SEC v. DALE B. CHAPPELL; BLACK HORSE CAPITAL LP; BLACK HORSE CAPITAL MASTER FUND LTD.; CHEVAL HOLDINGS, LTD.; and CAMERON DURRANT, No. 2:23-cv-03769, District of New Jersey (Dec. 30, 2024) — Complaint

Anna O. Area
Daniel T. Lloyd
Daniel J. Ball
George B. Parizek
Kevin Wu
U.S. SECURITIES AND EXCHANGE COMMISSION
100 F Street, N.E.
Washington, DC 20549
Phone: (202) 551-3781 (Lloyd)
Email: [email protected]

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

SECURITIES AND EXCHANGE
COMMISSION,

Plaintiff,
v.
DALE B. CHAPPELL,
BLACK HORSE CAPITAL LP,
BLACK HORSE CAPITAL MASTER
FUND LTD., CHEVAL HOLDINGS,
LTD., and CAMERON DURRANT,

   Case No.: 2:23-cv-03769 (CCC) (JRA)

JURY TRIAL DEMANDED
Defendants,

-and-

MARY E. CHAPPELL and
CANDACE M. DURAN,

Relief Defendants.

SECOND AMENDED COMPLAINT
Plaintiff U.S. Securities and Exchange Commission (“SEC” or

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“Commission”), files this Amended Complaint against Defendants Dale B.
Chappell (“Chappell”), whose last known address is Via Mezdi 35, 7500 St.
Moritz, Switzerland; Black Horse Capital LP, whose last known address is Via
Mezdi 35, 7500 St. Moritz, Switzerland; Black Horse Capital Master Fund Ltd.,
whose last known address is 309 Ugland House, Georgetown, Grand Cayman
KY1-1104, Cayman Islands; Cheval Holdings, Ltd., whose last known address is
309 Ugland House, Georgetown, Grand Cayman KY1-1104, Cayman Islands; and
Cameron Durrant (“Durrant”), whose last known address is 5 Haines Cove Drive,
Toms River, New Jersey 08753, United States.  In addition, the SEC files this
Complaint against Mary E. Chappell (“Mary Chappell”), whose last known
address is Via Mezdi 35, 7500 St. Moritz, Switzerland, and Candace M. Duran
(“Duran”), whose last known address is 18795 Road T, Cortez, Colorado 81321-
8734, as Relief Defendants.  The SEC alleges as follows:
SUMMARY
1. The Commission brings this action due to Defendants’ insider trading
in the stock of Humanigen, Inc. (“Humanigen”), a clinical stage biopharmaceutical
company, in violation of the federal securities laws.  Defendants Black Horse
Capital LP, Black Horse Capital Master Fund Ltd., and Cheval Holdings, Ltd., at
the direction of Chappell, sold 3,835,000 shares of Humanigen stock for more than
$68 million while in possession of material nonpublic information regarding

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Humanigen’s lead potential product, a monoclonal antibody called “lenzilumab.”
Defendant Durrant sold 81,441 shares of Humanigen stock for approximately
$1.68 million while in possession of the same material nonpublic information.
2. Throughout the relevant period, Chappell and Durrant were directors
on Humanigen’s board of directors.  Also throughout the relevant period, Chappell
was Humanigen’s Chief Scientific Officer, and Durrant was Humanigen’s Chief
Executive Officer (“CEO”).  While he engaged in insider trading, Chappell was
also Humanigen’s largest shareholder through three investment vehicles he
controlled, Defendants Black Horse Capital LP, Black Horse Capital Master Fund
Ltd., and Cheval Holdings, Ltd. (collectively, the “Black Horse Entities”).
3. In 2020 and 2021, Chappell and Durrant knew that obtaining an
Emergency Use Authorization (“EUA”) for lenzilumab to treat certain side effects
of COVID-19 from the U.S. Food & Drug Administration (the “FDA”) was
essential to the short-term financial success of Humanigen.  They also knew that
Humanigen had disclosed the importance of obtaining that EUA to its investors.
4. Chappell and Durrant learned in April 2021 that the FDA had serious
concerns that Humanigen’s existing clinical data regarding the use of lenzilumab to
treat COVID-19 side effects was insufficient to support approval of an EUA.  They
also learned directly in a meeting with the FDA in April 2021 that the agency was
unlikely to approve an EUA submission for lenzilumab unless Humanigen

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conducted additional confirmatory studies that sufficiently demonstrated its
benefits, efficacy, and risks.
5. Chappell and Durrant knew that Humanigen had conducted no new
trials of lenzilumab when, despite the FDA’s warnings, it submitted its EUA
application on May 28, 2021.
6. Armed with the material nonpublic information that the FDA had
warned it would likely reject such an EUA application, Chappell, through his
Black Horse Entities, sold 3,835,000 shares of Humanigen stock for more than $68
million, from June 2021 to August 2021.  Armed with the same material nonpublic
information, Durrant sold 81,441 shares of Humanigen stock for more than $1
million, on June 14, 2021.  Durrant and Chappell made these trades between the
May 2021 public announcement that Humanigen had submitted its EUA
application and its eventual September 2021 announcement that the FDA had
rejected that application.
7. Once Humanigen announced the FDA’s rejection of its EUA
application for lenzilumab, its share price plummeted, declining approximately
50%.  By trading Humanigen stock while in possession of the material nonpublic
information that its EUA application would likely be denied, Chappell and the
Black Horse Entities avoided losses of over $38 million, and Durrant avoided
losses of over $1 million.

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8. When Chappell and Durrant sold their shares, they knew that
Humanigen’s stock price was artificially inflated because it had not disclosed the
fact that the EUA application for lenzilumab it had touted as a “critical step” to
making the antibody commercially available was likely to be rejected.  Chappell
and Durrant defrauded the investors to whom they sold their shares – to the tune of
tens of millions of dollars – by knowingly selling their shares at a price that did not
reflect full disclosure of this material information.
9. By engaging in the conduct alleged in this Complaint, Chappell, the
Black Horse Entities, and Durrant violated, and unless restrained and enjoined, will
continue to violate Section 10(b) of the Securities and Exchange Act of 1934 [15
U.S.C. § 78j(b)] (“Exchange Act”) and Rule 10b-5 thereunder [17 C.F.R. §
240.10b-5], and Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)]
(“Securities Act”).
10. In connection with Defendants’ insider trading in the stock of
Humanigen, Relief Defendants Mary Chappell and Duran received, directly or
indirectly, funds or other property from the Black Horse Entities, which are either
the proceeds of, or are traceable to the proceeds of, unlawful activities alleged in
this Complaint to which they have no legitimate claim.  It would be inequitable for
the Relief Defendants to retain the proceeds from violations of the federal
securities laws and such proceeds should be disgorged.

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NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF
11. The SEC brings this action pursuant to the authority conferred upon it
by Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)]
and Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and
78u(e)].
12. The SEC seeks temporary, preliminary, and permanent injunctions, as
well as final judgments: (a) permanently enjoining Defendants from violating the
federal securities laws and rules this Complaint alleges they have violated; (b)
ordering Defendants and Relief Defendants to disgorge all ill-gotten gains they
received as a result of the violations alleged pursuant to Exchange Act Sections
21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and
78u(d)(7)], and to pay prejudgment interest thereon; (c) ordering Defendants to pay
civil money penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. §
78u-1]; (d) ordering Defendants Chappell and Durrant barred from serving as an
officer and director of a public securities issuer pursuant to Section 20(e) of the
Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15
U.S.C. § 78u(d)(2)]; and (e) ordering any other and further relief the Court may
deem just and proper.
JURISDICTION AND VENUE
13. The Court has jurisdiction over this action pursuant to Sections 20(b)

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and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections
21(d), 21(e), 21A, and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78u-
1, and 78aa].
14. Defendants have, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a
national securities exchange in connection with the transactions, acts, practices,
and courses of business alleged in this Complaint.
15. Venue is proper in this district pursuant to Section 22(a) of the
Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C.
§ 78aa] because certain of the transactions, acts, practices, and courses of conduct
constituting violations of the federal securities laws occurred within this district.
DEFENDANTS
16. Dale B. Chappell (“Chappell”), age 53, is a citizen of the Republic of
Malta and was recently a legal resident of Switzerland.  Chappell was previously a
U.S. citizen and resident.  He renounced his U.S. citizenship in 2013.  Chappell
became a controlling shareholder of Humanigen in 2016.  In July 2020, Chappell
joined Humanigen as its Chief Scientific Officer and has served as a director on its
board since February 2021.  At all times relevant to this Complaint, Chappell
served as a managing member, director, or officer of the Black Horse Entities, and
was a control person of the Black Horse Entities.  As of April 2021, Chappell and

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the Black Horse Entities owned approximately 24% of the outstanding shares of
Humanigen common stock.
17. Black Horse Capital LP (“BHC”) is a private investment fund
registered in Delaware.  Chappell is the managing member and control person of
BHC.  The mailing address of BHC is c/o Opus Equum, Inc., P.O. Box 788,
Dolores, Colorado 81323.  During the relevant period, BHC traded Humanigen
stock on a U.S. exchange, specifically the NASDAQ Stock Market (“NASDAQ”).
18. Black Horse Capital Master Fund Ltd. (“BHCMF”) is a private
investment fund and Cayman Islands exempt company.  Chappell is a director and
the control person of BHCMF.  The mailing address of BHCMF is c/o Opus
Equum, Inc., P.O. Box 788, Dolores, Colorado 81323.  During the relevant period,
BHCMF traded Humanigen stock on a U.S. exchange, specifically NASDAQ.
19. Cheval Holdings, Ltd. (“Cheval”) is a private investment company
and a Cayman Islands exempt company.  Chappell owns Cheval with his wife,
Mary E. Chappell.  Cheval has direct and indirect ownership interests in BHCMF
and indirect ownership interests in BHC.  Chappell is the CEO, CFO, President,
and control person of Cheval.  Cheval is a holding company for Dale and Mary
Chappell’s personal investing.  The mailing address of Cheval is 309 Ugland
House, Georgetown, Grand Cayman KY1-1104, Cayman Islands.  During the
relevant period, Cheval traded Humanigen stock on a U.S. exchange, specifically

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NASDAQ.
20.  Cameron Durrant (“Durrant”), age 63, is a U.S. citizen and resident
of New Jersey.  Durrant has served as the Chairman of Humanigen’s Board of
Directors since January 2016, and as Humanigen’s CEO since March 2016.  As of
April 2021, Durrant owned approximately 3.3% of the outstanding shares of
Humanigen common stock.  Durrant also currently serves on the board of directors
of two privately-held healthcare companies.
RELIEF DEFENDANTS
21. Mary E. Chappell (“Mary Chappell”), age 58, is a citizen of the
Republic of Malta and was recently a legal resident of Switzerland.  Mary
Chappell was also previously a United States citizen and resident.  She renounced
her U.S. citizenship in 2011.  Mary Chappell is an owner of Cheval with her
husband, Dale Chappell.  Mary Chappell owns approximately 95% of the assets in
Cheval; Dale Chappell owns the remainder.
22. Candace M. Duran (“Duran”), age 51, is a U.S. citizen and resident
of Colorado.  Duran is the sister of Dale Chappell.  Duran serves as a Director and
Chief Financial Officer of Opus Equum, Inc. (“Opus”), a private investment
company registered in Delaware that provides out-sourced accounting services to
the Black Horse Entities.  Opus is an indirectly wholly-owned subsidiary of
Cheval.  Together with Chappell, Duran also served during the relevant period as a

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Director of Black Horse Capital Offshore Ltd. Cayman, a Cayman Islands
company that invests substantially all of its assets in BHCMF.  In that role she and
Chappell had overall responsibility for the management of Black Horse Capital
Offshore Ltd. Cayman and BHCMF.  Duran is also an investor in BHC.
RELATED ENTITY
23. Humanigen, Inc. (“Humanigen” or the “Company”), incorporated in
Delaware with its principal place of business in Short Hills, New Jersey, is a
clinical stage biopharmaceutical company.  Originally named KaloBios
Pharmaceuticals, Inc. (“KaloBios”), it filed for bankruptcy in 2015.  KaloBios
entered into a restructuring agreement and stock purchase agreement with the
Black Horse Entities in 2016, which eventually resulted in Chappell and the Black
Horse Entities holding a controlling interest in Company shares.  The Company
changed its name from KaloBios to Humanigen in 2017.  During the relevant
period, Humanigen’s primary focus was on the development of a single drug,
lenzilumab, a monoclonal antibody the Company described as a treatment for
certain side effects of COVID-19.  Shares of its common stock were registered
pursuant to Section 12(b) of the Exchange Act and quoted on NASDAQ under the
symbol “HGEN.”
1
  On October 12, 2023, NASDAQ filed a Form 25 with the

1
 On August 24, 2022 and February 21, 2023, Humanigen received notices from
NASDAQ informing the Company that it had failed to meet NASDAQ’s $1.00

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Commission to initiate the delisting process for Humanigen stock.  Humanigen
filed for Chapter 11 bankruptcy on January 3, 2024.
FACTS
A. Chappell and Durrant Had Access to Material, Nonpublic
Information about Humanigen and a Duty Not to Trade on It

24. As executives and board members of Humanigen, Chappell and
Durrant had access to material, nonpublic information concerning Humanigen.
Chappell and Durrant owed Humanigen and its shareholders a duty to keep that
information confidential and not to use it for their personal gain.  Chappell and
Durrant knew, or were reckless in not knowing, that they owed Humanigen and its
shareholders this duty.
25. Humanigen had a “Company Policy Regarding Insider Trading”
(“Insider Trading Policy”) in effect during the relevant period, which applied to the
Company’s “directors, officers, employees and consultants,” including Chappell
and Durrant.  Humanigen’s Insider Trading Policy stated, in pertinent part: “You
may not trade in the securities of [Humanigen], directly or through family

minimum listing requirement and that its stock would be delisted if it failed to
come into compliance with NASDAQ’s $1.00 minimum listing requirement.  On
April 18, 2023, NASDAQ granted it an extension until August 21, 2023 to
demonstrate compliance with all applicable listing requirements.  On July 26,
2023, NASDAQ suspended trading in Humanigen shares after receiving notice
from the company that it did not expect to be able to demonstrate compliance by
that deadline.

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members or other persons or entities, if you are aware of material nonpublic
information relating to [Humanigen].”  The Insider Trading Policy explained that
“[i]nformation is material if there is a substantial likelihood that a reasonable
investor would consider it important in deciding whether to buy, hold or sell a
security.”  Accordingly, “[a]ny information that could reasonably be expected to
affect the price of the security is material.”  Humanigen’s Insider Trading Policy
specifically included “[c]ommunication from regulatory authorities” as an example
of material nonpublic information.
26. Humanigen’s Insider Trading Policy also addressed Exchange Act
Rule 10b5-1 trading plans.  The Policy provided that “a 10b5-1 plan must be
entered into before [the executive is] aware of material nonpublic information.”
The Policy emphasized this rule by specifying a second time that Rule 10b5-1
plans “may only be adopted before the person adopting the plan is aware of
material nonpublic information.”
27. All Humanigen employees were required to certify their
understanding of and intent to comply with the Insider Trading Policy annually.
Chappell agreed in writing to comply with the Insider Trading Policy in his
employment agreement with the Company that he signed on July 6, 2020.  The
most recent occasion prior to his June 2021 trades on which Durrant agreed in
writing to comply with the Insider Trading Policy was September 21, 2020.  As

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CEO, Durrant also personally approved the content of the Insider Trading Policy
when updating it in June 2021, the day after he sold Humanigen stock.
28. Humanigen’s other policies and procedures had similar prohibitions
on insider trading, including its Code of Business Conduct in effect during the
relevant period, which stated:
You are not permitted to use or share confidential information for stock
trading purposes or for any other purpose, except the conduct of our
business.  All non-public information about [Humanigen] should be
considered confidential information.  To use ‘material non-public
information’ about [Humanigen] or the market for [Humanigen’s] securities
for personal financial benefit or to ‘tip’ others who might make an
investment decision on the basis of this information is not only unethical, but
also illegal, and could result in criminal prosecution in addition to the
termination of your employment or other relationship with [Humanigen].
‘Material non-public information’ includes information that is not available
to the public at large that could affect the market price of [Humanigen’s], or
another company’s, securities, and that a reasonable investor would consider
important in deciding whether to buy, sell or hold such securities.

Emphasis added.

B. Chappell and Durrant Knew EUA Approval for Lenzilumab Was
Material to Humanigen

29.  Humanigen had only two product candidates for commercialization
during the relevant period.  Its primary focus was on the development of its lead
product candidate, lenzilumab, a monoclonal antibody the Company described as a
treatment for certain side effects of COVID-19.
30. During the relevant period, Humanigen had no product sales.  The
Company’s operations were primarily financed through proceeds from the public

14

offerings of Humanigen stock.  As Humanigen made clear in its public filings, its
future financial success hinged on regulatory approval for its products under
development, particularly lenzilumab.
31. In its 2020 annual report and as late as its Q3 2021 quarterly report
filed with the SEC on November 12, 2021, Humanigen highlighted lenzilumab as
the only product with short-term revenue potential in its pipeline: “Except for the
potential of lenzilumab for COVID-19 under an EUA, our product candidates are
in the clinical stage of development and will require substantial time, resources,
research and development, and regulatory approval prior to commercialization.”
32. As board members, and as the Chief Scientific Officer (Chappell) and
CEO (Durrant) of Humanigen, Chappell and Durrant knew the paramount
importance of an EUA for lenzilumab to the financial wellbeing of Humanigen, as
well as to the value of Humanigen’s stock.
C. Humanigen’s Initial Efforts to Obtain an EUA and the FDA’s
Concerns

33. On March 9, 2020, Humanigen announced that it was exploring
clinical strategies and partnerships to study the use of lenzilumab to treat COVID-
19.  Over the course of the year, Humanigen performed trials to evaluate the
efficacy of lenzilumab for treating the side effects of COVID-19, and obtained
funding to facilitate its efforts, including $71.8 million in equity financing through
a private placement in June 2020, and $72.8 million in equity financing through an

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initial public offering in September 2020.
34. On August 19, 2020, Humanigen requested a Pre-EUA meeting with
the FDA in order to obtain feedback on its plans for an EUA submission for
lenzilumab.  The FDA advised Humanigen by email that it would provide written
responses to Humanigen’s questions in lieu of a meeting.  On August 27, 2020,
Humanigen submitted its “Briefing Package” containing questions to the FDA.
35. On September 25, 2020,

the FDA provided written responses to
Humanigen’s Briefing Package, highlighting outstanding issues regarding
Humanigen’s data: “While positive 28-day results from [Humanigen’s ongoing
study of 300 patients treated with lenzilumab] may be sufficient to support an EUA
request, whether these would be sufficient to support authorization is a review
issue.”  The agency also raised “concerns regarding residual uncertainty that may
remain for mortality estimates in a study with 300 patients” that could negatively
affect Humanigen’s ability to obtain a license to commercialize lenzilumab.  It
cautioned that “recently completed trials for COVID-19 products ha[d] been
substantially larger than [Humanigen’s] ongoing trial.”
 
D. Humanigen, Chappell, and Durrant Learned in April 2021 that
EUA Approval for Lenzilumab Was Highly Unlikely

36. Discussions between Humanigen and the FDA regarding a potential
EUA application for lenzilumab continued into 2021.  On March 19, 2021,
Humanigen requested another Pre-EUA meeting with the FDA.  Humanigen

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submitted related questions to the FDA, and the FDA sent written comments in
response on April 12, 2021.
37. In those comments, the FDA stated that it had “significant concerns
that negatively impact the ability to rely on this single trial to support the potential
benefit of lenzilumab.”  The FDA explained that it had found the data available
from Humanigen’s small study to be “insufficient . . . to characterize the benefit-
risk of [lenzilumab],” and specifically cautioned that “the criteria for issuance of an
EUA are unlikely to be met based on results from [Humanigen’s study].”  Among
the agency’s numerous concerns, the FDA noted that Humanigen’s first analysis
considering all patients, in accordance with its specified plan, had failed to
sufficiently demonstrate a significant difference in outcomes between patients who
used lenzilumab and those who did not.  In other words, Humanigen’s first analysis
had a negative result.  The FDA further noted that the post-hoc “main analysis”
upon which Humanigen was relying, and which purported to have a positive result,
had excluded results from 41 of the patients included in the first analysis.
Humanigen requested to further discuss the FDA’s written comments.
38. On April 14, 2021, the  FDA held a meeting by teleconference with
Humanigen executives, including Chappell and Durrant.  As memorialized in the
minutes, Humanigen, Chappell, and Durrant learned directly from FDA officials in
this April 14 meeting that the agency harbored serious concerns regarding the

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sufficiency of its data for an EUA.  The FDA repeated its “significant concern
regarding the robustness of the efficacy results” of Humanigen’s clinical trial
previously detailed in its written comments.  The FDA reiterated that “there are
still many uncertainties regarding both the benefits and the risks involved with
lenzilumab.”  And the FDA reemphasized that it had “significant concern whether
the existing data would support a positive outcome in the context of an EUA.”
39. In this same meeting, the FDA next asked whether Humanigen had
another trial planned or underway so that the benefits and risks of lenzilumab could
be adequately assessed.  Humanigen said it had no further plans for clinical trials
beyond one additional small trial currently underway.  The FDA replied that this
second trial was “likely not sufficient to serve as a confirmatory trial” given its
small size.  The FDA then “strongly recommended that [Humanigen] conduct an
additional confirmatory study and discouraged submission of an EUA at this time.”
40. Later that same day, Durrant emailed his “commentary”
 and proposed “action plan” in light of what he had learned at the meeting to a
number of Humanigen executives, as well as to consultants for Humanigen.  In that
email, Durrant noted that one FDA official had stated the “Data [were] promising
but not sufficient for EUA/BLA.”  He also noted that he “stopped taking notes
after some of the discussion to focus on the action plan.”  In a heading of his action
plan Durrant wrote, “If current EUA likely to be rejected (seems it will be) delay

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submission of EUA (?by [sic] 60-90days).”
E. Humanigen Submitted Its EUA Request Despite – and Without
Disclosing – Strong Warnings of Probable Denial from the FDA

41.  Notwithstanding the FDA’s warnings, a few weeks later, on May 4,
2021, Humanigen informed the FDA of its plan to submit an EUA request, which
it said might include additional data and/or analyses to support its proposed
authorized use.
42. On May 13, 2021 at 10:11 a.m., the FDA emailed Durrant the meeting
minutes from the April 14 teleconference (the “May 13 Correspondence”).  The
FDA also included additional “post-meeting comments” alongside the minutes.  In
those post-meeting comments, and in response to Humanigen’s May 4, 2021 email,
the FDA strongly cautioned Humanigen against submitting its EUA application.
The FDA stated, “We reiterate our concerns conveyed during the meeting on April
14, 2021, as well as FDA’s feedback that the totality of scientific evidence
currently available for [lenzilumab] is unlikely sufficient to satisfy the criteria for
issuance of an EUA.”  The agency further stated, “In lieu of an EUA request, we
strongly recommend that [Humanigen] submit a meeting request to further discuss
[its] continued development program,” including details of additional clinical
trial(s).
43. Records for Durrant’s telephone number show five calls between
Chappell and Durrant on May 13, 2021.  Four of those calls were following

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Durrant’s receipt of the FDA’s May 13 Correspondence, including one call at
10:39 a.m., 28 minutes after Durrant received the FDA correspondence.  As
detailed further below, within hours of the May 13 Correspondence and these
phone calls with Durrant, Chappell contacted his broker about modifying his
existing 10b5-1 plan to significantly lower the price at which the shares in the plan
would be sold.
44. Less than a month later, on May 28, 2021, despite the FDA’s strong
and repeated recommendations against it, Humanigen announced its submission of
an EUA application for lenzilumab and filed a Form 8-K with the Commission
attaching the announcement.  The announcement did not disclose any information
whatsoever regarding the many concerns about lenzilumab expressed by the FDA
to Humanigen prior to its submission, or the fact that the FDA had strongly advised
Humanigen not to make the EUA submission at this time.  Humanigen did not
disclose the FDA’s stated concern that the totality of scientific evidence was
unlikely to support issuance of an EUA.  Nor did it disclose that the FDA had
recommended that Humanigen conduct additional clinical trials before making an
EUA submission.  Instead it made statements expressing enthusiasm and optimism
regarding its chances of EUA approval, including: “Filing for EUA in the U.S. is a
critical step to making a therapeutic option available for COVID-19,” and “We are
excited and encouraged by [our] clinical results and are preparing to distribute

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lenzilumab if granted Emergency Use Authorization.”
45. Despite the FDA’s strong recommendation, Humanigen conducted no
new trials of lenzilumab before submitting its EUA application.  Humanigen’s
EUA application contained no significant clinical data that had not already been
shared with the FDA.
F. Chappell Hastily Traded Humanigen Stock While in Possession of
Material Nonpublic Information Following the FDA’s May 13
Correspondence

46. On March 14, 2021, five days before Humanigen requested another
Pre-EUA meeting with the FDA, Chappell set up his first Rule 10b5-1 trading
plans since joining Humanigen in July 2020 for the sale of Humanigen stock by the
Black Horse Entities (the “March 2021 Trading Plans”).  The March 2021 Trading
Plans each had an effective date of March 30, 2021 and a termination date of June
30, 2021.  The March 2021 Trading Plans were approved on March 15, 2021 by
Humanigen’s Chief Financial Officer (“CFO”) and Compliance Coordinator at the
time.  The Plans called for the sale of Humanigen shares at an initial limit price of
$25, followed by a limit price of $35.  Humanigen stock at this time was trading
around $16.07.  Because Humanigen’s stock price never rose above the initial $25
limit price, no trades were ever initiated under the March 2021 Trading Plans.
47. Less than 2 hours following Durrant’s receipt of the FDA’s May 13
Correspondence warning that an EUA submission would likely be denied at this

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time, and his subsequent telephone conversation with Durrant, Chappell emailed
his broker to set up new Rule 10b5-1 trading plans for the Black Horse Entities.  In
this email, Chappell explained that “price targets [were] a little too high on the last
10b-5,” referring to the March 2021 Trading Plans, and that he wanted to reduce
the targets “to ensure we get some shares sold.”
48. That same day, Chappell prepared new Rule 10b5-1 trading plans for
the Black Horse Entities (collectively, the “May 2021 Trading Plans”) and emailed
them to his broker.  Chappell informed his broker that he was waiting for final
confirmation of an open trading window before signing.  The May 2021 Trading
Plans had effective dates of June 1, 2021 and termination dates of August 31, 2021.
The terms called for sale of shares at a limit price of $14, significantly lower than
the limit price on the March 2021 Trading Plans.  Humanigen stock had closed at
$17.02 on the day before Chappell prepared the plans.  Ultimately, Chappell did
not execute the May 2021 Trading Plans, however, because there was no open
trading window at the time.
49. When Chappell learned that a trading window would open on June 2,
2021, he directed his broker to sell 475,000 shares of Humanigen stock during that
window, mirroring the trading volumes contemplated in the unexecuted May 2021
Trading Plans.  From June 2 to June 7, 2021, Chappell sold 475,000 shares of
Humanigen stock at prices hovering around $19 per share for a total of more than

22

$8 million.  Chappell made these trades with no 10b5-1 trading plans in place, and
while possessing material nonpublic information regarding FDA’s strong
indications that Humanigen’s May 28, 2021 EUA application would be denied.
50. On June 2, 2021, the Black Horse Entities entered into new Rule
10b5-1 trading plans (the “June 2, 2021 Trading Plans”) with effective dates of
July 1, 2021, termination dates of August 31, 2021, and an initial limit price of
$25.  But because Humanigen’s stock price never rose above the $25 limit price,
no trades were initiated under these plans.
51. On June 15, 2021, Chappell entered into another series of Rule 10b5-1
trading plans for the Black Horse Entities (collectively, the “June 15, 2021 Trading
Plans”).  The June 15, 2021 Trading Plans had an effective date of June 16, 2021,
termination date of August 30, 2021, and called for sale of shares at a limit price of
$17.  Humanigen stock closed at $20.52 on the last trading day before the June 15,
2021 Trading Plans were put in place.
52. When establishing all of these Rule 10b5-1 trading plans, including
the June 15, 2021 Trading Plans, Chappell represented in writing to his broker that
he was entering into them in good faith and not while in possession of any material
nonpublic information concerning Humanigen.  These representations were false.
And Chappell knew, or was reckless in not knowing, that information concerning
communication from regulatory authorities, like the FDA, was material nonpublic

23

information pursuant to the terms of Humanigen’s Insider Trading Policy in effect
at the time.
 
53. The Black Horse Entities started selling shares of Humanigen
pursuant to the June 15, 2021 Trading Plans on June 16, 2021, the first trading day
after the plans were put in place.  From June 16, 2021 through August 12, 2021,
Chappell, through the Black Horse Entities, sold 3,360,000 shares of Humanigen
common stock at prices ranging from $17.04 to $19.50 per share for nearly $60
million.
54. In total, between June 2, 2021 and August 12, 2021, Chappell and the
Black Horse Entities sold 3,835,000 shares of Humanigen, for total proceeds of
more than $68 million.  Throughout that period, Chappell and the Black Horse
Entities were in possession of material nonpublic information about the FDA’s
communications with Humanigen concerning its EUA application.
55. Specifically, Chappell was aware that the FDA had seriously
questioned the sufficiency of Humanigen’s clinical data that would be used to
support its EUA application, and had recommended that Humanigen submit a
meeting request to discuss its development program in lieu of submitting an EUA
application.  He was also aware that the FDA had strongly discouraged Humanigen
from submitting an EUA application when it did, and that the FDA had
recommended the Company conduct an additional confirmatory study before doing

24

so.  As a result, Chappell knew that there was a substantial risk that the FDA
would deny Humanigen’s EUA application.  Chappell also knew, or was reckless
in not knowing, that information concerning communication from regulatory
authorities, like the FDA, was material nonpublic information pursuant to the terms
of Humanigen’s Insider Trading Policy in effect at the time.
56. At no time between June 2, 2021 and August 12, 2021 did Humanigen
disclose any of this material information to the public.
G. Durrant Traded Humanigen Stock While in Possession of
Material Nonpublic Information Following the FDA’s May 13
Correspondence

57. On March 15, 2021, four days before Humanigen requested another
Pre-EUA meeting with the FDA, Durrant set up his first Rule 10b5-1 trading plan
since joining Humanigen in 2016 for the sale of Humanigen stock.  This trading
plan was the only 10b5-1 plan Durrant had during the relevant time period.  It had
an effective date of “First Allowable” and a termination date of September 30,
2021.  Durrant’s trading plan was approved on March 15, 2021 by Humanigen’s
CFO and Compliance Coordinator at the time.  The plan called for the sale of
Humanigen shares at an initial limit price of $28.33, followed by limit prices
ranging from $25 to $100.  Humanigen stock at this time was trading around
$16.07.  Because Humanigen’s stock price never rose above the initial $28.33 limit
price, no trades were ever initiated under this March 15, 2021 trading plan.

25

58. On June 14, 2021, while the FDA’s concerns remained undisclosed to
the public, Durrant sold 81,441 shares of Humanigen stock, for total proceeds of
approximately $1.68 million.  These sales were the first time Durrant had sold any
of his Humanigen shares.  Durrant made these trades with no applicable 10b5-1
trading plan in place, and while possessing material nonpublic information
regarding FDA’s strong indications that Humanigen’s May 28, 2021 EUA
application would be denied.
59. Specifically, Durrant was aware that that the FDA had seriously
questioned the sufficiency of Humanigen’s clinical data that would be used to
support its EUA application, and had recommended that Humanigen submit a
meeting request to discuss its development program in lieu of submitting an EUA
application.  He was also aware that the FDA had strongly discouraged Humanigen
from submitting an EUA application when it did, and that the FDA had
recommended the Company conduct an additional confirmatory study before doing
so.  As a result, Durrant knew that there was a substantial risk that the FDA would
deny Humanigen’s EUA application.  Durrant also knew, or was reckless in not
knowing, that information concerning communication from regulatory authorities,
like the FDA, was material nonpublic information pursuant to the terms of
Humanigen’s Insider Trading Policy in the process of being updated by Durrant
and others at the time.  At no time prior to September 9, 2021, did Humanigen

26

disclose any of this material information to the public.
60. Durrant’s awareness of the materiality of the FDA’s strong warnings
of likely EUA denial is underscored by an email he sent on July 24, 2021.  Durrant
forwarded an email inquiry from an investor to Humanigen’s CFO and Compliance
Coordinator.  The investor had asked, “Cameron, any update you can give on
EUA?  Is the FDA trying to push vaccines more and not focused on something like
Lenz?”  In his forwarding email, Durrant commented to the CFO, “Apparently this
guy is a seasoned investor.....amazing how many investors keep asking me for
MNPI [material nonpublic information].....” 
H. Humanigen’s Stock Fell by Approximately 50% After the FDA
Denied Its EUA Application

61. On September 8, 2021, the FDA formally notified Humanigen that its
EUA application for lenzilumab had been denied.  Shortly after midnight on
September 9, 2021, Humanigen publicly disclosed in a press release that the FDA
had denied its EUA application (the “September Announcement”): “U.S. FDA has
declined [Humanigen’s] request for emergency use authorization of lenzilumab to
treat newly hospitalized COVID-19 patients.”  In its denial letter, the FDA stated
that it was “unable to reasonably conclude that the known and potential benefits of
lenzilumab . . . outweigh the known and potential risks” of its use as a treatment
for COVID-19.  The FDA’s stated reasons for denial were nearly identical to the
concerns it raised in the May 13 Correspondence.  On September 10, 2021,

27

Humanigen filed an interim report with the Commission on Form 8-K, attaching
the September Announcement.
62. On September 8, 2021, the day before the September Announcement,
trading of Humanigen stock closed at a price of $15.11.  The next day, following
the overnight September Announcement, it opened at a price of only $6.11.  At the
end of trading on September 9, 2021, Humanigen’s stock price closed at $7.97,
down $7.14, or approximately 50% from the prior day, and on an exponentially
higher trading volume of approximately 35 million shares (compared to a volume
of 658,900 shares on September 8, 2021).  The stock price continued to fall on
September 10, 2021, and closed at $6.88, down $8.23 from the pre-announcement
$15.11 stock price.
I. Chappell Avoided Over $38 Million in Losses and Durrant
Avoided Over $1 Million in Losses by Selling Humanigen Stock
Ahead of the September Announcement

63.    By selling 3,835,000 shares of Humanigen stock while in possession
of material nonpublic information before the September Announcement, Chappell
and the Black Horse Entities avoided losses of approximately $38 million.  As
investors in the Black Horse Entities, Relief Defendants Mary Chappell and Duran
shared in this avoidance of losses.
64. By selling 81,441 shares of Humanigen stock while in possession of
material nonpublic information before the September Announcement, Durrant

28

avoided losses of more than $1 million.
65. A little over a year later, on November 14, 2022, Humanigen stated in
its quarterly report that it “no longer expect[ed] to be positioned to receive an EUA
or other regulatory approval for, or to commercialize or receive revenues from,
lenzilumab for COVID-19 in the foreseeable future.”  It further stated that it had
shifted to researching potential non-COVID-19 applications of lenzilumab, and
that it would therefore need to obtain additional financing to fund operations or
would be unable to continue as a going concern.  On July 18, 2023, Humanigen
announced that it would not be able to continue as a going concern and was
exploring all restructuring options, which could include commencing a bankruptcy
or other insolvency proceeding sometime in the third quarter of 2023.  On January
3, 2024, Humanigen filed for Chapter 11 bankruptcy.  As of Friday, May 17, 2024,
the Company’s stock was trading on OTC Link, an alternative trading system
operated by OTC Markets Group, Inc., at around $0.0001 per share.
FIRST CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act and Rule 10b-5
(against Defendants Chappell, the Black Horse Entities, and Durrant)

66. Paragraphs 1 through 65 are realleged and incorporated by reference
as if fully set forth herein.
67. As set forth above, Defendants Chappell, the Black Horse Entities,
and Durrant traded Humanigen securities on the basis of material nonpublic

29

information about Humanigen in violation of Chappell’s and Durrant’s duty of
confidentiality to Humanigen.  Defendants knew, consciously avoided knowing, or
were reckless in not knowing that this information was material and nonpublic.
68. By engaging in the conduct described above, Defendants Chappell,
the Black Horse Entities, and Durrant, directly or indirectly, in connection with the
purchase or sale of securities, by use of the means or instrumentalities of interstate
commerce, or the mails, or the facilities of a national securities exchange: (a)
employed devices, schemes or artifices to defraud; (b) made untrue statements of
material fact or omitted to state material facts necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading; and/or (c) engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon any person in connection with
the purchase or sale of any security.
69. By engaging in the conduct described above, Defendants Chappell,
the Black Horse Entities, and Durrant violated, and unless restrained and enjoined
will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b),
and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5.
SECOND CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act
(against Defendants Chappell, the Black Horse Entities, and Durrant)

70. Paragraphs 1 through 69 are realleged and incorporated by reference

30

as if fully set forth herein.
71. By engaging in the conduct described above, Defendants Chappell,
the Black Horse Entities, and Durrant, singly or in concert with others, in the offer
or sale of securities, by use of the means or instrumentalities of interstate
commerce, or of the mails, or a facility of a national securities exchange, directly
or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) made
untrue statements of material fact or omitted to state material facts necessary in
order to make the statements made, in light of the circumstances under which they
were made, not misleading; or (c) engaged in acts, practices, or courses of business
which operated or would have operated as a fraud or deceit upon persons.
72. By engaging in the conduct described above, Defendants Chappell,
the Black Horse Entities, and Durrant, violated, and unless restrained and enjoined
will continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a).
THIRD CLAIM FOR RELIEF
Disgorgement From Relief Defendants Under Section 21(d) of the Exchange
Act [15 U.S.C. § 78u(d)(5)]
(Against Relief Defendants Mary Chappell and Duran)

73. Paragraphs 1 through 72 are realleged and incorporated by reference
as if fully set forth herein.
74. Relief Defendant Mary Chappell received, directly or indirectly, funds
or other property from Defendants Chappell, BHC, and BHCMF, which are either

31

the proceeds of, or are traceable to the proceeds of, unlawful activities alleged in
this Complaint to which she has no legitimate claim.
75. Relief Defendant Duran received, directly or indirectly, funds or other
property from Defendant BHC, which are either the proceeds of, or are traceable to
the proceeds of, unlawful activities alleged in this Complaint to which she has no
legitimate claim.
76. By reason of the foregoing, it would be inequitable for Relief
Defendants to retain the proceeds from violations of the federal securities laws and
such proceeds should be disgorged.
PRAYER FOR RELIEF
 WHEREFORE, the SEC respectfully requests that the Court enter a Final
Judgment:
I.
Permanently enjoining Defendants Chappell, the Black Horse Entities, and
Durrant, and those persons in active concert or participation with any of them, who
receive actual notice of the judgment by personal service or otherwise, and each of
them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)],
Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder
[17 C.F.R. § 240.10b-5].

32

II.
Ordering Defendants to disgorge all ill-gotten gains obtained within the
statute of limitations, together with prejudgment interest thereon, pursuant to
Sections 21(d)(3), 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§
78u(d)(3), 78u(d)(5) and 78u(d)(7)].
III.
Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the
Securities Act [15 U.S.C. § 77t(d)] and Section 21A of the Exchange Act [15
U.S.C. § 78u-1].
IV.
 Ordering that Defendants Chappell and Durrant be barred from serving as an
officer and director of a public issuer pursuant to Section 20(e) of the Securities
Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. §
78u(d)(2)].
V.
Ordering the Relief Defendants to disgorge, with prejudgment interest, all
ill-gotten gains received or derived from the activities set forth in this Complaint,
and to repatriate any ill-gotten funds or assets sent overseas.
VI.
Retaining jurisdiction of this action in accordance with the principles of

33

equity and the Federal Rules of Civil Procedure in order to implement and carry
out the terms of all orders and decrees that may be entered, or to entertain any
suitable application or motion for additional relief within the jurisdiction of this
Court.
VII.
Grant such other and further relief as this Court may determine to be just and
necessary.
DEMAND FOR JURY TRIAL
Pursuant to Federal Rule of Civil Procedure 38, the SEC demands trial by
jury.
Dated: May 20, 2024 Respectfully submitted,

/s/ Anna O. Area
Anna O. Area
(202) 551-6417
[email protected]

Daniel T. Lloyd
(202) 551-3781
[email protected]

Daniel J. Ball
(202) 551-5987
[email protected]

U.S. Securities and Exchange Commission
100 F Street, N.E.
Washin
gton, DC 20549

34

Counsel for Plaintiff
U.S. Securities and Exchange Commission

35

DESIGNATION OF AGENT FOR SERVICE UNDER
LOCAL CIVIL RULE 101.1(f)

In accordance with Local Civil Rule 101.1(f), the undersigned hereby makes
the following designation for the receipt of service of all notices or papers in this
action at the following address:
United States Attorney’s Office
District of New Jersey
Attention: David E. Dauenheimer
Deputy Chief, Government Fraud Unit
970 Broad Street, Suite 700
Newark, NJ 07102-2534

Dated: May 20, 2024
Respectfully submitted,

/s/ Anna O. Area
Anna O. Area
Daniel T. Lloyd
Daniel J. Ball
U.S. Securities and Exchange
Commission
100 F Street, N.E.
Washington, DC 20549
(202) 551-6417 (Area)
[email protected]
Counsel for Plaintiff
U.S. Securities and Exchange
Commission

36

CERTIFICATE OF SERVICE

I certify that on May 20, 2024, a true and correct copy of the foregoing document
was filed electronically with the clerk’s office, who will send copies to all counsel
of record.

I further certify that a true and correct copy of the foregoing document shall be
served upon Defendant Durrant consistent with the Federal and Local Rules of
Civil Procedure.

/s/ Anna O. Area
Anna O. Area
Counsel for Plaintiff United States
Securities and Exchange Commission

Anna O. Area 
Daniel T. Lloyd 
Daniel J. Ball  
George B. Parizek  
Kevin Wu  
U.S. SECURITIES AND EXCHANGE COMMISSION 
100 F Street, N.E. 
Washington, DC 20549 
Phone: (202) 551-3781 (Lloyd) 
Email: [email protected] 

 
UNITED STATES DISTRICT COURT 

DISTRICT OF NEW JERSEY 

 

SECURITIES AND EXCHANGE 
COMMISSION, 
 

Plaintiff, 
v. 

DALE B. CHAPPELL,  
BLACK HORSE CAPITAL LP,  
BLACK HORSE CAPITAL MASTER 
FUND LTD., CHEVAL HOLDINGS, 
LTD., and CAMERON DURRANT,  
 

 Case No.: 2:23-cv-03769 (CCC) (JRA) 
 
JURY TRIAL DEMANDED 

Defendants, 
 

-and- 
 

MARY E. CHAPPELL and  
CANDACE M. DURAN,  
 

Relief Defendants. 

  

 
SECOND AMENDED COMPLAINT 

Plaintiff U.S. Securities and Exchange Commission (“SEC” or 

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2 
 

“Commission”), files this Amended Complaint against Defendants Dale B. 

Chappell (“Chappell”), whose last known address is Via Mezdi 35, 7500 St. 

Moritz, Switzerland; Black Horse Capital LP, whose last known address is Via 

Mezdi 35, 7500 St. Moritz, Switzerland; Black Horse Capital Master Fund Ltd., 

whose last known address is 309 Ugland House, Georgetown, Grand Cayman 

KY1-1104, Cayman Islands; Cheval Holdings, Ltd., whose last known address is 

309 Ugland House, Georgetown, Grand Cayman KY1-1104, Cayman Islands; and 

Cameron Durrant (“Durrant”), whose last known address is 5 Haines Cove Drive, 

Toms River, New Jersey 08753, United States.  In addition, the SEC files this 

Complaint against Mary E. Chappell (“Mary Chappell”), whose last known 

address is Via Mezdi 35, 7500 St. Moritz, Switzerland, and Candace M. Duran 

(“Duran”), whose last known address is 18795 Road T, Cortez, Colorado 81321-

8734, as Relief Defendants.  The SEC alleges as follows: 

SUMMARY 

1. The Commission brings this action due to Defendants’ insider trading 

in the stock of Humanigen, Inc. (“Humanigen”), a clinical stage biopharmaceutical 

company, in violation of the federal securities laws.  Defendants Black Horse 

Capital LP, Black Horse Capital Master Fund Ltd., and Cheval Holdings, Ltd., at 

the direction of Chappell, sold 3,835,000 shares of Humanigen stock for more than 

$68 million while in possession of material nonpublic information regarding 

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3 
 

Humanigen’s lead potential product, a monoclonal antibody called “lenzilumab.”  

Defendant Durrant sold 81,441 shares of Humanigen stock for approximately 

$1.68 million while in possession of the same material nonpublic information. 

2. Throughout the relevant period, Chappell and Durrant were directors 

on Humanigen’s board of directors.  Also throughout the relevant period, Chappell 

was Humanigen’s Chief Scientific Officer, and Durrant was Humanigen’s Chief 

Executive Officer (“CEO”).  While he engaged in insider trading, Chappell was 

also Humanigen’s largest shareholder through three investment vehicles he 

controlled, Defendants Black Horse Capital LP, Black Horse Capital Master Fund 

Ltd., and Cheval Holdings, Ltd. (collectively, the “Black Horse Entities”).   

3. In 2020 and 2021, Chappell and Durrant knew that obtaining an 

Emergency Use Authorization (“EUA”) for lenzilumab to treat certain side effects 

of COVID-19 from the U.S. Food & Drug Administration (the “FDA”) was 

essential to the short-term financial success of Humanigen.  They also knew that 

Humanigen had disclosed the importance of obtaining that EUA to its investors. 

4. Chappell and Durrant learned in April 2021 that the FDA had serious 

concerns that Humanigen’s existing clinical data regarding the use of lenzilumab to 

treat COVID-19 side effects was insufficient to support approval of an EUA.  They 

also learned directly in a meeting with the FDA in April 2021 that the agency was 

unlikely to approve an EUA submission for lenzilumab unless Humanigen 

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4 
 

conducted additional confirmatory studies that sufficiently demonstrated its 

benefits, efficacy, and risks.   

5. Chappell and Durrant knew that Humanigen had conducted no new 

trials of lenzilumab when, despite the FDA’s warnings, it submitted its EUA 

application on May 28, 2021.   

6. Armed with the material nonpublic information that the FDA had 

warned it would likely reject such an EUA application, Chappell, through his 

Black Horse Entities, sold 3,835,000 shares of Humanigen stock for more than $68 

million, from June 2021 to August 2021.  Armed with the same material nonpublic 

information, Durrant sold 81,441 shares of Humanigen stock for more than $1 

million, on June 14, 2021.  Durrant and Chappell made these trades between the 

May 2021 public announcement that Humanigen had submitted its EUA 

application and its eventual September 2021 announcement that the FDA had 

rejected that application.   

7. Once Humanigen announced the FDA’s rejection of its EUA 

application for lenzilumab, its share price plummeted, declining approximately 

50%.  By trading Humanigen stock while in possession of the material nonpublic 

information that its EUA application would likely be denied, Chappell and the 

Black Horse Entities avoided losses of over $38 million, and Durrant avoided 

losses of over $1 million.   

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5 
 

8. When Chappell and Durrant sold their shares, they knew that 

Humanigen’s stock price was artificially inflated because it had not disclosed the 

fact that the EUA application for lenzilumab it had touted as a “critical step” to 

making the antibody commercially available was likely to be rejected.  Chappell 

and Durrant defrauded the investors to whom they sold their shares – to the tune of 

tens of millions of dollars – by knowingly selling their shares at a price that did not 

reflect full disclosure of this material information. 

9. By engaging in the conduct alleged in this Complaint, Chappell, the 

Black Horse Entities, and Durrant violated, and unless restrained and enjoined, will 

continue to violate Section 10(b) of the Securities and Exchange Act of 1934 [15 

U.S.C. § 78j(b)] (“Exchange Act”) and Rule 10b-5 thereunder [17 C.F.R. § 

240.10b-5], and Section 17(a) of the Securities Act of 1933 [15 U.S.C. § 77q(a)] 

(“Securities Act”). 

10. In connection with Defendants’ insider trading in the stock of 

Humanigen, Relief Defendants Mary Chappell and Duran received, directly or 

indirectly, funds or other property from the Black Horse Entities, which are either 

the proceeds of, or are traceable to the proceeds of, unlawful activities alleged in 

this Complaint to which they have no legitimate claim.  It would be inequitable for 

the Relief Defendants to retain the proceeds from violations of the federal 

securities laws and such proceeds should be disgorged.  

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6 
 

NATURE OF THE PROCEEDINGS AND REQUESTED RELIEF 

11. The SEC brings this action pursuant to the authority conferred upon it 

by Sections 20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] 

and Sections 21(d) and 21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 

78u(e)].   

12. The SEC seeks temporary, preliminary, and permanent injunctions, as 

well as final judgments: (a) permanently enjoining Defendants from violating the 

federal securities laws and rules this Complaint alleges they have violated; (b) 

ordering Defendants and Relief Defendants to disgorge all ill-gotten gains they 

received as a result of the violations alleged pursuant to Exchange Act Sections 

21(d)(3), 21(d)(5), and 21(d)(7) [15 U.S.C. §§ 78u(d)(3), 78u(d)(5), and 

78u(d)(7)], and to pay prejudgment interest thereon; (c) ordering Defendants to pay 

civil money penalties pursuant to Section 21A of the Exchange Act [15 U.S.C. § 

78u-1]; (d) ordering Defendants Chappell and Durrant barred from serving as an 

officer and director of a public securities issuer pursuant to Section 20(e) of the 

Securities Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 

U.S.C. § 78u(d)(2)]; and (e) ordering any other and further relief the Court may 

deem just and proper.    

JURISDICTION AND VENUE 

13. The Court has jurisdiction over this action pursuant to Sections 20(b) 

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7 
 

and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b) and 77v(a)], and Sections 

21(d), 21(e), 21A, and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), 78u-

1, and 78aa]. 

14. Defendants have, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a 

national securities exchange in connection with the transactions, acts, practices, 

and courses of business alleged in this Complaint. 

15. Venue is proper in this district pursuant to Section 22(a) of the 

Securities Act [15 U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. 

§ 78aa] because certain of the transactions, acts, practices, and courses of conduct 

constituting violations of the federal securities laws occurred within this district. 

DEFENDANTS 

16. Dale B. Chappell (“Chappell”), age 53, is a citizen of the Republic of 

Malta and was recently a legal resident of Switzerland.  Chappell was previously a 

U.S. citizen and resident.  He renounced his U.S. citizenship in 2013.  Chappell 

became a controlling shareholder of Humanigen in 2016.  In July 2020, Chappell 

joined Humanigen as its Chief Scientific Officer and has served as a director on its 

board since February 2021.  At all times relevant to this Complaint, Chappell 

served as a managing member, director, or officer of the Black Horse Entities, and 

was a control person of the Black Horse Entities.  As of April 2021, Chappell and 

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8 
 

the Black Horse Entities owned approximately 24% of the outstanding shares of 

Humanigen common stock.     

17. Black Horse Capital LP (“BHC”) is a private investment fund 

registered in Delaware.  Chappell is the managing member and control person of 

BHC.  The mailing address of BHC is c/o Opus Equum, Inc., P.O. Box 788, 

Dolores, Colorado 81323.  During the relevant period, BHC traded Humanigen 

stock on a U.S. exchange, specifically the NASDAQ Stock Market (“NASDAQ”). 

18. Black Horse Capital Master Fund Ltd. (“BHCMF”) is a private 

investment fund and Cayman Islands exempt company.  Chappell is a director and 

the control person of BHCMF.  The mailing address of BHCMF is c/o Opus 

Equum, Inc., P.O. Box 788, Dolores, Colorado 81323.  During the relevant period, 

BHCMF traded Humanigen stock on a U.S. exchange, specifically NASDAQ.   

19. Cheval Holdings, Ltd. (“Cheval”) is a private investment company 

and a Cayman Islands exempt company.  Chappell owns Cheval with his wife, 

Mary E. Chappell.  Cheval has direct and indirect ownership interests in BHCMF 

and indirect ownership interests in BHC.  Chappell is the CEO, CFO, President, 

and control person of Cheval.  Cheval is a holding company for Dale and Mary 

Chappell’s personal investing.  The mailing address of Cheval is 309 Ugland 

House, Georgetown, Grand Cayman KY1-1104, Cayman Islands.  During the 

relevant period, Cheval traded Humanigen stock on a U.S. exchange, specifically 

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9 
 

NASDAQ.  

20.  Cameron Durrant (“Durrant”), age 63, is a U.S. citizen and resident 

of New Jersey.  Durrant has served as the Chairman of Humanigen’s Board of 

Directors since January 2016, and as Humanigen’s CEO since March 2016.  As of 

April 2021, Durrant owned approximately 3.3% of the outstanding shares of 

Humanigen common stock.  Durrant also currently serves on the board of directors 

of two privately-held healthcare companies.   

RELIEF DEFENDANTS 

21. Mary E. Chappell (“Mary Chappell”), age 58, is a citizen of the 

Republic of Malta and was recently a legal resident of Switzerland.  Mary 

Chappell was also previously a United States citizen and resident.  She renounced 

her U.S. citizenship in 2011.  Mary Chappell is an owner of Cheval with her 

husband, Dale Chappell.  Mary Chappell owns approximately 95% of the assets in 

Cheval; Dale Chappell owns the remainder.  

22. Candace M. Duran (“Duran”), age 51, is a U.S. citizen and resident 

of Colorado.  Duran is the sister of Dale Chappell.  Duran serves as a Director and 

Chief Financial Officer of Opus Equum, Inc. (“Opus”), a private investment 

company registered in Delaware that provides out-sourced accounting services to 

the Black Horse Entities.  Opus is an indirectly wholly-owned subsidiary of 

Cheval.  Together with Chappell, Duran also served during the relevant period as a 

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Director of Black Horse Capital Offshore Ltd. Cayman, a Cayman Islands 

company that invests substantially all of its assets in BHCMF.  In that role she and 

Chappell had overall responsibility for the management of Black Horse Capital 

Offshore Ltd. Cayman and BHCMF.  Duran is also an investor in BHC.   

RELATED ENTITY 

23. Humanigen, Inc. (“Humanigen” or the “Company”), incorporated in 

Delaware with its principal place of business in Short Hills, New Jersey, is a 

clinical stage biopharmaceutical company.  Originally named KaloBios 

Pharmaceuticals, Inc. (“KaloBios”), it filed for bankruptcy in 2015.  KaloBios 

entered into a restructuring agreement and stock purchase agreement with the 

Black Horse Entities in 2016, which eventually resulted in Chappell and the Black 

Horse Entities holding a controlling interest in Company shares.  The Company 

changed its name from KaloBios to Humanigen in 2017.  During the relevant 

period, Humanigen’s primary focus was on the development of a single drug, 

lenzilumab, a monoclonal antibody the Company described as a treatment for 

certain side effects of COVID-19.  Shares of its common stock were registered 

pursuant to Section 12(b) of the Exchange Act and quoted on NASDAQ under the 

symbol “HGEN.”1  On October 12, 2023, NASDAQ filed a Form 25 with the 

 
1 On August 24, 2022 and February 21, 2023, Humanigen received notices from 
NASDAQ informing the Company that it had failed to meet NASDAQ’s $1.00 
 

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Commission to initiate the delisting process for Humanigen stock.  Humanigen 

filed for Chapter 11 bankruptcy on January 3, 2024.   

FACTS 

A. Chappell and Durrant Had Access to Material, Nonpublic 
Information about Humanigen and a Duty Not to Trade on It 
 

24. As executives and board members of Humanigen, Chappell and 

Durrant had access to material, nonpublic information concerning Humanigen.  

Chappell and Durrant owed Humanigen and its shareholders a duty to keep that 

information confidential and not to use it for their personal gain.  Chappell and 

Durrant knew, or were reckless in not knowing, that they owed Humanigen and its 

shareholders this duty.   

25. Humanigen had a “Company Policy Regarding Insider Trading” 

(“Insider Trading Policy”) in effect during the relevant period, which applied to the 

Company’s “directors, officers, employees and consultants,” including Chappell 

and Durrant.  Humanigen’s Insider Trading Policy stated, in pertinent part: “You 

may not trade in the securities of [Humanigen], directly or through family 

 
minimum listing requirement and that its stock would be delisted if it failed to 
come into compliance with NASDAQ’s $1.00 minimum listing requirement.  On 
April 18, 2023, NASDAQ granted it an extension until August 21, 2023 to 
demonstrate compliance with all applicable listing requirements.  On July 26, 
2023, NASDAQ suspended trading in Humanigen shares after receiving notice 
from the company that it did not expect to be able to demonstrate compliance by 
that deadline.  

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members or other persons or entities, if you are aware of material nonpublic 

information relating to [Humanigen].”  The Insider Trading Policy explained that 

“[i]nformation is material if there is a substantial likelihood that a reasonable 

investor would consider it important in deciding whether to buy, hold or sell a 

security.”  Accordingly, “[a]ny information that could reasonably be expected to 

affect the price of the security is material.”  Humanigen’s Insider Trading Policy 

specifically included “[c]ommunication from regulatory authorities” as an example 

of material nonpublic information. 

26. Humanigen’s Insider Trading Policy also addressed Exchange Act 

Rule 10b5-1 trading plans.  The Policy provided that “a 10b5-1 plan must be 

entered into before [the executive is] aware of material nonpublic information.”  

The Policy emphasized this rule by specifying a second time that Rule 10b5-1 

plans “may only be adopted before the person adopting the plan is aware of 

material nonpublic information.”  

27. All Humanigen employees were required to certify their 

understanding of and intent to comply with the Insider Trading Policy annually.  

Chappell agreed in writing to comply with the Insider Trading Policy in his 

employment agreement with the Company that he signed on July 6, 2020.  The 

most recent occasion prior to his June 2021 trades on which Durrant agreed in 

writing to comply with the Insider Trading Policy was September 21, 2020.  As 

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CEO, Durrant also personally approved the content of the Insider Trading Policy 

when updating it in June 2021, the day after he sold Humanigen stock. 

28. Humanigen’s other policies and procedures had similar prohibitions 

on insider trading, including its Code of Business Conduct in effect during the 

relevant period, which stated:  

You are not permitted to use or share confidential information for stock 
trading purposes or for any other purpose, except the conduct of our 
business.  All non-public information about [Humanigen] should be 
considered confidential information.  To use ‘material non-public 
information’ about [Humanigen] or the market for [Humanigen’s] securities 
for personal financial benefit or to ‘tip’ others who might make an 
investment decision on the basis of this information is not only unethical, but 
also illegal, and could result in criminal prosecution in addition to the 
termination of your employment or other relationship with [Humanigen].  
‘Material non-public information’ includes information that is not available 
to the public at large that could affect the market price of [Humanigen’s], or 
another company’s, securities, and that a reasonable investor would consider 
important in deciding whether to buy, sell or hold such securities. 
 

Emphasis added. 
 
B. Chappell and Durrant Knew EUA Approval for Lenzilumab Was 

Material to Humanigen 
 

29.  Humanigen had only two product candidates for commercialization 

during the relevant period.  Its primary focus was on the development of its lead 

product candidate, lenzilumab, a monoclonal antibody the Company described as a 

treatment for certain side effects of COVID-19.   

30. During the relevant period, Humanigen had no product sales.  The 

Company’s operations were primarily financed through proceeds from the public 

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offerings of Humanigen stock.  As Humanigen made clear in its public filings, its 

future financial success hinged on regulatory approval for its products under 

development, particularly lenzilumab. 

31. In its 2020 annual report and as late as its Q3 2021 quarterly report 

filed with the SEC on November 12, 2021, Humanigen highlighted lenzilumab as 

the only product with short-term revenue potential in its pipeline: “Except for the 

potential of lenzilumab for COVID-19 under an EUA, our product candidates are 

in the clinical stage of development and will require substantial time, resources, 

research and development, and regulatory approval prior to commercialization.” 

32. As board members, and as the Chief Scientific Officer (Chappell) and 

CEO (Durrant) of Humanigen, Chappell and Durrant knew the paramount 

importance of an EUA for lenzilumab to the financial wellbeing of Humanigen, as 

well as to the value of Humanigen’s stock. 

C. Humanigen’s Initial Efforts to Obtain an EUA and the FDA’s 
Concerns 
 

33. On March 9, 2020, Humanigen announced that it was exploring 

clinical strategies and partnerships to study the use of lenzilumab to treat COVID-

19.  Over the course of the year, Humanigen performed trials to evaluate the 

efficacy of lenzilumab for treating the side effects of COVID-19, and obtained 

funding to facilitate its efforts, including $71.8 million in equity financing through 

a private placement in June 2020, and $72.8 million in equity financing through an 

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initial public offering in September 2020. 

34. On August 19, 2020, Humanigen requested a Pre-EUA meeting with 

the FDA in order to obtain feedback on its plans for an EUA submission for 

lenzilumab.  The FDA advised Humanigen by email that it would provide written 

responses to Humanigen’s questions in lieu of a meeting.  On August 27, 2020, 

Humanigen submitted its “Briefing Package” containing questions to the FDA. 

35. On September 25, 2020, the FDA provided written responses to 

Humanigen’s Briefing Package, highlighting outstanding issues regarding 

Humanigen’s data: “While positive 28-day results from [Humanigen’s ongoing 

study of 300 patients treated with lenzilumab] may be sufficient to support an EUA 

request, whether these would be sufficient to support authorization is a review 

issue.”  The agency also raised “concerns regarding residual uncertainty that may 

remain for mortality estimates in a study with 300 patients” that could negatively 

affect Humanigen’s ability to obtain a license to commercialize lenzilumab.  It 

cautioned that “recently completed trials for COVID-19 products ha[d] been 

substantially larger than [Humanigen’s] ongoing trial.” 

D. Humanigen, Chappell, and Durrant Learned in April 2021 that 
EUA Approval for Lenzilumab Was Highly Unlikely 
 

36. Discussions between Humanigen and the FDA regarding a potential 

EUA application for lenzilumab continued into 2021.  On March 19, 2021, 

Humanigen requested another Pre-EUA meeting with the FDA.  Humanigen 

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submitted related questions to the FDA, and the FDA sent written comments in 

response on April 12, 2021. 

37. In those comments, the FDA stated that it had “significant concerns 

that negatively impact the ability to rely on this single trial to support the potential 

benefit of lenzilumab.”  The FDA explained that it had found the data available 

from Humanigen’s small study to be “insufficient . . . to characterize the benefit-

risk of [lenzilumab],” and specifically cautioned that “the criteria for issuance of an 

EUA are unlikely to be met based on results from [Humanigen’s study].”  Among 

the agency’s numerous concerns, the FDA noted that Humanigen’s first analysis 

considering all patients, in accordance with its specified plan, had failed to 

sufficiently demonstrate a significant difference in outcomes between patients who 

used lenzilumab and those who did not.  In other words, Humanigen’s first analysis 

had a negative result.  The FDA further noted that the post-hoc “main analysis” 

upon which Humanigen was relying, and which purported to have a positive result, 

had excluded results from 41 of the patients included in the first analysis.  

Humanigen requested to further discuss the FDA’s written comments. 

38. On April 14, 2021, the  FDA held a meeting by teleconference with 

Humanigen executives, including Chappell and Durrant.  As memorialized in the 

minutes, Humanigen, Chappell, and Durrant learned directly from FDA officials in 

this April 14 meeting that the agency harbored serious concerns regarding the 

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sufficiency of its data for an EUA.  The FDA repeated its “significant concern 

regarding the robustness of the efficacy results” of Humanigen’s clinical trial 

previously detailed in its written comments.  The FDA reiterated that “there are 

still many uncertainties regarding both the benefits and the risks involved with 

lenzilumab.”  And the FDA reemphasized that it had “significant concern whether 

the existing data would support a positive outcome in the context of an EUA.”  

39. In this same meeting, the FDA next asked whether Humanigen had 

another trial planned or underway so that the benefits and risks of lenzilumab could 

be adequately assessed.  Humanigen said it had no further plans for clinical trials 

beyond one additional small trial currently underway.  The FDA replied that this 

second trial was “likely not sufficient to serve as a confirmatory trial” given its 

small size.  The FDA then “strongly recommended that [Humanigen] conduct an 

additional confirmatory study and discouraged submission of an EUA at this time.” 

40. Later that same day, Durrant emailed his “commentary” 

 and proposed “action plan” in light of what he had learned at the meeting to a 

number of Humanigen executives, as well as to consultants for Humanigen.  In that 

email, Durrant noted that one FDA official had stated the “Data [were] promising 

but not sufficient for EUA/BLA.”  He also noted that he “stopped taking notes 

after some of the discussion to focus on the action plan.”  In a heading of his action 

plan Durrant wrote, “If current EUA likely to be rejected (seems it will be) delay 

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submission of EUA (?by [sic] 60-90days).” 

E. Humanigen Submitted Its EUA Request Despite – and Without 
Disclosing – Strong Warnings of Probable Denial from the FDA 
 

41.  Notwithstanding the FDA’s warnings, a few weeks later, on May 4, 

2021, Humanigen informed the FDA of its plan to submit an EUA request, which 

it said might include additional data and/or analyses to support its proposed 

authorized use. 

42. On May 13, 2021 at 10:11 a.m., the FDA emailed Durrant the meeting 

minutes from the April 14 teleconference (the “May 13 Correspondence”).  The 

FDA also included additional “post-meeting comments” alongside the minutes.  In 

those post-meeting comments, and in response to Humanigen’s May 4, 2021 email, 

the FDA strongly cautioned Humanigen against submitting its EUA application.  

The FDA stated, “We reiterate our concerns conveyed during the meeting on April 

14, 2021, as well as FDA’s feedback that the totality of scientific evidence 

currently available for [lenzilumab] is unlikely sufficient to satisfy the criteria for 

issuance of an EUA.”  The agency further stated, “In lieu of an EUA request, we 

strongly recommend that [Humanigen] submit a meeting request to further discuss 

[its] continued development program,” including details of additional clinical 

trial(s). 

43. Records for Durrant’s telephone number show five calls between 

Chappell and Durrant on May 13, 2021.  Four of those calls were following 

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Durrant’s receipt of the FDA’s May 13 Correspondence, including one call at 

10:39 a.m., 28 minutes after Durrant received the FDA correspondence.  As 

detailed further below, within hours of the May 13 Correspondence and these 

phone calls with Durrant, Chappell contacted his broker about modifying his 

existing 10b5-1 plan to significantly lower the price at which the shares in the plan 

would be sold. 

44. Less than a month later, on May 28, 2021, despite the FDA’s strong 

and repeated recommendations against it, Humanigen announced its submission of 

an EUA application for lenzilumab and filed a Form 8-K with the Commission 

attaching the announcement.  The announcement did not disclose any information 

whatsoever regarding the many concerns about lenzilumab expressed by the FDA 

to Humanigen prior to its submission, or the fact that the FDA had strongly advised 

Humanigen not to make the EUA submission at this time.  Humanigen did not 

disclose the FDA’s stated concern that the totality of scientific evidence was 

unlikely to support issuance of an EUA.  Nor did it disclose that the FDA had 

recommended that Humanigen conduct additional clinical trials before making an 

EUA submission.  Instead it made statements expressing enthusiasm and optimism 

regarding its chances of EUA approval, including: “Filing for EUA in the U.S. is a 

critical step to making a therapeutic option available for COVID-19,” and “We are 

excited and encouraged by [our] clinical results and are preparing to distribute 

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lenzilumab if granted Emergency Use Authorization.”   

45. Despite the FDA’s strong recommendation, Humanigen conducted no 

new trials of lenzilumab before submitting its EUA application.  Humanigen’s 

EUA application contained no significant clinical data that had not already been 

shared with the FDA.   

F. Chappell Hastily Traded Humanigen Stock While in Possession of 
Material Nonpublic Information Following the FDA’s May 13 
Correspondence 
 

46. On March 14, 2021, five days before Humanigen requested another 

Pre-EUA meeting with the FDA, Chappell set up his first Rule 10b5-1 trading 

plans since joining Humanigen in July 2020 for the sale of Humanigen stock by the 

Black Horse Entities (the “March 2021 Trading Plans”).  The March 2021 Trading 

Plans each had an effective date of March 30, 2021 and a termination date of June 

30, 2021.  The March 2021 Trading Plans were approved on March 15, 2021 by 

Humanigen’s Chief Financial Officer (“CFO”) and Compliance Coordinator at the 

time.  The Plans called for the sale of Humanigen shares at an initial limit price of 

$25, followed by a limit price of $35.  Humanigen stock at this time was trading 

around $16.07.  Because Humanigen’s stock price never rose above the initial $25 

limit price, no trades were ever initiated under the March 2021 Trading Plans. 

47. Less than 2 hours following Durrant’s receipt of the FDA’s May 13 

Correspondence warning that an EUA submission would likely be denied at this 

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time, and his subsequent telephone conversation with Durrant, Chappell emailed 

his broker to set up new Rule 10b5-1 trading plans for the Black Horse Entities.  In 

this email, Chappell explained that “price targets [were] a little too high on the last 

10b-5,” referring to the March 2021 Trading Plans, and that he wanted to reduce 

the targets “to ensure we get some shares sold.”  

48. That same day, Chappell prepared new Rule 10b5-1 trading plans for 

the Black Horse Entities (collectively, the “May 2021 Trading Plans”) and emailed 

them to his broker.  Chappell informed his broker that he was waiting for final 

confirmation of an open trading window before signing.  The May 2021 Trading 

Plans had effective dates of June 1, 2021 and termination dates of August 31, 2021.  

The terms called for sale of shares at a limit price of $14, significantly lower than 

the limit price on the March 2021 Trading Plans.  Humanigen stock had closed at 

$17.02 on the day before Chappell prepared the plans.  Ultimately, Chappell did 

not execute the May 2021 Trading Plans, however, because there was no open 

trading window at the time. 

49. When Chappell learned that a trading window would open on June 2, 

2021, he directed his broker to sell 475,000 shares of Humanigen stock during that 

window, mirroring the trading volumes contemplated in the unexecuted May 2021 

Trading Plans.  From June 2 to June 7, 2021, Chappell sold 475,000 shares of 

Humanigen stock at prices hovering around $19 per share for a total of more than 

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$8 million.  Chappell made these trades with no 10b5-1 trading plans in place, and 

while possessing material nonpublic information regarding FDA’s strong 

indications that Humanigen’s May 28, 2021 EUA application would be denied. 

50. On June 2, 2021, the Black Horse Entities entered into new Rule 

10b5-1 trading plans (the “June 2, 2021 Trading Plans”) with effective dates of 

July 1, 2021, termination dates of August 31, 2021, and an initial limit price of 

$25.  But because Humanigen’s stock price never rose above the $25 limit price, 

no trades were initiated under these plans. 

51. On June 15, 2021, Chappell entered into another series of Rule 10b5-1 

trading plans for the Black Horse Entities (collectively, the “June 15, 2021 Trading 

Plans”).  The June 15, 2021 Trading Plans had an effective date of June 16, 2021, 

termination date of August 30, 2021, and called for sale of shares at a limit price of 

$17.  Humanigen stock closed at $20.52 on the last trading day before the June 15, 

2021 Trading Plans were put in place.  

52. When establishing all of these Rule 10b5-1 trading plans, including 

the June 15, 2021 Trading Plans, Chappell represented in writing to his broker that 

he was entering into them in good faith and not while in possession of any material 

nonpublic information concerning Humanigen.  These representations were false.  

And Chappell knew, or was reckless in not knowing, that information concerning 

communication from regulatory authorities, like the FDA, was material nonpublic 

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information pursuant to the terms of Humanigen’s Insider Trading Policy in effect 

at the time.   

53. The Black Horse Entities started selling shares of Humanigen 

pursuant to the June 15, 2021 Trading Plans on June 16, 2021, the first trading day 

after the plans were put in place.  From June 16, 2021 through August 12, 2021, 

Chappell, through the Black Horse Entities, sold 3,360,000 shares of Humanigen 

common stock at prices ranging from $17.04 to $19.50 per share for nearly $60 

million. 

54. In total, between June 2, 2021 and August 12, 2021, Chappell and the 

Black Horse Entities sold 3,835,000 shares of Humanigen, for total proceeds of 

more than $68 million.  Throughout that period, Chappell and the Black Horse 

Entities were in possession of material nonpublic information about the FDA’s 

communications with Humanigen concerning its EUA application.   

55. Specifically, Chappell was aware that the FDA had seriously 

questioned the sufficiency of Humanigen’s clinical data that would be used to 

support its EUA application, and had recommended that Humanigen submit a 

meeting request to discuss its development program in lieu of submitting an EUA 

application.  He was also aware that the FDA had strongly discouraged Humanigen 

from submitting an EUA application when it did, and that the FDA had 

recommended the Company conduct an additional confirmatory study before doing 

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so.  As a result, Chappell knew that there was a substantial risk that the FDA 

would deny Humanigen’s EUA application.  Chappell also knew, or was reckless 

in not knowing, that information concerning communication from regulatory 

authorities, like the FDA, was material nonpublic information pursuant to the terms 

of Humanigen’s Insider Trading Policy in effect at the time.   

56. At no time between June 2, 2021 and August 12, 2021 did Humanigen 

disclose any of this material information to the public.   

G. Durrant Traded Humanigen Stock While in Possession of 
Material Nonpublic Information Following the FDA’s May 13 
Correspondence 
 

57. On March 15, 2021, four days before Humanigen requested another 

Pre-EUA meeting with the FDA, Durrant set up his first Rule 10b5-1 trading plan 

since joining Humanigen in 2016 for the sale of Humanigen stock.  This trading 

plan was the only 10b5-1 plan Durrant had during the relevant time period.  It had 

an effective date of “First Allowable” and a termination date of September 30, 

2021.  Durrant’s trading plan was approved on March 15, 2021 by Humanigen’s 

CFO and Compliance Coordinator at the time.  The plan called for the sale of 

Humanigen shares at an initial limit price of $28.33, followed by limit prices 

ranging from $25 to $100.  Humanigen stock at this time was trading around 

$16.07.  Because Humanigen’s stock price never rose above the initial $28.33 limit 

price, no trades were ever initiated under this March 15, 2021 trading plan. 

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58. On June 14, 2021, while the FDA’s concerns remained undisclosed to 

the public, Durrant sold 81,441 shares of Humanigen stock, for total proceeds of 

approximately $1.68 million.  These sales were the first time Durrant had sold any 

of his Humanigen shares.  Durrant made these trades with no applicable 10b5-1 

trading plan in place, and while possessing material nonpublic information 

regarding FDA’s strong indications that Humanigen’s May 28, 2021 EUA 

application would be denied.   

59. Specifically, Durrant was aware that that the FDA had seriously 

questioned the sufficiency of Humanigen’s clinical data that would be used to 

support its EUA application, and had recommended that Humanigen submit a 

meeting request to discuss its development program in lieu of submitting an EUA 

application.  He was also aware that the FDA had strongly discouraged Humanigen 

from submitting an EUA application when it did, and that the FDA had 

recommended the Company conduct an additional confirmatory study before doing 

so.  As a result, Durrant knew that there was a substantial risk that the FDA would 

deny Humanigen’s EUA application.  Durrant also knew, or was reckless in not 

knowing, that information concerning communication from regulatory authorities, 

like the FDA, was material nonpublic information pursuant to the terms of 

Humanigen’s Insider Trading Policy in the process of being updated by Durrant 

and others at the time.  At no time prior to September 9, 2021, did Humanigen 

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disclose any of this material information to the public.   

60. Durrant’s awareness of the materiality of the FDA’s strong warnings 

of likely EUA denial is underscored by an email he sent on July 24, 2021.  Durrant 

forwarded an email inquiry from an investor to Humanigen’s CFO and Compliance 

Coordinator.  The investor had asked, “Cameron, any update you can give on 

EUA?  Is the FDA trying to push vaccines more and not focused on something like 

Lenz?”  In his forwarding email, Durrant commented to the CFO, “Apparently this 

guy is a seasoned investor…..amazing how many investors keep asking me for 

MNPI [material nonpublic information]…..”  

H. Humanigen’s Stock Fell by Approximately 50% After the FDA 
Denied Its EUA Application 
 

61. On September 8, 2021, the FDA formally notified Humanigen that its 

EUA application for lenzilumab had been denied.  Shortly after midnight on 

September 9, 2021, Humanigen publicly disclosed in a press release that the FDA 

had denied its EUA application (the “September Announcement”): “U.S. FDA has 

declined [Humanigen’s] request for emergency use authorization of lenzilumab to 

treat newly hospitalized COVID-19 patients.”  In its denial letter, the FDA stated 

that it was “unable to reasonably conclude that the known and potential benefits of 

lenzilumab . . . outweigh the known and potential risks” of its use as a treatment 

for COVID-19.  The FDA’s stated reasons for denial were nearly identical to the 

concerns it raised in the May 13 Correspondence.  On September 10, 2021, 

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Humanigen filed an interim report with the Commission on Form 8-K, attaching 

the September Announcement. 

62. On September 8, 2021, the day before the September Announcement, 

trading of Humanigen stock closed at a price of $15.11.  The next day, following 

the overnight September Announcement, it opened at a price of only $6.11.  At the 

end of trading on September 9, 2021, Humanigen’s stock price closed at $7.97, 

down $7.14, or approximately 50% from the prior day, and on an exponentially 

higher trading volume of approximately 35 million shares (compared to a volume 

of 658,900 shares on September 8, 2021).  The stock price continued to fall on 

September 10, 2021, and closed at $6.88, down $8.23 from the pre-announcement 

$15.11 stock price. 

I. Chappell Avoided Over $38 Million in Losses and Durrant 
Avoided Over $1 Million in Losses by Selling Humanigen Stock 
Ahead of the September Announcement  
 

63.    By selling 3,835,000 shares of Humanigen stock while in possession 

of material nonpublic information before the September Announcement, Chappell 

and the Black Horse Entities avoided losses of approximately $38 million.  As 

investors in the Black Horse Entities, Relief Defendants Mary Chappell and Duran 

shared in this avoidance of losses. 

64. By selling 81,441 shares of Humanigen stock while in possession of 

material nonpublic information before the September Announcement, Durrant 

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avoided losses of more than $1 million. 

65. A little over a year later, on November 14, 2022, Humanigen stated in 

its quarterly report that it “no longer expect[ed] to be positioned to receive an EUA 

or other regulatory approval for, or to commercialize or receive revenues from, 

lenzilumab for COVID-19 in the foreseeable future.”  It further stated that it had 

shifted to researching potential non-COVID-19 applications of lenzilumab, and 

that it would therefore need to obtain additional financing to fund operations or 

would be unable to continue as a going concern.  On July 18, 2023, Humanigen 

announced that it would not be able to continue as a going concern and was 

exploring all restructuring options, which could include commencing a bankruptcy 

or other insolvency proceeding sometime in the third quarter of 2023.  On January 

3, 2024, Humanigen filed for Chapter 11 bankruptcy.  As of Friday, May 17, 2024, 

the Company’s stock was trading on OTC Link, an alternative trading system 

operated by OTC Markets Group, Inc., at around $0.0001 per share. 

FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 
(against Defendants Chappell, the Black Horse Entities, and Durrant) 

 
66. Paragraphs 1 through 65 are realleged and incorporated by reference 

as if fully set forth herein. 

67. As set forth above, Defendants Chappell, the Black Horse Entities, 

and Durrant traded Humanigen securities on the basis of material nonpublic 

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information about Humanigen in violation of Chappell’s and Durrant’s duty of 

confidentiality to Humanigen.  Defendants knew, consciously avoided knowing, or 

were reckless in not knowing that this information was material and nonpublic. 

68. By engaging in the conduct described above, Defendants Chappell, 

the Black Horse Entities, and Durrant, directly or indirectly, in connection with the 

purchase or sale of securities, by use of the means or instrumentalities of interstate 

commerce, or the mails, or the facilities of a national securities exchange: (a) 

employed devices, schemes or artifices to defraud; (b) made untrue statements of 

material fact or omitted to state material facts necessary in order to make the 

statements made, in light of the circumstances under which they were made, not 

misleading; and/or (c) engaged in acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon any person in connection with 

the purchase or sale of any security. 

69. By engaging in the conduct described above, Defendants Chappell, 

the Black Horse Entities, and Durrant violated, and unless restrained and enjoined 

will continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), 

and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-5. 

SECOND CLAIM FOR RELIEF 

Violations of Section 17(a) of the Securities Act 
(against Defendants Chappell, the Black Horse Entities, and Durrant) 

 
70. Paragraphs 1 through 69 are realleged and incorporated by reference 

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as if fully set forth herein. 

71. By engaging in the conduct described above, Defendants Chappell, 

the Black Horse Entities, and Durrant, singly or in concert with others, in the offer 

or sale of securities, by use of the means or instrumentalities of interstate 

commerce, or of the mails, or a facility of a national securities exchange, directly 

or indirectly: (a) employed devices, schemes, or artifices to defraud; (b) made 

untrue statements of material fact or omitted to state material facts necessary in 

order to make the statements made, in light of the circumstances under which they 

were made, not misleading; or (c) engaged in acts, practices, or courses of business 

which operated or would have operated as a fraud or deceit upon persons. 

72. By engaging in the conduct described above, Defendants Chappell, 

the Black Horse Entities, and Durrant, violated, and unless restrained and enjoined 

will continue to violate, Section 17(a) of the Securities Act, 15 U.S.C. § 77q(a). 

THIRD CLAIM FOR RELIEF 

Disgorgement From Relief Defendants Under Section 21(d) of the Exchange 
Act [15 U.S.C. § 78u(d)(5)] 

(Against Relief Defendants Mary Chappell and Duran) 
 

73. Paragraphs 1 through 72 are realleged and incorporated by reference 

as if fully set forth herein. 

74. Relief Defendant Mary Chappell received, directly or indirectly, funds 

or other property from Defendants Chappell, BHC, and BHCMF, which are either 

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the proceeds of, or are traceable to the proceeds of, unlawful activities alleged in 

this Complaint to which she has no legitimate claim. 

75. Relief Defendant Duran received, directly or indirectly, funds or other 

property from Defendant BHC, which are either the proceeds of, or are traceable to 

the proceeds of, unlawful activities alleged in this Complaint to which she has no 

legitimate claim. 

76. By reason of the foregoing, it would be inequitable for Relief 

Defendants to retain the proceeds from violations of the federal securities laws and 

such proceeds should be disgorged. 

PRAYER FOR RELIEF 

 WHEREFORE, the SEC respectfully requests that the Court enter a Final 

Judgment: 

I. 

Permanently enjoining Defendants Chappell, the Black Horse Entities, and 

Durrant, and those persons in active concert or participation with any of them, who 

receive actual notice of the judgment by personal service or otherwise, and each of 

them, from violating Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], 

Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder 

[17 C.F.R. § 240.10b-5]. 

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II. 

Ordering Defendants to disgorge all ill-gotten gains obtained within the 

statute of limitations, together with prejudgment interest thereon, pursuant to 

Sections 21(d)(3), 21(d)(5) and 21(d)(7) of the Exchange Act [15 U.S.C. §§ 

78u(d)(3), 78u(d)(5) and 78u(d)(7)]. 

III. 

Ordering Defendants to pay civil penalties pursuant to Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)] and Section 21A of the Exchange Act [15 

U.S.C. § 78u-1]. 

IV. 

 Ordering that Defendants Chappell and Durrant be barred from serving as an 

officer and director of a public issuer pursuant to Section 20(e) of the Securities 

Act [15 U.S.C. § 77t(e)] and Section 21(d)(2) of the Exchange Act [15 U.S.C. § 

78u(d)(2)]. 

V. 

Ordering the Relief Defendants to disgorge, with prejudgment interest, all 

ill-gotten gains received or derived from the activities set forth in this Complaint, 

and to repatriate any ill-gotten funds or assets sent overseas. 

VI. 

Retaining jurisdiction of this action in accordance with the principles of 

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equity and the Federal Rules of Civil Procedure in order to implement and carry 

out the terms of all orders and decrees that may be entered, or to entertain any 

suitable application or motion for additional relief within the jurisdiction of this 

Court. 

VII.  

Grant such other and further relief as this Court may determine to be just and 

necessary. 

DEMAND FOR JURY TRIAL 

Pursuant to Federal Rule of Civil Procedure 38, the SEC demands trial by 

jury. 

Dated: May 20, 2024 Respectfully submitted, 

  
/s/ Anna O. Area 
Anna O. Area 
(202) 551-6417  
[email protected] 
 
Daniel T. Lloyd 
(202) 551-3781  
[email protected] 
 
Daniel J. Ball 
(202) 551-5987 
[email protected] 
 
U.S. Securities and Exchange Commission 
100 F Street, N.E. 
Washington, DC 20549 

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Counsel for Plaintiff 
U.S. Securities and Exchange Commission 

 

  

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DESIGNATION OF AGENT FOR SERVICE UNDER  
LOCAL CIVIL RULE 101.1(f) 

 
In accordance with Local Civil Rule 101.1(f), the undersigned hereby makes 

the following designation for the receipt of service of all notices or papers in this 

action at the following address: 

United States Attorney’s Office 
District of New Jersey 
Attention: David E. Dauenheimer 
Deputy Chief, Government Fraud Unit 
970 Broad Street, Suite 700 
Newark, NJ 07102-2534 
 
 

Dated: May 20, 2024 

Respectfully submitted, 

 

/s/ Anna O. Area  
Anna O. Area 
Daniel T. Lloyd 
Daniel J. Ball 
U.S. Securities and Exchange 
Commission 
100 F Street, N.E. 
Washington, DC 20549 
(202) 551-6417 (Area)  
[email protected]  
Counsel for Plaintiff 
U.S. Securities and Exchange 
Commission 

  

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CERTIFICATE OF SERVICE 
 

I certify that on May 20, 2024, a true and correct copy of the foregoing document 
was filed electronically with the clerk’s office, who will send copies to all counsel 
of record.  
 
I further certify that a true and correct copy of the foregoing document shall be 
served upon Defendant Durrant consistent with the Federal and Local Rules of 
Civil Procedure. 
 
 

/s/ Anna O. Area  
Anna O. Area  
Counsel for Plaintiff United States  
Securities and Exchange Commission 

 

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