

the Washington Post, and in Erwin’s statements to the SmallCap Network on October 6 created

the false and misleading impression in the minds of investors that because iBio had a license

with Caliber and because Caliber would “have” to be involved in producing ZMapp, iBio would

be involved in producing ZMapp, leading to greater profits and prestige for the Company.

72. Indeed, the next day, October 17, 2014, investment website Benzinga.com

confirmed the an “iBio Spokesperson Says Any Lab that Wants to Make ZMapp Vaccine Using

Plant-Based Technology Would Have to License it from iBio; Caliber has License from iBio.”

This statement encapsulates the false and misleading impression that iBio’s statements had on

investors and the market.

73. On this news, iBio stock soared nearly 70% in price. Moreover, the volume of

shares traded was astronomical. On October 17, 2014, 60.7 million of iBio’s approximately 67.5

million outstanding shares were traded.

74. The truth is, contrary to the title of the false and misleading press release, iBio

had no role whatsoever in providing a treatment for the Ebola Disease Outbreak, it merely had an

unrelated license agreement with Caliber, a potential subcontractor of Texas A&M, one of three

facilities that would submit plans to the U.S. government to produce additional quantities of

ZMapp. iBio’s sole relationship to Caliber at the time was a license agreement which predated

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the Ebola outbreak by over a year relating to the development of a protein for an oncology

(cancer) indication, having nothing to do with Ebola.

75. In reality, iBio does not own the exclusive patent for using plant-based

technology to make ZMapp. iBio’s recently filed prospectus and registration statement with

SEC make no mention that the Company was planning to go into the market of manufacturing

drugs to combat the Ebola virus, and iBio’s collaboration agreement with Caliber deals with the

development of an oncology protein, a crucial detail defendants omitted in its recent press

releases and statements to mislead the public. In addition, a plant-based drug to fight Ebola

could not be a substitute for the already tested ZMapp because extensive safety testing would be

required since the compound must be identical to the tested ZMapp in order to be given to

patients.

76. Several days later, the investing public would learn that iBio had no role in the

production of ZMapp or true involvement in responding the Ebola virus outbreak. An article

issued by SeekingAlpha.com on October 20, 2014 states that the Company’s representations

about its purported involvement in the emergency response to the Ebola virus outbreak were

materially false and misleading because iBio’s relationship with Caliber had nothing to do with

the production of ZMapp or combating the Ebola virus. The article states in relevant part:

The Truth About iBio’s Role In Ebola Drug Production October 20, 2014

iBIO (NYSEMKT:IBIO) spiked nearly 70% after the “U.S. requests production plans for Ebola drug ZMapp” news broke in the early afternoon on Friday. The news reported that government officials have asked “three advanced biology laboratories to submit plans for producing the experimental Ebola drug ZMapp.” These three labs are: Texas A&M Health Science Center, Emergent Biosolutions in Baltimore, and another center in Holly Springs, North Carolina, led by Swiss drug company Novartis AG. iBio was never mentioned as one of the production centers, or a partner of the centers. You may wonder why iBIO shares are up so much. It turns out that iBio is only remotely related to a subcontractor of one of

19


the three centers, the Texas center. If Texas center wins the government contract, said Dr. Brett Giroir, chief executive officer of Texas A&M Health Science Center, it would likely tap Caliber Biotherapeutics as a subcontractor...

iBio entered into a license agreement with Caliber in Feb 2013. So the question is, is iBio directly involved in the Ebola drug production? On last Thursday, iBio issued an ambiguous press release responding to inquiries about its role in emergency response to Ebola virus. All iBio said in the press release can be summarized into below three points: 1). iBio has an on-going relationship with Caliber; 2). iBio reiterated its self-claim that plant-based production may be superior to animal-based antibody production; 3). iBio “offered’ to help US government.

iBio NEVER confirmed in a straightforward fashion that it’s involved in the Ebola drug production. Why? It’s because iBIO has never been involved. Based on the company’s 10-K, the license to Caliber is for use of the iBioLaunch in connection with the development of an antibbody-based protein for an “oncology indication”...

If iBio management has any dignity, it should just tell investors what Protalix (another plant-based therapeutic proteins producer) CEO Dr. David Aviezer said, “We have no information about the drug, no connection with the manufacturers. We also have no genetic information about the drug or the rights to use it.”

(Emphasis added).

77. Following this news, on October 20, 2014, the Company’s stock price fell over

$1.03 per share, or 32%, from its prior closing price of $3.21 per share.

78. On October 23, 2014, another article was published on SeekingAlpha.com . The

article states in relevant part:

iBio: A Wannabe Ebola Player Infecting Buyers With False Hope October 23, 2014

Shame on iBio (NYSEMKT:IBIO) for pulling a dangerous stunt that could soon cost its shareholders a staggering fortune. No matter how tempted IBIO might have felt to further capitalize on the Ebola scare - or how thrilled it must be with the immediate results - the company should have known better than to hype a vague possibility so remote that it looks downrightfar-fetched.

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Get ready for the truth to unfold and reality to exact its inevitable toll.

Let’s cut to the chase and get straight to the point. In short, IBIO has suggested that its technology might play a serious role in the mass production of a promising new Ebola drug that already utilizes a rival delivery system to handle that process instead. Since IBIO has so far tested its own delivery system on just a handful of vaccines in early-stage safety trials - and the company never even bothered to mention the word “Ebola” in its recent 92-page 10K report - the government might feel understandably reluctant to let some manufacturer casually substitute the firm’s experimental technology for the very platform used to engineer that vital treatment and simply hope that it produces the same kind of results.

Last week, in fact, the head of the government-funded lab where IBIO would like to offer its services virtually ruled out the likelihood of any changes to the existing process at all. Look at the revealing comments shared by Dr. Brett Girior, chief executive of the health science center at Texas A&M, in the following excerpt from a recent media report:

“‘We believe there are substantial opportunities to increase the yield of ZMapp (the new Ebola treatment) in plants while keeping the product the same,’ Giroir said in an interview. The compound needs to be identical to what Mapp (the maker of the drug) has already vetted in animals, ‘or you would have to go back to the beginning for safety testing,’ he said.”

Based upon the information that we’ve uncovered while conducting our extensive research, we feel so confident that IBIO will play no role in the urgent mass production of ZMapp that we dare the company to share any concrete evidence that clearly suggests otherwise. We also strongly encourage bullish investors to present the same type of request to IBIO or - better yet - Caliber Biotherapeutics, the firm that IBIO likes to treat as its potential ticket to the ZMapp production line, since it has put so much money on the line. We highly doubt that it will feel quite so confident in its investment once it finishes that exercise, but we certainly invite the company to share any feedback that might prove us wrong as well.

So far, of course, IBIO has simply hinted at the tantalizing prospect of an Ebola-related deal. If IBIO had any legitimate reason to expect an actual contract of some kind, its promotional nature strongly suggests the company would have jumped at the first chance to broadcast that news in all of its glorious detail. By merely highlighting an unrelated agreement with one of the firms equipped to to ramp up production of ZMapp, however, the company has relied on vague innuendo to make investors arrive at a favorable conclusion instead.

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With little to hype beyond a somewhat dated agreement to supply its delivery system to Caliber for the development of an ONCOLOGY drug (a pesky detail that management conveniently forgot to mention), IBIO hardly seems like a real contender in the race to produce that new Ebola drug at all.

Its chances look even slimmer with a rival like Icon Genetics already in the picture. Founded long before IBIO ever surfaced as an obscure penny-stock company, Icon developed its own plant-delivery system more than a decade ago, and soon went on to forge such a close relationship with Mapp Pharmaceuticals and Kentucky Bio-Processing (KBP) - the creator and the manufacturer of ZMapp, respectively - that at one point, the trio practically decided to merge. While they may have changed their plans about that particular deal, they maintained their partnership (collaborating together for a total of eight long years at this point) and now credit the entire team for the potential success of their new Ebola drug.

Just ask Mapp how much it depended on both Icon and KBP throughout the process that led to that celebrated breakthrough.

“Two partnerships were crucial to us in the development of the plant system for ZMapp: Icon Genetics AG (Halle, Germany) and Kentucky BioProcessing (KBP, Owensboro, KY),” Mapp emphasizes on its own website. “Icon pioneered vectors for engineering Nicotania (a low-nicotine tobacco plant) to produce pharmaceuticals. KBP specializes in GMP manufacturing of therapeutic proteins” in that same kind of plant.

Mapp has shared credit with Icon and KBP in the media, too. This summer, in fact, The New York Times - none other than the self-proclaimed “newspaper of record” itself - reported that Icon had developed the system used to introduce the genes from modified antibodies into tobacco plants and ultimately produce the new Ebola drug. By now, many other media outlets - ranging from Time magazine to all sorts of trade publications - have cited Icon as the firm responsible for providing the unique delivery system required for that process as well.

Given that sort of publicity, IBIO must surely know the truth at this point. Unless the company has somehow managed to completely overlook Icon for some inexplicable reason, however, it must have decided to conveniently pretend as that German firm - far more established than itself - doesn’t exist at all. Mere days ago, in fact, a company spokesman reportedly told the press that “any lab that wants to make a ZMapp vaccine using plant-based technology would have to license it from IBIO” itself.

Wow. Talk about a bold statement. Perhaps IBIO should have decided to just kept its mouth shut.

22


After all, as its recent stock chart so vividly illustrates, IBIO immediately plummets as soon as investors sense any reason for doubt. Exploding one day and plunging the next, that volatile stock has swung all the way between $3.48 and $1.24 a share over the course of the past week alone.

Who knows where IBIO might trade by the time that it issues the mountain of stock that it just registered to sell under a prearranged fundraising deal? Still, we do know this much for sure: IBIO felt willing to sell more than 20 million shares of stock - enough to dilute the value of its current shares by roughly 30% - for as little as 44 cents a share just a few short weeks ago. Plus, as recently as mid-September, a major IBIO shareholder (and a frequent seller of the company’s stock) continued to trim his position in the bleeding firm at a modest fraction of the current market price, too.

If anyone knows how much IBIO is really worth, the company and an investor who owns more than 10% of the firm certainly should. So maybe their actions make perfect sense.

Think about it.

With no mention of Ebola in its recent registration statement or its latest Annual Report - both comprehensive documents filed less than a month ago - IBIO likely never dreamed that it might somehow luck out and explode in value as a promising Ebola play. In fairness, given the circumstances, IBIO could have always changed its mind since that time. If IBIO suddenly realized that it might have a realistic shot at landing a contract to help produce a new Ebola drug, however, the company just missed the perfect chance to make that clear. IBIO failed to mention Ebola in the detailed prospectus that it filed just two short days ago as well.

Granted, IBIO seems to prefer playing it a bit safer by hyping its prospects in casual press releases instead. And now that it’s free to start selling all of that stock that it registered earlier this month, the company might just decide to test its luck once again.

IBIO better not count on such amazing results next time, however. By then, after all, investors will know all about this dirty trick.

(Emphasis added).

79. Following this negative news, on October 23, 2014, the Company’s stock price

fell $0.14 per share, or almost 8%, from its prior closing price of $1.77 per share.

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80. Defendants have never refuted the statements in the articles cited above, despite

the precipitous decline in iBio stock price following their publication.

81. iBio’s share price has since returned to its pre-fraud levels of less than

$0.90/share.

82. iBio’s short-lived fraud was successful.

83. Between October 1, 2014 and November 14, 2014, iBio sold 3,994,754 shares of

common stock to Aspire and received net proceeds of $5,211,680.” 3 This means that Aspire

paid an average purchase price of $1.30 per share.

84. Prior to October 10, 2014, iBio’s share price never exceeded $0.90/share. After

disclosure of the fraud on October 20, 2014, iBio’s share price quickly (in about three trading

days) returned to the pre-fraud level of less than $1.00/share.

85. Based on an analysis of the trading prices of iBio stock between October 1 and

November 14, 2015 (the period during which the sales to Aspire were made), iBio had to have

sold the 3,994,754 shares to Aspire at prices that were set based on market trading prices during

the Class Period which were inflated by iBio’s misleading statements concerning its role in

producing a treatment for Ebola.

86. Thus, defendants were motivated to issue the misleading statements because this

enabled iBio to earn an additional $2.6 million from sales of stock to Aspire during the Class

period.

3 See iBio Form S-3 filed with the SEC on November 20, 2014 at 9.

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SCIENTER

87. On November 10, 2014, iBio announced that it had just executed an agreement

with Caliber for an “emergency use license to the iBioLaunch platform for the production by

Caliber of antibodies that target the Ebola Virus.”

88. This new agreement is irrefutable evidence that Caliber had never agreed to use

iBio’s technology to target the Ebola virus at the time of iBio’s false misleading statements on

October 6, 11 and 16, 2014. This “emergency agreement” was only entered into after iBio was

sued for securities fraud. The only emergency was that iBio needed an alibi for its fraud.

89. As alleged herein, the Individual Defendants acted with scienter in that they knew

that the public documents and statements issued or disseminated in the name of the Company

were materially false and misleading; knew that such statements or documents would be issued

or disseminated to the investing public; and knowingly and substantially participated or

acquiesced in the issuance or dissemination of such statements or documents as primary

violations of the federal securities laws. As set forth elsewhere herein in detail, the Individual

Defendants, by virtue of their receipt of information reflecting the true facts regarding the nature

of the affiliation between iBio and Caliber, as well as the lack of any role for the Company in the

manufacture of ZMapp, knew or recklessly disregarded that their statements concerning the

foregoing were materially false and misleading.

90. The Company and the Individual Defendants were motivated to materially

misrepresent the truth concerning the affiliation between iBio and Caliber, as well as the lack of

any role for the Company in the manufacture of ZMapp in order to artificially inflate the price of

iBio’s stock to increase the proceeds from the sale of stock to Aspire described above.

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APPLICATION OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET

91. The market for iBio’s securities was open, well-developed, and efficient at all

times during the Class Period permitting Plaintiffs a presumption of reliance on the integrity of

the market for iBio common stock

92. Defendants made public misrepresentations or failed to disclose material facts

during the Class Period:

(a) The misrepresentations and omissions were material;

(b) The Company’s stock traded in an efficient market;

(c) The misrepresentations alleged would tend to induce a reasonable investor to

misjudge the value of the Company’s stock; and

(d) Plaintiffs and other members of the Class purchased iBio common stock between

the time defendants misrepresented or failed to disclose material facts and the time the true facts

were disclosed, without knowledge of the misrepresented or omitted facts.

93. The market for iBio’s securities was an efficient market during the Class Period

for the following reasons, among others:

(a) iBio’s stock met the requirements for listing, and was listed and actively

traded on the NYSE MKT, a highly efficient and automated markets;

(b) As a regulated issuer, iBio filed with the SEC periodic reports during the

Class Period;

(c) During the Class Period, iBio was eligible and did file short-form

registration statements with the SEC;

(d) iBio regularly communicated with public investors via established market

communication mechanisms, including regular disseminations of press releases on the national

26


circuits of major newswire services and other wide-ranging public disclosures, such as

communications with the financial press and other similar reporting services;

(e) iBio was followed by securities who wrote reports that were distributed to

investors during the Class Period. Each of these reports was publicly available and entered the

public marketplace;

(f) According to iBio’s form 10-K for the fiscal year ended on June 30, 2014

filed with the SEC on September 29, 2014, there were 67,460,267 shares of iBio common stock

issued and outstanding as of September 26, 2014;

(g) On average, approximately 43% of iBio’s 67,460,267 outstanding shares

were traded on a daily basis during the Class Period. On average, approximately 13.4% of iBio’s

67,460,267 were traded on a weekly basis during 2014; and

(h) Unexpected material news about iBio was rapidly reflected in and

incorporated into the Company’s stock price during the Class Period.

94. As a result of the foregoing, the market for iBio’s common stock promptly

digested current information regarding iBio from all publicly available sources and reflected

such information in iBio’s stock price. Under these circumstances, all purchasers of iBio’s

common stock during the Class Period suffered similar injury through their purchase of iBio’s

common stock at artificially inflated prices, and a presumption of reliance applies.

PLAINTIFFS’ CLASS ACTION ALLEGATIONS

95. Plaintiffs bring this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all persons who purchased the

common stock of iBio during the Class Period and who were damaged thereby. Excluded from

the Class are defendants, the current and former officers and directors of the Company, members

27


of their immediate families and their legal representatives, heirs, successors or assigns and any

entity in which defendants have or had a controlling interest.

96. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, iBio’s common stock was actively traded on the

NYSE MKT. While the exact number of Class members is unknown to Plaintiffs at this time

and can only be ascertained through appropriate discovery, Plaintiffs believe that there are at

least hundreds of members in the proposed Class. Members of the Class may be identified from

records maintained by iBio or its transfer agent and may be notified of the pendency of this

action by mail, using a form of notice customarily used in securities class actions.

97. Plaintiffs’ claims are typical of the claims of the members of the Class, as all

members of the Class are similarly affected by defendants’ wrongful conduct in violation of

federal law that is complained of herein.

98. Plaintiffs will fairly and adequately protect the interests of the members of the

Class and have retained counsel competent and experienced in class and securities litigation.

99. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) Whether the federal securities laws were violated by defendants’ acts as

alleged herein;

(b) Whether the misstatements and omissions alleged herein were made with

scienter;

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(c) Whether statements made by the Individual Defendants to the investing

public during the Class Period misrepresented and/or omitted material facts about the business,

prospects, and operations of iBio; and

(d) To what extent the members of the Class have sustained damages and the

proper measure of damages.

100. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation make it impossible for members of the Class to redress

individually the wrongs done to them. There will be no difficulty in the management of this

action as a class action.

FIRST CLAIM

Violation of Section 10(b) of The Exchange Act Against and Rule 10b-5

Promulgated Thereunder Against All Defendants

101. Plaintiffs repeat and reallege each and every allegation contained above as if fully

set forth herein.

102. This First Claim is asserted against defendants iBio and the Individual

Defendants.

103. During the Class Period, defendants carried out a plan, scheme and course of

conduct which was intended to, and throughout the Class Period, did: (1) deceive the investing

public, including Plaintiffs and other Class members, as alleged herein; and (2) cause Plaintiffs

and other members of the Class to purchase and/or sell iBio common stock at artificially inflated

29


and distorted prices. In furtherance of this unlawful scheme, plan and course of conduct,

defendants, individually and as a group, took the actions set forth herein.

104. Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about the business,

operations and future prospects of iBio as specified herein.

105. Defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure investors of iBio’s value and

performance and continued substantial growth, which included the making of, or the

participation in the making of, untrue statements of material facts and omitting to state material

facts necessary in order to make the statements made about iBio and its business operations and

future prospects in light of the circumstances under which they were made, not misleading, as set

forth more particularly herein, and engaged in transactions, practices and a course of business

that operated as a fraud and deceit upon the purchasers of iBio’s common stock during the Class

Period.

106. Each of the defendants’ primary liability, and controlling person liability, arises

from the following facts: (1) defendants were high-level executives, directors, and/or agents at

the Company during the Class Period and members of the Company’s management team or had

control thereof; (2) each of the defendants, by virtue of his responsibilities and activities as a

senior officer and/or director of the Company, was privy to and participated in the creation,

development and reporting of the Company’s financial condition; (3) each of the defendants

enjoyed significant personal contact and familiarity with the other defendants and was advised of

30


and had access to other members of the Company’s management team, internal reports, and other

data and information about the Company’s finances, operations, and sales at all relevant times;

(4) each of the defendants was aware of the Company’s dissemination of information to the

investing public that they knew or recklessly disregarded was materially false and misleading;

and (5) each of the defendants culpably participated in the wrongful conduct alleged herein.

107. Defendants had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to

ascertain and to disclose such facts, even though such facts were available to them. Such

defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and

for the purpose and effect of concealing iBio’s financial condition and future business prospects

from the investing public and supporting the artificially inflated or distorted price of its common

stock. As demonstrated by defendants’ overstatements and misstatements of the Company’s

financial condition and business prospects throughout the Class Period, defendants, if they did

not have actual knowledge of the misrepresentations and omissions alleged, were reckless in

failing to obtain such knowledge by deliberately refraining from taking those steps necessary to

discover whether those statements were false or misleading.

108. As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, the market price for iBio’s common

stock was artificially inflated during the Class Period. In ignorance of the fact that market prices

of iBio’s publicly-traded common stock were artificially inflated or distorted, and relying

directly or indirectly on the false and misleading statements made by defendants, or upon the

integrity of the market in which the Company’s common stock trade, and/or on the absence of

material adverse information that was known to or recklessly disregarded by defendants but not

31


disclosed in public statements by defendants during the Class Period, Plaintiffs and the other

members of the Class acquired and/or sold iBio common stock during the Class Period at

artificially high prices and were damaged thereby.

109. At the time of said misrepresentations and omissions, Plaintiffs and other

members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs

and the other members of the Class and the marketplace known the truth regarding iBio’s

financial results, which were not disclosed by defendants, Plaintiffs and other members of the

Class would not have purchased or otherwise acquired iBio common stock, or, if they had

acquired such common stock during the Class Period, they would not have done so at the

artificially inflated prices or distorted prices at which they did.

110. By virtue of the foregoing, the defendants have violated Section 10(b) of the

Exchange Act, and Rule 10b-5 promulgated thereunder.

111. As a direct and proximate result of the defendants’ wrongful conduct, Plaintiffs

and the other members of the Class suffered damages in connection with their respective

purchases and sales of the Company’s common stock during the Class Period.

112. This action was filed within two years of discovery of the fraud and within five

years of Plaintiffs’ purchases of securities giving rise to the cause of action.

SECOND CLAIM

Violation Of Section 20(a) of The Exchange Act Against the Individual Defendants

113. Plaintiffs repeat and reallege each and every allegation contained above as if fully

set forth herein.

114. This Second Claim is asserted against the Individual Defendants.

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115. The Individual Defendants acted as controlling persons of iBio within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, agency, and their ownership and contractual rights, participation in and/or awareness

of the Company’s operations and/or intimate knowledge of aspects of the Company’s revenues

and earnings and dissemination of information to the investing public, the Individual Defendants

had the power to influence and control, and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements that Plaintiffs contend are false and misleading. The Individual Defendants were

provided with or had unlimited access to copies of the Company’s reports, press releases, public

filings and other statements alleged by Plaintiffs to be misleading prior to and/or shortly after

these statements were issued, and had the ability to prevent the issuance of the statements or to

cause the statements to be corrected.

116. In particular, the Individual Defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, are presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

117. As set forth above, iBio violated Section 10(b) and Rule 10b-5. By virtue of their

positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of

the Exchange Act as they culpably participated in the fraud alleged herein. As a direct and

proximate result of defendants’ wrongful conduct, Plaintiffs and other members of the Class

suffered damages in connection with their purchases of the Company’s common stock during the

Class Period.

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118. This action was filed within two years of discovery of the fraud and within five

years of each Plaintiffs’ purchases of securities giving rise to the cause of action.

PRAYER FOR RELIEF

WHEREFORE , Plaintiffs pray for relief and judgment, as follows:

(a) Determining that this action is a proper class action, and designating

Plaintiffs as class representatives under Rule 23 of the Federal Rules of Civil Procedure and

Plaintiffs’ counsel as Class Counsel;

(b) Awarding compensatory damages in favor of Plaintiffs and the other Class

members against all defendants, jointly and severally, for all damages sustained as a result of

defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;

(c) Awarding Plaintiffs and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and expert fees; and

(d) Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiffs hereby demand a trial by jury.

Dated: April 6, 2015 RIGRODSKY & LONG, P.A.

By: /s/ Brian D. Long Seth D. Rigrodsky (#3147) Brian D. Long (#4347) Gina M. Serra (#5387) 2 Righter Parkway, Suite 120 Wilmington, DE 19803 Telephone: (302) 295-5310 Facsimile: (302) 654-7530 Email: [email protected] Email: [email protected] Email: [email protected]

Attorneys for Plaintiffs

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THE ROSEN LAW FIRM, P.A. Laurence Rosen Phillip Kim Sara Fuks 275 Madison Avenue, 34th Floor New York, NY 10016 Telephone: (212) 686-1060 Facsimile: (212) 202-3827 Email: [email protected] Email: [email protected] Email: [email protected]

Lead Counsel for Lead Plaintiffs

HAGENS BERMAN SOBOL SHAPIRO LLP Reed R. Kathrein Peter E. Borkon 715 Hearst Avenue, Suite 2-2 Berkeley, CA 94710 Telephone: (510) 725-3000 Facsimile: (510) 725-3001 [email protected] [email protected]

Additional Counsel for Plaintiffs

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Documents

DISTRICT OF DELAWARE Behalf Of All Others Similarly ...securities.stanford.edu/.../201546_r01c_14CV01343.pdf · Case 1:14-cv-01343-RGA Document 35 Filed 04/06/15 Page 6 of 35 PageID