GREENBELT, Md. (CN) - Pharmaceutical company Northwest Biotherapeutics prematurely released results of new cancer treatment studies to artificially boost stock value, a class claims in Federal Court.
A federal securities class action lawsuit brought in Maryland district court claims Northwest Biotherapeutics Inc. and chief financial officer Linda Powers issued "materially false and misleading" financial statements.
The suit, filed by lead plaintiff Chad Lerner, could affect hundreds or thousands of investors who traded the company's stock on the NASDQ Stock Exchange, the complaint states. The proposed class includes those who bought Northwest Bio stock between March 8, 2013 and Aug. 20, 2015.
TheStreet.com reported last year that doctors at MD Anderson Cancer Center, one of the hospitals conducting research funded by the company, "had issued a stern rebuke to Northwest Bio for making promotional, unjustified claims about results from the ongoing clinical trial," the lawsuit states. Company stock apparently dropped $1.79 per share, or about 20 percent, after the report.
A similar report on July 7, 2014 caused Northwest Bio stock to drop another 6 percent, and an Aug. 21, 2015 announcement about the suspension of a clinical trial in Germany caused a 2 percent drop, according to the complaint.
"As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the company's securities, plaintiff and other class members have suffered significant losses and damages," the complaint states.
Northwest Bio is involved in the development of DCVax, a platform technology mobilizes a patient's own immune system to attack cancer, according to the lawsuit. A number of the company's products are currently undergoing clinical trials.
"The company touted the initial 'positive responses' by patients in the DCVax-Direct Trial. The company reported that a significant portion of the patients tested experienced tumor necrosis (cell death) and immune cell infiltration," the complaint states.
Press releases and financial report filings outlined the progression of cancer studies both in the United States and Europe, according to the lawsuit. Lerner claims violation of the Securities Exchange Act.
"Defendants were personally motivated to make false statements and omit material information necessary to make the statements not misleading in order to personally benefit from the sale of Northwest Biotherapeutics securities from their personal portfolios," the lawsuit states.
Requests for comment from Northwest Bio and from Lerner's attorney Daniel Sommers of Washington, D.C. law firm Cohen, Milstein, Sellers & Toll were not immediately returned.
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