×

Athenex is facing a class action lawsuit

Athenex is on track to refile its New Drug Application to the federal Food and Drug Administration for breast cancer treatment — but may have a legal challenge on its hands at the same time.

First, the good news.

Athenex Inc. officials recently announced that company officials participated in a constructive meeting with FDA officials to discuss the clinical section of the company’s New Drug Application for oral paclitaxel and encequidar for the treatment of metastatic breast cancer. Athenex officials said they are on track to submit the application in accordance with the FDA’s guidance, and will provide a further update when the FDA’s official response to the filing becomes available.

The company is building a 409,000 square foot facility in Dunkirk that should be open by the end of the year, with a portion dedicated to manufacturing large batches of prescriptions to healthcare facilities for office use.

While the company has been working to get its breast cancer treatment approved by the FDA, the company and its executives are also facing a class action lawsuit that alleges Athenex officials failed to disclose to investors that the data included in Athenex’s application to the FDA presented a safety risk to patients and that the company used an inadequate phase 3 study that may not have met FDA guidelines.

The lawsuit points to several news releases and public statements by company officials from the fall of 2019 through February 26, 2021, in which company officials touted the development of oral paclitaxel and its likely approval by the FDA.

Before the financial markets opened on March 1, 2021, Athenex announced that the FDA issued a complete response letter for the company’s New Drug Application for oral paclitaxel plus encequidar for the treatment of metastatic breast cancer. In the letter, the FDA cited safety risks to patients and uncertainty over the results of the primary endpoint of the objective response rate which might have introduced unmeasured bias and influence on the blinded independent central review. The FDA further recommended that “Athenex conduct a new adequate and well-conducted clinical trial in a patient population with metastatic breast cancer representative of the population in the U.S.” The FDA also noted that additional risk mitigation strategies to improve toxicity would be required for this cancer treatment to be approved.

The letter sent Athenex’s stock prices tumbling by 55% in one day, or hundreds of millions of dollars in lost market capitalization, according to the lawsuit. Several law firms are now trying to line up investors to file a class action lawsuit for any investors who purchased Athenex stock from Aug. 7, 2019, through Feb. 26, 2021, and who lost money. The lawsuit was filed in the U.S. District Court for the Western District of New York, located at 2 Niagara Square, Buffalo, NY 14202. The case is captioned Gupta v. Athenex, Inc., et al., No. 1:21-cv-00337 (W.D.N.Y.), and has not yet been assigned to a specific judge.

“Throughout the class period, defendants made materially false and misleading statements regarding the company’s business,” the lawsuit states.

The lawsuit alleges the data included in the oral paclitaxel plus encequidar NDA presented a safety risk to patients and that the uncertainty over the results of the primary endpoint of objective response rate at week 19 conducted by blinded independent central review reconciliation and re-read process may have introduced unmeasured bias and influence on the blinded independent review. Lawyers also allege Athenex’s Phase 3 study that was used to file the NDA was inadequate and not well-conducted in a patient population with metastatic breast cancer representative of the U.S. population, such that the FDA would recommended a new such clinical trial.

“As a result, it was foreseeable that the FDA would not approve Athenex’s NDA in its current form; and consequently, Athenex’s public statements were materially false and misleading at all relevant times,” the lawsuit states.

The lawsuit asks for a jury trial to determine whether or not Athenex violated the federal Exchange Act, omitted or misrepresented material facts, whether the statements by Athenex officials omitted facts in their statements, if company officials knew or recklessly disregarded that their statements may be false or misleading, whether the company’s stock prices were artificially inflated and how much damage was sustained by investors and an appropriate measurement of the damages.

“Plaintiff and the class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for the company’s shares. Plaintiff and the class would not have purchased the company’s shares at the price paid, or at all, if they had been aware that the market prices had been artificially and falsely inflated by defendants’ misleading statements,” the lawsuit states.

Newsletter

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

COMMENTS

[vivafbcomment]

Starting at $4.62/week.

Subscribe Today