PepGen reports its securities class action and shareholder demand are over

PepGen Inc. (Nasdaq: PEPG) says a securities class action filed against it and two of its executives in 2025 has ended, according to its 10-Q filed August 6, 2026. The case, Johnny Karam v. PepGen Inc., et al., was filed on June 9, 2025 in the U.S. District Court for the Eastern District of New York. The parties filed a stipulation of voluntary dismissal on November 18, 2025.

The complaint named PepGen, its chief executive officer and its chief financial officer. The 10-Q does not give their names. PepGen's annual report for 2023, filed on March 6, 2024, the day before the alleged class period began, was signed by James McArthur, Ph.D., as chief executive officer and Noel Donnelly as chief financial officer. A shareholder had also sent the company a demand letter on September 29, 2025 based on substantially the same allegations. That shareholder withdrew the demand on December 1, 2025.

The case

A stockholder sued on behalf of anyone who purchased or otherwise acquired PepGen's securities between March 7, 2024 and March 3, 2025. The lawsuit alleged that material misrepresentations or omissions in the company's public disclosures violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5. The disclosures at issue related primarily to statements about PGN-EDO51, a Duchenne muscular dystrophy candidate. PepGen said in its 10-Q for the quarter ended September 30, 2025 that it announced on May 28, 2025 a decision to voluntarily discontinue development of PGN-EDO51. The plaintiff sought unspecified monetary damages for the putative class, plus costs and expenses including attorney's fees. These were allegations only, and the filings report no ruling on them.

Defendants

PepGen's filings describe the defendants as the company, its CEO and its CFO, without naming the two executives. PepGen's annual reports for 2023 and 2024, filed March 6, 2024 and February 24, 2025, were both signed by McArthur as chief executive officer and Donnelly as chief financial officer. No PepGen filing says they are the officers who were sued.

Where it stands

On July 15, 2025 the action was transferred to the U.S. District Court for the District of Massachusetts. In its 10-Q for the quarter ended September 30, 2025, PepGen said it believed the allegations were without merit and intended to defend the case vigorously. By the time of its annual report, filed March 4, 2026, the company reported the November 18, 2025 stipulation of voluntary dismissal. The 10-Q for the quarter ended June 30, 2026 repeats that dismissal and the withdrawn demand and describes no further proceedings.

The filings do not say whether the dismissal was with or without prejudice, and they do not describe any settlement terms or payment. They also do not say why the plaintiff dismissed the action.

Why it matters to shareholders

In the 10-Q for the quarter ended September 30, 2025, PepGen said litigation can have an adverse effect "because of defense costs, diversion of management resources and other factors." It also said it had not recorded an estimate of the possible loss because of uncertainty about both the likelihood and the amount of any loss.

In the latest 10-Q, PepGen says it "is not party to any other litigation and does not have contingency reserves established for any litigation liabilities." The company also says it indemnifies directors and officers serving at its request and has never incurred costs to defend lawsuits or settle claims related to its indemnification agreements. The filing does not break out legal expenses for the Karam case.

PepGen's risk factors still warn that securities class actions often follow declines in a company's share price, and that this risk is especially relevant to biotechnology and pharmaceutical companies. The 10-Q does not report any new suit.

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