I agree that nothing has changed in the value of the drug via the science. And yes the direct financial impact of losing the lawsuit is not all that significant in the grand scheme, But the accusations include the CEO’s willingness to cut corners related to safety (I.e. pushing through the colon cancer IND). The filings paint the CEO as a egotistical and hot tempered leader that won’t listen to his most senior staff. This has always been a concern that there is no one in the company or the BOD that can provide effective challenge to NP. We don’t know but these happenings elevate those concerns until proven untrue.

For a company that is running on a razor thin budget and solely relies on the capital markets for funding on a monthly basis, the optics of being well managed are considerable. If the very loyal investors (who are largely the same from raise to raise) start loosing their trust in the CEO they may not be so willing to keep digging themselves deeper. Investor fatigue was already a concern and this exasperates that concern. Any elevated risk until the issue is resolved.

Additionally, RP is still the largest shareholder. At the very least, the could introduce volatility in trading patterns or proxy votes to get things done. At worst, he finds some other large shareholders or investor activists to stage a proxy war. All of this is hypothetical but is now more probable than it was before the lawsuit, which by definition increases risk in the trade (higher probability of bad events). By saying there’s more risk in the trade is not bearish. It’s just an objective fact.