Class Claims Drug Firm Didn’t Report Death

     SEATTLE (CN) — Juno Therapeutics CEO Hans Bishop sold $8.6 million of his stock after issuing a glowing press release about a cancer immunotherapy drug, but failed to disclose that a patient had died in clinical trials, shareholders claim in a federal class action.
     The Food and Drug Administration stopped the trials after two more patients died less than a month later, lead plaintiff Jiayi Wan says in the July 13 complaint. He sued the company and Bishop.
     The FDA stopped clinical trials of Juno’s cell-based leukemia drug JCAR015 on July 8, causing shares to plunge 30 percent, but gave a green light to resume testing on July 12, after the company removed an additional chemotherapy drug to the trial regime.
     Wan says the company failed to disclose the first patient’s death, and touted its reduced side effects to investors.
     However, “The company knows — and has previously admitted — that one of the notable side effects of JCAR015 is ‘severe neurotoxicity.’ In May 2016, a patient in the Phase 2 trial of JCAR015 — dubbed the ‘ROCKET’ trial by Juno — died of a cerebral edema, a form of neurotoxicity,” according to the complaint.
     “Juno knew the patient death was important. Following the patient death, the company consulted with its Data Safety Monitoring Board (‘DSMB’) and the Food and Drug Administration (‘FDA’) about an appropriate response. Yet Juno failed to report the death to investors.”
     In early June, the company issued a press release about the drug’s minimal side effects with no mention of the patient’s death. Juno’s stock price went up after the release and Bishop sold his shares for a huge profit, according to the complaint.
     “Shortly thereafter, the company’s insiders cashed in. Most notably, defendant Hans E. Bishop, Juno’s CEO, sold over $8.6 million worth of shares in June 2016 — more than twice the value of his total sales for all of 2015,” the complaint states.
     In late June or early July, two more patients died, causing the FDA to halt trials on July 8. Juno disclosed the news after the markets closed on July 7 and its stock price fell by $13, according to the complaint.
     Bishop also faced investor complaints of inside trading while COO of biotech company Dendreon, according to the complaint.
     “For defendant Bishop, this was part of a familiar pattern: Bishop was fired from his previous position as Chief Operating Officer at Dendreon Corporation on the heels of investor complaints about management’s history of ‘failing to disclose important info’ and ‘s[elling] big chunks of stock just weeks before … bad news was announced,'” the complaint states. (Brackets and ellipsis in complaint.)
     Wan seeks to represent investors who bought Juno stock from June 4 through July 7.
     He claims Juno violated securities laws by misrepresenting material facts, making false and misleading statements and causing the company’s stock to be artificially inflated.
     He seeks compensatory and punitive damages. He is represented by Clifford Cantor in Sammamish.
     Juno spokesman Christopher Williams told GeekWire that the company is reassessing its timeline for testing the drug and would have “a clear sense of that over the next couple of weeks.”

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