Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Saturday, May 25, 2024 | Back issues
Courthouse News Service Courthouse News Service

Biotech Firm Settles Charges Over Cancer Drug

WASHINGTON (CN) - AVEO Pharmaceuticals agreed to pay $4 million for claims that it misled investors about the approval process for a developmental drug used to treat kidney cancer, according to the SEC.

The U.S. Securities and Exchange Commission (SEC) announced the fraud charges against the Massachusetts-based biotech company and three former executives on Tuesday.

AVEO Pharmaceuticals Inc. allegedly concealed the Food and Drug Administration's (FDA) level of concern about the drug, Tivozanib, in statements to investors. The company neglected to mention that the FDA recommended a second clinical trial due to concerns about patient death rates during the first trial, according to the SEC.

A 30-page complaint filed by the SEC in Boston Federal Court on Tuesday claims AVEO made $53 million in a January 2013 public offering of its stock because it did not disclose that the FDA recommended a second clinical trial in May 2012.

"FDA staff told AVEO they were concerned about results from TIVO-1 that showed that, while Tivo seemed to be slowing the progression of the disease, patients taking Tivo were dying sooner than patients taking the other study drug," the complaint states. "The FDA staff recommended that AVEO conduct a second large, randomized clinical trial to address these concerns. Conducting a clinical trial for an experimental drug such as Tivo is expensive and time-consuming. AVEO estimated the cost of such an additional trial at more than $80 million, and estimated that it would take approximately three years. AVEO had already invested a similar amount of time and money in TIVO-1."

The biotech company actually designed a second trial and presented plans to the FDA but didn't follow through, the SEC alleges.

The firm's stock plummeted 31 percent when the FDA announced publicly that it recommended another clinical trial. AVEO never held another trial and the FDA did not approve Tivozanib.

The SEC said AVEO agreed to pay $4 million to settle the charges, without admitting or denying the allegations. AVEO's settlement is awaiting court approval.

The three former executives facing charges - Tuan Ha-Ngoc, David Johnston and William Slichenmyer - have not settled charges against them. The SEC seeks disgorgement and penalties against them.

Categories / Uncategorized

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.