A class action lawsuit was filed against PepGen Inc. (PEPG) by Levi & Korsinsky on June 9, 2025. The plaintiffs (shareholders) alleged that they bought PEPG stock at artificially inflated prices between March 7, 2024, and March 3, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought PepGen stock during that period can click here to learn about joining the lawsuit.
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PepGen is a clinical-stage biotechnology company that develops next-generation oligonucleotide therapies for the treatment of severe neuromuscular and neurological diseases. PepGen has developed its own Enhanced Delivery Oligonucleotide (EDO) platform, built around cell-penetrating peptides designed to improve the cellular uptake and activity of oligonucleotide drug candidates.
PepGen’s claims about its lead drug candidate, PGN-EDO51, a proprietary EDO peptide for the treatment of Duchenne muscular dystrophy (DMD), are at the crux of the current complaint.
PepGen’s Misleading Claims
According to the lawsuit, PepGen and two of its senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about the safety and efficacy of PGN-EDO51, and associated studies, from SEC filings and related material.
During the Class Period, the CEO noted that, based on the company’s research of external data and internal clinical and nonclinical work for internal modeling assumptions, PepGen expects treatment with EDO51 in DMD patients to produce high levels of dystrophin protein.
Additionally, in an annual report filed on the same day, PepGen said in its SEC filing that it hopes to receive accelerated approval from the U.S. Food and Drug Administration for its lead drug, PGN-EDO51, if its Phase 2 trials show good safety data and a meaningful increase in dystrophin levels, among other things.
Finally, in a May 14, 2024 press release, PepGen noted that CONNECT2 is a Phase 2, randomized, double-blind, placebo-controlled MAD clinical trial evaluating PGN-EDO51 in approximately 20 male patients at least 6 years of age with DMD amenable to an exon 51-skipping approach.
Notably, the company plans to extend this study to the U.S. and other countries, subject to regulatory authorizations. The CONNECT2 clinical trial, together with data from CONNECT1, is designed to potentially support a future accelerated approval pathway, subject to regulatory authority feedback.
However, subsequent events (mentioned below) reveal that the defendants failed to inform investors that PGN-EDO51 was less effective and less safe than the defendants had led them to believe, and that the Phase 2 CONNECT2 study was dangerous or otherwise deficient for purposes of FDA approval.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about the true nature and expected outcomes of the CONNECT2 study.
The information became clear on March 4, 2025, when the company issued a press release announcing that it had decided to voluntarily pause the CONNECT2 study for the time being. PepGen chose to review results from the 10 mg/kg cohort in the ongoing CONNECT1 study before proceeding further with the tests. Following the news, PEPG stock fell 18.9% the same day.
To conclude, the defendants misled investors by overestimating PGN-EDO51’s clinical, regulatory, and commercial prospects, as well as by downplaying the possibility of PepGen halting the CONNECT2 study. Owing to these issues, PEPG stock has lost 65.2% year-to-date.
