(CN) – Investors are suing biopharmaceutical company Genocea Biosciences Inc. for allegedly making false claims about the readiness of its lead genital herpes drug, causing a sharp drop in the company’s value when the drug’s status was revealed.
Filed in the U.S. District Court of Massachusetts by investor Barry Heaney, the proposed class is made up of any investors who purchased Genocea stock from May 5, 2017 to Sept. 25, 2017, and names Genocea, CEO William D. Clark and CFO Jonathan Poole as defendants.
According to the class, Clarke and Poole caused the company to spew numerous falsehoods about GEN-003, the company’s lead genital herpes immunotherapy drug.
The drug was set to begin Phase 3 trials, having reported positive outlooks and results for the Phase 2 trials, but to the contrary, investors claim the company did not have the finances to support the drug’s development and that the prospects for the drug were overstated.
But on Sept. 25, 2017, when Genocea issued a press release stating the company would be focusing on developing a new cancer vaccine while spending and activities on GEN-003 would be ceased. In the same press release the company announced it would be cutting 40 percent of its workforce.
Genocea’s share price fell 76 percent or $4.08 per share to close at $1.25 per share on September 26.
Investors say they’ve suffered “significant losses and damages” due to the defendants’ alleged misrepresentations.
Investors are represented by Glen DeValerio and Daryl Andrews of Andrew DeValerio LLP in Boston, Jeremy A. Lieberman and J. Alexander Hood II of Pomerantz LLP in New York, Patrick V. Dahlstrom of Pomerantz LLP in Chicago and Peretz Bronstein of Bronstein, Gewirtz & Grossman, LLC in New York.