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A biopharma company didn’t tell its investors about a delay in certification of a new product it has in development, which led to a “precipitous decline” in its market value, a new nationwide class action lawsuit alleges.
Plaintiff Adam Paxton filed the nationwide class action lawsuit against Provention Bio, Inc. Friday in a New Jersey federal court, alleging violations of the Securities Exchange Act of 1934.
Provention is a clinical stage biopharmaceutical company that focuses on the development and commercialization of medicines to prevent immune-mediated diseases, the class action says.
In November last year, it completed its submission of a Biologics License Application to the U.S. Food and Drug Administration (FDA) for an antibody named teplizumab, which is to delay or prevent clinical Type 1 Diabetes in at-risk individuals.
However, from this date to April 8, the company made materially false and misleading statements regarding its business, operations, and compliance policies, Paxton says.
He alleges the company failed to disclose that the teplizumab application was missing information and would require additional data to secure FDA approval.
“The teplizumab [application] lacked the evidentiary support the Company had led investors to believe it possessed…the Company had thus overstated the teplizumab [application’s] approval prospects and hence the commercialization timeline for teplizumab and as a result, the Company’s public statements were materially false and misleading at all relevant times.”
Paxton says on April 8 this year, Provention issued a press release telling investors that the FDA had identified deficiencies in its application that were delaying discussion of labeling and other aspects of going to market.
On this news, Provention’s stock price fell $1.73 per share, or 17.78 percent, to close at $8.00 per share, the class action says.
“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.”
Paxton is seeking certification of the class action, damages, interest, fees, costs and a jury trial, and is looking to represent anyone that acquired Provention securities between Nov. 2, 2020 and April 8 this year.
Meanwhile, a number of biopharma companies are facing class action lawsuits under the Securities Exchange Act right now.
Earlier this month, biopharma company Emergent was accused of misleading its investors about its capability to produce coronavirus vaccines, leading to an artificially inflated stock price that later plummeted when the truth became known.
What do you think of the way Provention allegedly communicated with its investors? Let us know in the comments!
The plaintiff is represented by Thomas H. Przybylowski, Jeremy A. Lieberman, J. Alexander Hood II of Pomerantz LLP.
The Provention Securities Class Action Lawsuit is Paxton et al., v. Provention Bio, Inc, et al., Case No. 3:21-cv-11613, in the U.S. District Court District of New Jersey
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