The litigation targets a fifteen-month window beginning February 13, 2025, when Aardvark debuted on the NASDAQ at $16.00 per share. Throughout that period, the company repeatedly characterized its primary drug candidate, ARD-101, as being 99% restricted to the gut with minimal systemic exposure. However, the complaint filed in the U.S. District Court for the Southern District of California contends these safety assurances masked mounting clinical risks.

The company’s narrative shifted abruptly in 2026. On February 27, Aardvark announced a voluntary pause of its Phase 3 HERO trial, citing cardiac observations in healthy volunteers. The disclosure prompted a 56.2% single-session drop, with shares closing at $5.47. By May 14, 2026, the situation deteriorated further when the FDA imposed a full clinical hold on the ARD-101 investigative new drug application. This news pushed the stock down to $4.57, leaving many investors with losses exceeding 70% of their initial investment value.

Joseph E. Levi, representing the plaintiffs, argues that the discrepancy between the company’s internal safety disclosures and the eventual regulatory halt is central to the case. The lawsuit seeks to recover damages for those who bought shares between February 13, 2025, and May 14, 2026, based on the allegation that the company’s commercial and regulatory prospects were materially overstated.