Due Diligence on Biopharma Company


Identify risks surrounding a potential investment in a Nasdaq-listed clinical-stage biopharmaceutical company with operations in the Middle East and the United States.


A close review of stock exchange filings found that the company’s supposedly independent auditor was actually the former employer of the current CFO. Multiple other former executive officers had also worked at the auditor immediately before joining the biopharma company. The company’s financial statements appeared to downplay these connections, by referring to the auditor in one place by its formal legal name and in other places by its more commonly used brand name. Additionally, the auditor firm was found to be located down the street from the biopharma company. The closeness between the auditor firm and the biopharma company’s executive team showed the need to apply extra scrutiny to the financial statements, possibly including a new, truly independent audit.


Forward Risk’s team, which includes Certified Fraud Examiners and other individuals well versed on corporate governance concerns, found a potential red flag that had not yet been publicly commented on by investment analysts or media outlets.