A securities class action suit was filed against a biopharmaceutical company following claims the cellular immunotherapy developer and some of its officers violated federal securities laws.
The lawsuit against Juno Therapeutics Inc. was filed in the U.S. District Court for the Western District of Washington on behalf of investors who purchased shares in the company during the class period between June 4, 2016 and July 7, 2016, according to a press release. The class action complaint alleged Juno violated provisions of the Securities Exchange Act of 1934. The biopharmaceutical company develops treatments that target the immune system to treat cancer.
Cancer treatment enters Phase 2 trails on high praise
On July 30, 2015, Juno announced in a press release that the Food and Drug Administration cleared the investigational new drug application for JCAR015, a treatment for adult patients with relapsed or refractory acute lymphoblastic leukemia. The clearance permitted the company to begin a Phase 2 trial for the drug. The approval was based on positive results in Phase 1 trials conducted by Memorial Sloan Kettering Cancer Center.
“FDA clearance of the JCAR015 IND for this pivotal Phase 2 trial is a significant milestone for the company,” Mark Frohlich, Juno executive vice president of development and portfolio strategy, said. “Highlighting the early returns on the investments we have made in process development and manufacturing as well as providing clarity on a potential path toward our first product approval.”
The class action filing claimed that during the class period the defendants made materially false and misleading statements on Juno’s compliance, business and operational policies. Specifically, the lawsuit alleged the company and certain officers disclosed misleading and incomplete information on JCAR015’s safety. The class action suit also charged the defendants with making public misrepresentations or failing to disclose material facts about the deaths of patients in the treatment’s Phase 2 clinical trial.
“In late June and early July, two more patients died during the Phase 2 clinical trial.”
Patient deaths lead to clinical hold
In May 2016, a patient in the trial suffered a cerebral edema that resulted in death. Juno consulted with the FDA about the incident, but failed to inform investors of the patient’s passing. The following month, the company issued a press release describing “lower side effects.” It went on to make partial and misleading disclosures, the class action suit alleged, by explaining that “Grade 3 or higher neurotoxicity was observed in 15/51 (29 percent) patients,” without mention of the death.
In late June and early July, two more patients died during the Phase 2 clinical trial. On this news, the FDA placed a clinical hold on the trial. Juno was subsequently forced to disclose the details surrounding the patient deaths. The announcement was made after the market closed on July 7. The following day the company’s stock tumbled by more than 30 percent. The clinical hold was lifted the following Tuesday, but Juno’s securities continued to slip lower. On July 14, the company’s stock closed down $12.02 per share from the July 7 closing price, a 29.5 percent drop.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.