The chief scientific officer of a cannabis product company whose stock price has been hotter than a flaming joint (sorry) was known more than 18 months ago to have committed research misconduct while at the U.S. National Institutes of Health — casting a cloud of suspicion over the firm’s operations.
Marketwatch reported yesterday that the company, India Globalization Capital, which trades on the New York Stock Exchange as IGC, has at least nine other “red flags” for investors, from questions about its ability to manufacture cannabinoids to a history of trouble with the U.S. Securities and Exchange Commission.
Until August, the company’s stock had been trading below 50 cents per share. It began a dramatic rise, eventually reaching $13 per share. MarketWatch notes:
The stock’s move came after the company announced its plan for a line of CBD-infused drinks, or those containing cannabinoids, ingredients in cannabis that are said to have health benefits. With Canada gearing up for full legalization of cannabis for adult recreational use on Oct. 17, the sector has become a hot market for speculators, with investors jumping on every announcement of a planned product, alliance, distribution agreement or deal.
As MarketWatch found, IGC’s chief scientific officer is Jagadeesh Rao, although his position at the company now appears uncertain. Rao falsified data in at least four papers while working at the NIH under Stanley Rapoport, a once-prominent neuroscientist at the agency. Rapoport ultimately resigned as lab head after three of his subordinates, including Rao, were found to have committed misconduct in 19 published studies.
Following publication of the MarketWatch story, the stock began to tumble, and today’s trading has it mostly between $4 and $5.
MarketWatch cites Retraction Watch as the source of its information on Rao, but full marks to its reporting team for looking him up in the first place. Rao’s name still appears on a “company overview” page dated November 21, 2017 — here’s a screenshot in case that changes — but links to his bio no longer work. We’ve emailed and called IGC to find out if he is still working there, but have not had a response.
The story seems to be a good reminder of why investors might want to pay more attention to shady dealings in science — which we’ve said before.
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