B. Riley Faces Wider Probe on Risk Disclosures, Ties

 B. Riley Financial Inc. faces a widening US investigation into whether it gave investors an accurate picture of its financial health amid a string of losses and a sagging stock price.

The US Securities and Exchange Commission is assessing whether Los Angeles-based B. Riley adequately disclosed the risks embedded in some of its assets, people familiar with the matter said. The agency is also seeking information on the interactions between founder Bryant Riley and longtime business partner Brian Kahn, the former chief executive of Franchise Group Inc., the people said. Franchise Group, or FRG, is one of B. Riley’s larger investment holdings.

B. Riley’s shares lost nearly half their value in Monday pre-market trading.

The inquiry includes a review of possible improper trading by other insiders, said the people, who asked for anonymity because the probe hasn’t been announced by the agency. Another topic regulators have asked about is the movement between companies of receivables due from cash-strapped retail customers whose repayment might be doubtful, the people said.

The SEC’s overlapping civil probes, which involve agency lawyers in Los Angeles, Washington and Philadelphia, are proceeding along with a federal criminal inquiry in New Jersey. Prosecutors are examining the 2020 collapse of an investment fund, Prophecy Asset Management, where Kahn handled most of its assets.

Prophecy investors who lost money have questioned in a lawsuit whether Kahn improperly used Prophecy proceeds to acquire control of FRG for himself. A co-founder of that fund pleaded guilty in November in a $294 million fraud case and is cooperating with prosecutors, who tagged Kahn as an unindicted co-conspirator, Bloomberg previously reported.

Subpoenas Received

Bryant Riley told investors in a Monday conference call that he and the company received subpoenas in July from the SEC focused mainly on B. Riley’s dealings with Kahn.

“We are responding to the subpoenas and are fully cooperating with the SEC,” Bryant Riley said. “We are confident that the SEC will reach the same conclusion that our own internal investigation, with the assistance of two separate law firms, did – that we had no involvement with or knowledge of any alleged misconduct concerning Brian Kahn or his affiliates.”

Representatives for Kahn didn’t respond to messages seeking comment. Representatives for the SEC and the US Attorney’s Office in New Jersey declined to comment. Kahn, Riley and their companies haven’t been charged with anything by authorities, and the US probes could conclude with no action against any of them.

“At no time during my former business relationship with Prophecy did I know that Prophecy or its principals were allegedly defrauding their investors, nor did I conspire in any fraud,” Kahn said in a November statement.

B. Riley on Monday suspended its dividend and warned of losses as it wrote down a portion of its stake in FRG and a related loan receivable. It’s expecting a non-cash markdown of about $330 million to $370 million, according to a company statement.

The SEC investigation is advancing as B. Riley tries to bounce back from two annual losses and struggles to correct flaws in its controls identified by its auditors this year. Short sellers have targeted the stock, which is down more than 60% in the year after B. Riley helped Kahn stage a management-led buyout of FRG.

B. Riley’s finances are complicated by a series of loans, receivables and other asset transfers between the company, FRG and Kahn.

FRG’s debt is trading at deeply distressed levels, and the firm hired advisers to help find ways to ease the burden. It’s also been hurt by the demise of Conn’s Inc., another furniture chain that went bankrupt within months after buying rival W.S. Badcock from FRG.

Conn’s owed B. Riley at least $93 million on a loan when it filed for court protection, according to company filings. B. Riley had said it expects to be fully repaid. Meanwhile, FRG holds a stake in Conn’s preferred shares, which it received as payment for the Badcock sale. The stake is convertible into Conn’s common stock, but those shares have since collapsed with the bankruptcy, slashing the value of FRG’s holdings.

In turn, B. Riley owns almost a third of FRG’s equity. B. Riley has downplayed the potential impact of Conn’s misfortune, saying FRG’s stake was a small part of that firm’s overall holdings.

But S&P Global Ratings said in a July 24 credit downgrade that Conn’s bankruptcy could lead to FRG violating the terms of its own loan. FRG’s capital structure “appears to be unsustainable,” S&P said in its analysis, and its scenario for recoveries after a default showed little or nothing for second-lien term lenders — which typically means equity holders would be left empty handed.

https://finance.yahoo.com/news/b-riley-faces-wider-us-122522928.html

60 Degrees Yields Right of Reference to NDA in Support of Phase IIb Study

 

• University of Kentucky will commence a Phase IIb clinical study of drug development candidate SJ733 for treatment of vivax malaria.
• SJ733 will be combined with a single dose of tafenoquine in the study.
• The right of reference allows FDA to review 60 Degrees Pharma’s regulatory file when the agency evaluates new study protocols for the SJ733-tafenoquine Phase IIb program.

https://www.globenewswire.com/news-release/2024/08/12/2928485/0/en/60-Degrees-Pharma-Provides-University-of-Kentucky-with-Right-of-Reference-to-ARAKODA-NDA-in-Support-of-SJ733-Phase-IIb-Study.html

Oragenics Concussion Drug Successfully Completes FDA-Required Genotoxicity Study

 ONP-002 showed no cancer-causing DNA damage

– Phase II clinical trial being planned

https://www.globenewswire.com/news-release/2024/08/12/2928386/0/en/Oragenics-Inc-Announces-Concussion-Drug-Successfully-Completes-FDA-Required-Genotoxicity-Study.html

Crown Laboratories, Revance to Merge

 Combination provides opportunity to create a leading, innovative, high-growth aesthetics and skincare company

Brings together two high-quality, complementary product lines

Combined company's flagship brands to include DAXXIFY® (toxin), the RHA® Collection (filler), SkinPen® (microneedling), PanOxyl® (acne), Blue Lizard® (sunscreen), and StriVectin® (anti-aging)

Opportunity for global commercialization capabilities with coverage of >10,000 medical professionals, mass retailers, specialty retailers, club retailers, and an ecommerce channel

New product flow potential through internal product development and an integrated manufacturing operation

The transaction is expected to close by year end. Following completion of the merger, Revance will be wholly owned by Crown and Revance's stock will no longer be publicly traded on Nasdaq.

The transaction is subject to stockholders validly tendering shares representing at least a majority of the voting power of Revance, required regulatory approvals and other customary closing conditions. 

Following the successful closing of the tender offer, Crown will acquire any shares of Revance that are not tendered in the tender offer through a second-step merger for the same consideration as paid in the tender offer.

Revance's Board of Directors unanimously recommends that Revance's stockholders tender their shares in the tender offer.

Further information regarding the terms and conditions in the definitive transaction agreement will be provided in the tender offer materials on Schedule TO and Schedule 14D-9, which will be filed with the U.S. Securities and Exchange Commission in connection with the transaction

https://www.prnewswire.com/news-releases/crown-laboratories-and-revance-announce-entry-into-merger-agreement-302219678.html

MDMA Papers Retracted for ‘Unethical Conduct’ on Heels of Lykos’ FDA Rejection

 

A day after the regulator denied approval of Lykos’ MDMA-assisted PTSD therapy, a medical journal pulled three studies related to the use of the psychedelic in the indication.

The medical journal Psychopharmacology on Saturday retracted three papers related to the use of the psychiatric substance MDMA for the treatment of post-traumatic stress disorder.

The decision to pull the studies was driven by “protocol violations amounting to unethical conduct” at one of the study sites, according to the journal’s retraction note. The authors of the studies also confirmed to Psychopharmacology that they knew of these breaches when they submitted their manuscript “but did not disclose this information to the journal or remove data generated by this site from their analysis.”

Many of the authors failed to fully disclose a “potential competing interest,” according to the retraction notice, while some of the researchers were affiliated with either the Multidisciplinary Association for Psychedelic Studies or one of its subsidiaries, which funded and provided the MDMA used in the studies.

Allison Feduccia, an author in all three studies, agreed with the retraction but disputes the language that Psychopharmacology used in the retraction note. In an interview with STAT News, Feduccia said that she only agreed to the retraction because the journal would not allow them to amend the studies’ data.

Other researchers on the studies—including Michael Mithoefer, Lisa Jerome, Berra Yazar-Klosinski and Rick Doblin—registered their disagreement with the retraction. The remaining authors did not return Psychopharmacology’s request for comment.

Saturday’s retraction comes just a day after the FDA rejected Lykos Therapeutics’ investigational MDMA-assisted regimen for post-traumatic stress disorder (PTSD). In its Complete Response Letter, the regulator said that Lykos’ application “could not be approved based on data submitted to date” and called for an additional Phase III trial.

Lykos is planning to request a meeting with the FDA to “ask reconsideration of the decision” and to seek guidance for its resubmission.

The FDA’s rejection is in line with the verdict of its Psychopharmacologic Drugs Advisory Committee, which in June 2024 voted 10–1 against Lykos. During the panel discussion, the external experts raised concerns about selection bias and the functional unblinding of Lykos’ Phase III study to support its MDMA therapy.

The panelists also flagged the “potential for some misconduct and manipulating the trial results,” according to consumer representative Kim Witczak, who voted against Lykos.

In May 2024, the Institute for Clinical and Economic Review (ICER) released a scathing report on Lykos’ MDMA-assisted therapy, questioning the enrollment of patients who had been “pulled heavily” from a community with deep interest in the use of psychedelics. Some therapists and patients also had “very strong prior beliefs” about MDMA.

In addition, the ICER report revealed that there had been “pressures” to make the study’s results “favorable.”

https://www.biospace.com/drug-development/mdma-papers-retracted-for-unethical-conduct-on-heels-of-lykos-fda-rejection

Ascendis’ Hypoparathyrodism Drug Gets FDA OK onTough Regulatory Path

 

Ascendis Pharma’s palopegteriparatide was previously rejected by the regulator due to manufacturing problems, and the review period for its resubmitted application was extended by three months.

The FDA on Monday approved Ascendis Pharma’s palopegteriparatide, which was developed as TransCon PTH, for the treatment of adults with the rare endocrine disorder hypoparathyroidism. The drug will be marketed under the brand name Yorvipath.

The company is currently wrapping up the manufacturing of Yorvipath and expects the product to hit U.S. shelves in the first quarter of 2025. However, Yorvipath could be available before then if the FDA allows Ascendis to commercialize existing batches of the drug. In case of this approval, the company estimates that Yorvipath could reach the market in the fourth quarter of this year.

At launch, Ascendis will offer patients a “suite” of services through its access program, which seeks to help patients through the treatment process and provide financial assistance to eligible patients.

Patty Keating, executive director of the patient advocacy group HypoPARAthyroidism Association, in a statement said that Yorvipath’s approval is “such an important milestone” for patients suffering from the condition. “We look forward to having this new treatment option to help us move beyond the limits and risks of conventional therapy,” Keating said.

Hypoparathyroidism is a rare disease characterized by abnormally low levels of the parathyroid hormone, which are caused by dysfunctions in the parathyroid glands. Patients with this condition typically experience fatigue, weakness, muscle aches and spasms and dry skin. When left unchecked, hypoparathyroidism can also severely impair calcium levels in the blood, which can then lead to abnormal bone growth, developmental delays and calcium deposits in the brain.

Patients with hypoparathyroidism are usually prescribed oral calcium supplements or are given high-dose vitamin D treatments. However, neither of these can adequately control the disease.

Yorvipath is designed as a once-daily subcutaneous injection and is a long-acting prodrug of the parathyroid hormone. It addresses the underlying cause of hypoparathyroidism by restoring normal levels of the hormone for 24 hours each day, according to Ascendis’ website. As a result, Yorvipath can ease both the short- and long-term symptoms of the condition.

Ascendis first tried for an approval for Yorvipath in October 2022, which the FDA ended up rejecting in May 2023. In its Complete Response Letter at the time, the regulator cited manufacturing concerns but did not name safety or efficacy problems or ask for additional trials.

The company resubmitted its application a few months later, which the FDA accepted in December 2023 and gave an initial target action date of May 14, 2024. However, the regulator pushed back its decision date by three months after Ascendis filed a major amendment to the application.

https://www.biospace.com/fda/ascendis-hypoparathyrodism-drug-secures-fda-approval-following-tough-regulatory-path

NASA Inspector General Report Criticizes Boeing's Quality Control

 by Katabella Roberts via The Epoch Times (emphasis ours),

NASA’s Office of Inspector General (OIG) has raised concerns over quality control and standards at plane maker Boeing and its efforts to help the space agency return astronauts to the Moon.

Boeing's Starliner spacecraft which launched astronauts Butch Wilmore and Suni Williams to the International Space Station docked to the Harmony module's forward port on July 3, 2024, seen from a window on the SpaceX Dragon Endeavour spacecraft docked to the adjacent port. (NASA via AP)

A report from NASA’s OIG released on Aug. 8 focuses on the Space Launch System (SLS) version 1B—the powerful heavy-lift rocket system that NASA plans to use to send the crewed Orion spacecraft and large cargo to the Moon in 2028 as part of the Artemis IV mission.

According to NASA’s report, a “critical component” of this upgrade is Boeing’s development of the SLS’s new upper stage, the Exploration Upper Stage (EUS), which will aid in sending the Orion on its mission.

Once it is complete, EUS will give the SLS a 40 percent upgrade in carrying capability, going from 27 metric tons under Block 1—the SLS rocket’s first iteration—to 38 metric tons with Block 1B, according to the report.

However, progress on the SLS, which has been under development since 2014, has been plagued with issues, including Boeing’s “ineffective quality management and inexperienced workforce,” along with continued cost increases and schedule delays, the report said.

As part of its report, NASA’s OIG interviewed officials at NASA Headquarters, Marshall Space Flight Center, Boeing, and DCMA between August 2023 through May 2024.

It also visited the Michoud Assembly Facility in New Orleans, Louisiana, to observe the SLS core stage and EUS production.

The OIG found that Boeing’s quality management system at Michoud “does not adhere” to international standards established under the global association SAE International.

The report pointed to 71 “Corrective Action Requests”(CARs) issued by the Defense Contract Management Agency (DCMA) at Michoud between 2021 and 2023 to address “deficiencies in quality.”

NASA’s OIG said this is a “high number of CARs for a space flight system at this stage in development and reflects a recurring and degraded state of product quality control.”

“Boeing’s process to address deficiencies to date has been ineffective, and the company has generally been nonresponsive in taking corrective actions when the same quality control issues reoccur,” the report said.

‘Foreign Object Debris’ Found in Fuel Tank

The report highlights other issues, including “foreign object debris ” identified inside the SLS Core Stage 2 liquid hydrogen fuel tank.

The debris included “metal shavings, Teflon, and other debris on and underneath the entry platform and ladder assembly on the forward dome panels inside of the tank.”

“Foreign object debris can damage hardware and potentially injure flight crew when entrapped within crewed flight articles,” the report stated.

The liquid hydrogen fuel tank was subsequently cleaned, reinspected, and found to meet standards, according to the report.

In another incident during its visit to Michoud in April 2023, the OIG said it observed substandard welding on a liquid oxygen fuel tank dome, a critical component of the SLS Core Stage 3.

The report said that on another occasion, Boeing officials “incorrectly approved hardware processing under unacceptable environmental conditions.”

“Quality control issues at Michoud are largely due to the lack of a sufficient number of trained and experienced aerospace workers at Boeing,” the report said.

To mitigate such challenges, Boeing provides training and work orders to its employees, the report noted.

However, the OIG said it found these efforts to be “inadequate” considering the “significant quality control deficiencies at Michoud.”

The Artemis I Space Launch System (SLS) and Orion spacecraft, atop the mobile launcher, are prepared for a wet dress rehearsal to practice timelines and procedures for launch at Launch Complex 39B at NASA's Kennedy Space Center, Fla., on June 14, 2022. (Cory Huston/NASA via AP)

Rising Costs

Boeing’s EUS contract has soared from the initially agreed-upon cost of $962 million in 2017 to over $2 billion through 2025, and the company’s delivery of the EUS to NASA has been postponed six years from an initial February 2021 date established in 2016 to April 2027, the report stated.

“Given Boeing’s quality management and its related workforce challenges, we are concerned these factors could potentially impact the safety of the SLS and Orion spacecraft including its crew and cargo,” it concluded.

The OIG report included a number of recommendations, including that Boeing work with the Associate Administrator for Exploration Systems Development Mission Directorate (ESDMD), among others, to develop a quality management system training program compliant with international standards.

The report said that NASA officials would review the program.

It also recommended financial penalties for Boeing’s “noncompliance with quality control standards,” although NASA ultimately decided not to fine the planemaker, according to the report.

The Epoch Times has contacted Boeing for comment.

Stuck in Space

The report comes as NASA astronauts Butch Wilmore and Suni Williams remain stuck in space aboard the Boeing Starliner due to ongoing issues with its thrusters.

NASA said during a press conference earlier this week that it is considering bringing the two astronauts back on SpaceX’s Crew-9 mission in February 2025.

Wilmore and Williams launched on June 5 from Cape Canaveral Space Force Station in Florida and docked with the ISS on June 6. They were originally set to return around one week later, on June 14.

https://www.zerohedge.com/technology/nasa-inspector-general-report-criticizes-boeings-quality-control