SEC Charges TherapeuticsMD for Selectively Disclosing Info From FDA Meeting
Posted 20 August 2019 | By
The US Securities and Exchange Commission (SEC) on Tuesday charged Florida-based drugmaker TherapeuticsMD with violating fair disclosure regulations by selectively sharing nonpublic information from interactions with the US Food and Drug Administration (FDA) with sell-side analysts.
Specifically, the SEC says that TherapeuticsMD on two occasions in 2017 shared nonpublic information with sell-side research analysts about a meeting and a subsequent submission to FDA concerning the company’s recently rejected new drug application (NDA) for its dyspareunia treatment Imvexxy (estradiol vaginal inserts).
FDA accepted TherapeuticsMD’s NDA for Imvexxy on 19 September 2016 and issued a complete response letter (CRL) to the company citing a long-term safety concern on 5 May 2017. FDA eventually approved
the drug a year later in May 2018 after receiving additional information from the company.
According to the SEC, on 15 June 2017, “One day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as ‘very positive and productive.’”
The next day, TherapeuticsMD’s stock closed 19.4% higher, despite the company making no public statement or disclosures about the meeting.
Then, on the morning of 17 July 2017, ThepeuticsMD issued a press release
stating that it had submitted new information to FDA concerning the application, but had “not yet received a formal timeline” for FDA to complete its review.
Between issuing the press release and when the market opened, the SEC says the company shared more previously undisclosed information about the meeting and the information submitted to FDA to sell-side analysts, who then published research notes reporting those details.
While the stock had dropped 16% in premarket trading, the SEC says it had rebounded to close down by 6.6%.
“Information about a pharmaceutical company’s interactions with the FDA can be critical to investors. It is essential that when companies disseminate material, nonpublic information, they do so fairly and appropriately to all investors and not just a select few analysts,” said Carolyn Welshhans, associate director of the SEC’s Division of Enforcement.
TherapeuticsMD settled the charges with the SEC without admitting or denying the agency’s findings. The company will pay a $200,000 penalty and agreed to cease and desist from violating fair disclosure regulations and disclosure requirements under Section 13(a) of the Securities Exchange Act of 1934
In a statement to Focus
, Nichol Ochsner, vice president, investor relations at TherapeuticsMD said the company is “pleased to have resolved the matter. As the order notes, we have revised our policies and procedures related to the public disclosure of information, and have enhanced training in this area. With the settlement behind us, we look forward to continuing our mission of advancing the health of women and championing awareness of their healthcare issues.”