A securities class action suit has been filed against the drug manufacturer Spectrum Pharmaceuticals alleging the company made false or misleading statements and failed to disclose key details about the status of certain of its products with the U.S. Food and Drug Administration. For more information, visit Battea’s Spectrum Pharmaceuticals case summary.
The suit specifically alleges that Spectrum failed to disclose that the FDA questioned data from two of its recent studies, and that the agency told Spectrum as far back as December 2012 that it should not submit data from those two studies as part of a new drug application. And because it failed to disclose these facts about the studies – known as 611 and 612 – statements about the company’s operations and prospects made after the FDA warned it, that such actions were materially misleading to investors.
The suit has a class period of Dec. 16, 2015, through Sept. 16, 2016.
More details of the situation
Specifically, the FDA told Spectrum that because two of its clinical trials had failed to produce positive outcomes for patients with bladder cancer, it should not pursue an application for the medication, known as apaziquone, according to a report from The Street. Earlier this month, the FDA convened a panel of outside experts who reviewed the data from studies 611 and 612 and likewise determined by a unanimous vote that the drug should not be approved.
What seems to have happened since the December 2012 meeting is that while the FDA cannot disclose details about meetings with drug companies, the latter are not bound by those restrictions and therefore are free to offer any details of those meetings with investors as they see fit, the report said. In this case, Spectrum CEO Rajesh Shrotriya told investors in May 2015 the FDA merely wanted the company to start another trial based on the findings of 611 and 612, but that it could “go ahead and file the [New Drug Application] with this drug.”
As part of the advisory panel the FDA convened, the actual substance of the FDA’s advice to Spectrum was disclosed to the public, the report said. Spectrum vice president for strategic planning Shiv Kapoor told the site that while he was not aware of the specifics of the FDA’s discussions with the company, he believes Spectrum was engaged in ongoing conversations with the regulatory agency about apaziquone.
The effect on stock prices
Not surprisingly, the details of the FDA advisory panel’s findings sent Spectrum’s stock tumbling more or less immediately, according to a separate report from The Street. It’s further worth noting that the FDA will announce its final decision on Spectrum’s application for apaziquone on Dec. 11.
The announcement about the advisory panel was made on Wednesday, Sept. 14. After having closed at $5.49 per share the previous day, heavy trading sent the stock price tumbling to as little as $4.68 per share early on Sept. 15, according to Google Finance. Since then, it has mostly continued to drop off, reaching an ebb of $4.35 per share on Sept. 21. That’s down from a year-to-date high of $7.65 per share observed in late April. And in December 2012, when the FDA first advised Spectrum about the test failures, the stock’s price was regularly above $10 per share.
However, it should also be noted that the current stock prices are only in-line with some of the lows seen earlier this year. Back in late January and early February, Spectrum was trading at less than $5 per share for a few weeks, and at that time suffered its year-to-date low of $4.28 per share.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or info@battea.com.