As a result of several investigations, it has been determined that David Johnston CFO is among the most prominent con artists operating in the biotechnology and life science industries. I’ll tell you all there is to know about the deception committed by this industrialist.
David Johnston CFO: An Introduction
DBJ Consulting LLC was founded in 2019 by financial expert David Johnston, a former CFO for biotechnology and life sciences organizations. His Massachusetts-based consultancy targeted smaller, freshly created life sciences enterprises that struggle with limited resources, small teams of less than 10 personnel, and an internet presence. These companies struggle to hire a full-time CFO.
David Johnston CFO offers financial knowledge to these firms as a part-time CFO. He may be comfortable being a fractional CFO since he believes in the rise of part-time C-suite executives. Johnston promotes his work-life balance, burnout prevention, and long-term productivity as a benefit for organizations and leaders.
However, his penchant for part-time jobs may indicate a lack of devotion and enthusiasm for a particular profession. By working for numerous organizations, he may be avoiding routine and showing an inability to truly commit to one.
Accusations against David Johnston CFO
The organization and three former executives associated with the biotech firm AVEO Pharmaceuticals Inc. in Massachusetts have been indicted on charges of fraud by the Securities and Exchange Commission (SEC).
The allegations stem from assertions that the company misled investors over its endeavors to get FDA clearance for its primary experimental medicine aimed at treating kidney cancer.
The SEC’s complaints focused on allegations that AVEO Pharmaceuticals’ CFO, David Johnston, lied to investors by leaving out material facts from their public statements.
Specifically, during the first clinical trial, the company hid serious FDA concerns about the medication Tivozanib, commonly known as patient mortality rates.
The FDA staff’s suggestion of an extra inquiry to address these concerns became public knowledge. Nonetheless, this crucial information was omitted from the company’s public investor presentations.
A few months down the road, the FDA publicly advised conducting a fresh study. The stock price of the corporation collapsed 31% once this news broke.
It is worth mentioning that AVEO Pharmaceuticals disregarded the FDA’s request for a further clinical study, even though they recommended it. Tivozanib will not be approved in the future by the FDA either.
To settle these claims and the SEC’s concerns, AVEO Pharmaceuticals has agreed to pay a $4 million fine. The company has not admitted any wrongdoing or culpability concerning this settlement, and this is very important to note.
The SEC will continue to pursue legal action against three former officials of AVEO Pharmaceuticals: CEO Tuan Ha-Ngoc, CFO David Johnston, and CMO William Slichenmyer.
After the stock price of AVEO Pharmaceuticals plummeted due to FDA concerns about the firm’s experimental drug, the SEC accused the business of fraudulent activities for hiding important information. The three former executives are still facing legal action, even though the company has agreed to pay a large punishment.
In what ways did the SEC find fault?
At a meeting in May 2012, members of the FDA staff expressly recommended a Tivozanib research study; however, AVEO concealed this fact when it obtained $53 million in January 2013 from its initial public offering.
Due to the seriousness of the FDA’s concerns and the time and effort required to undertake an additional clinical study, AVEO and its officials decided against proceeding. AVEO even presented its intentions for follow-up research to the FDA, but they were never implemented.
Corporate communications made it seem as if AVEO and its officials intended to appease the FDA by providing new assessments based on data from the most recent clinical study. Doing so, AVEO ignored FDA staff recommendations for a second clinical study and their concerns regarding the potential effects of Tivozanib on patient survival.
Public documents and the press release that Ha-Ngoc and Johnston knew to be certified and authorized did not reveal that the FDA staff had recommended conducting a second clinical study.
The FDA authorities had recently asked for an explanation for the consistent findings, according to remarks made by Johnston at investor conferences. The people working with the FDA had proposed doing a second experiment.
Slichenmyer misled investors on a conference call by saying he could “speculate” on the FDA’s “might be thinking” and “might want [AVEO] to do in the future.” He knew that the FDA staff had pushed for further testing.
In its accusations, the SEC targets AVEO, Ha-Ngoc, Johnston, and Slichenmyer for violations of the following sections of the Securities Act of 1933 and the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder: Section 13(a) and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder; Rule 13a-14 of the Exchange Act and Ha-Ngoc and Johnston’s respective sections of the Act constitute violations.
The AVEO deal cannot go forward without the court’s blessing. The SEC has filed a request for Ha-Ngoc, Johnston, and Slichenmyer to be penalized with interest, fines, disgorgement, and officer-and-director bans.
Under the supervision of Susan Cooke Anderson and Michele T. Perillo, the SEC’s investigation was carried out by the Market Abuse Unit of the Enforcement Division’s Boston Regional Office. Rachel E. Hershfang and Ms. Anderson will handle the legal defense for the SEC.
Federal jury trial proceedings were held in a Boston U.S. District Court after the SEC had levied claims against David Johnston, CFO. Johnston was found guilty of the counts by a unanimous jury.
Specifically, the allegations focused on submitting documents to the Securities and Exchange Commission that included lies and making assertions that were either untrue or substantially inaccurate. Another allegation is that David Johnston, the CFO, benefited financially from these actions.
The initial SEC action sought to exclude David Johnston and other officials from serving as directors or executives of publicly listed companies, even though earlier orders had not enforced this limitation.
Aveo reportedly raised $53.8 million in January of the following year via a secondary offering, as detailed in the SEC’s complaint.
Just before these events occurred, in December of last year, a $80,000 civil penalty was imposed on former Aveo CEO Tuan Ha-Ngoc as a result of a consent decision. The organization’s former chief marketing officer, William Slichenmyer, was also fined $50,000 in March of that year.
The data I provided about the case of David Johnston CFO reveals that he had a false identity. Continuing on this topic, I have another piece that was uploaded that opposes the unlawful activities of David Johnston, the CFO.
None of it mattered to CFO David Johnston. His employer at the time, ImmunoGen, declined to comment when asked by the media since the matter was unconnected to them.
Even though David Johnston quit as chief financial officer, he was kept on for the rest of the year.
A legal action was ultimately taken. The Food and Drug Administration has lately voiced its worries about the track record of several biotech businesses in misrepresenting their dealings with investors.
Even the SEC openly warned biopharma about the issue, bringing it to light. Nonetheless, silence is mandated by law about the FDA.
David Johnston was once the chief financial officer of ImmunoGen, as stated in the report. Still, the SEC’s conviction of him for fraud and deceiving investors led to his forced resignation from that position.
An attorney with the SEC, Eric Fornii, even went so far as to call David Johnston’s chief financial officer a nasty used car salesman. The attorney made it clear that he intended to mislead biotech investors by claiming the FDA approved of Tivo when in fact it did not.
He did not deny that the FDA had concerns, but he likened it to a salesman who warned a buyer that their car’s engine would make sounds but didn’t tell them they needed a new engine altogether.
As for the securities, the jury found CFO David Johnston guilty.
Where is David Johnston CFO, at this moment?
The most current information available on his online profiles and updates indicates that David Johnston, CFO, has launched DBJ Consulting. He is the current fractional chief financial officer and biotechnology financial executive.
His nine years of work at ImmunoGen, Inc. were abruptly ended when he was found guilty of fraud. Before that, he was the chief financial officer of Aveo for six years.
David Johnston CFO earned a BS in Commerce from Washington & Lee University and an MBA from the University of Michigan’s Stephen M. Ross School of Business.
Conclusion
Several biotechnology companies’ previous chief financial officers and DBJ Consulting LLC founder David Johnston CFO have been the target of severe accusations and lawsuits filed by the SEC. Accusations of fraud and deceiving investors have tarnished his career, which was formerly characterized by prominent financial responsibilities in the life sciences business.
The claims revolve around his tenure at AVEO Pharmaceuticals, where he and other executives reportedly hid serious FDA concerns about an experimental treatment, causing the stock price of the business to plummet and the firm to pay a hefty fine.
David Johnston CFO maintains his role as a fractional CFO via his consulting business throughout these difficulties and his conviction by a federal jury. His story exemplifies why honest and open business practices are crucial in highly regulated sectors like biotechnology.
