Key Takeaways:
ADMA Biologics Inc. shareholders face an Aug. 10 deadline to seek lead plaintiff status in a securities class action alleging the company inflated revenue through channel stuffing and an undisclosed related party transaction.
"ADMA Biologics engaged in an undisclosed related party transaction and used channel stuffing to create an appearance of revenue," the complaint filed in the U.S. District Court for the District of New Jersey alleges. The lawsuit, captioned Mazzarino v. ADMA Biologics Inc., covers investors who bought shares between Aug. 9, 2024 and March 25, 2026.
The stock fell $3.96, or 29.1%, over two trading sessions to close at $9.63 on March 25 after Culper Research published a report alleging the company's "reported growth is a fiction driven more than entirely by a de facto channel stuffing scheme and an undisclosed related party distributor." The report claimed that two employees at one of ADMA's largest distributors confirmed the company offered rebates and extended payment terms to induce excess inventory purchases. Had ADMA held payment terms steady, the company would have reported a 3% revenue decline in 2025 rather than the 20% growth it reported, according to Culper.
ADMA responded on March 25 with a press release calling the report "premised on speculative assertions derived from unidentified and unreliable sources." Two days later, Cantor Fitzgerald downgraded the stock to Neutral from Overweight, citing investor disappointment with the company's response. Shares fell another 13% on that news.
The lawsuit alleges ADMA lacked adequate internal controls and that executives' positive statements about the company's business and prospects were materially misleading. The company develops specialty plasma-derived biologics for immune deficiencies and infectious diseases.
The Aug. 10 lead plaintiff deadline gives investors roughly seven weeks to file motions. A lead plaintiff with the largest financial interest will direct the litigation and select counsel. Multiple law firms including Kessler Topaz Meltzer & Check LLP and Robbins Geller Rudman & Dowd LLP are soliciting investors.
This article is for informational purposes only and does not constitute investment advice.
