MANHATTAN (CN) - Shareholders of Newlink Genetics claim in court the Iowa-based drug company lied to them about the effectiveness of their pancreatic cancer treatment to sell its shares at inflated prices.
In a federal class action filed Thursday in Manhattan, lead plaintiff Trevor Abramson claims the company made misleading statements in press releases, SEC filings, and quarterly and annual reports intended to convince shareholders no safety issues had been associated with their pancreatic cancer treatment, algenpantucel-L, which was in Phase 3 clinical trials during a class period extending from September 2013 to May 9, 2016.
Among numerous examples, Abramson cites a press release NewLink issued in March 2014, in which the company stated "In any case, it is reassuring that no unexpected safety issues or other concerns were raised by the independent data safety monitoring committee."
On May 9, 2016, however, NewLink announced that algenpantucel-L did not meet the main goal in the Phase 3 IMPRESS clinical study. Patients treated with algenpantucel-L lived for a median of 27.3 months in the company's Phase 3 trial, compared to median survival of 30.4 months for patients treated with standard therapy.
These results suggested that patients were in fact harmed by NewLink's treatment, the complaint says.
The algenpantucel-L immunotherapy was supposed to stimulate patients' immune systems to react to cancer cells and kill them, but failed to do so in the Phase 3 clinical trial.
Following the news of the drug's failure, NewLink's stock price fell $5.05, or 30.61%, to close at $11.45 on May 10, 2016.
Abramson, who purchased 200 shares of the company's stock at just over $23 per share, accuses
NewLink Genetics of two counts of violations of the Exchange Act, Section 10(b) and Section 20(a).
NewLink was founded in 1999 and is headquartered in Ames, Iowa. It trades on the NASDAQ under the ticker symbol "NLNK."
In 2015, NewLink was tapped to provide Ebola vaccine candidate for a large clinical trial in Liberia.
Representatives of NewLink Genetics referred Courthouse News to a PR firm which declined to comment.
Abramson and class are represented by Jeremy Lieberman at Pomerantz LLP in New York.
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