The lawsuit centers on allegations that Aardvark failed to disclose significant safety issues linked to its ARD-101 treatment, designed for Prader-Willi Syndrome. According to the complaint, the company’s offering documents overstated the drug's clinical viability while omitting reports of reversible cardiac complications, specifically QRS prolongation, observed during high-dose trials. These omissions allegedly left investors unaware of the risks facing the Phase 3 HERO trial.

Market confidence eroded in early 2026 as the company's safety narrative collapsed. On February 27, Aardvark announced a voluntary pause of its HERO trial after identifying cardiac issues in healthy volunteers, triggering a 56% drop in share price. The situation deteriorated further on May 14, 2026, when the U.S. Food and Drug Administration imposed a full clinical hold on the company’s investigational new drug application. This regulatory intervention caused a secondary decline of 32.1%.

Reed Kathrein, the Hagens Berman partner heading the investigation, noted that the firm is scrutinizing claims that the company misled the public about the efficacy and safety of its development pipeline. Investors seeking to serve as Lead Plaintiff must file their motions by October 13, 2026. The firm is also encouraging whistleblowers with non-public information regarding the company's internal disclosures to come forward.