Biotech Company Settles With SEC Over Failure to Disclose FDA Concerns
Posted 29 March 2016 | By
The Securities and Exchange Commission (SEC) on Tuesday settled fraud charges against Massachusetts-based biotech company AVEO Pharmaceuticals for $4 million after three former executives allegedly concealed the US Food and Drug Administration’s (FDA) level of concern about approving the cancer drug tivozanib in public statements.
SEC had alleged that AVEO concealed FDA’s concerns with tivozanib in statements to investors by omitting the critical fact that FDA staff had recommended a second clinical trial to address their concerns about patient death rates during the first clinical trial.
When, months later, FDA made public that it had recommended an additional clinical trial, the company’s stock price declined 31 percent. AVEO never conducted an additional trial, and the FDA later denied approval for tivozanib.
Paul Levenson, Director of the SEC’s Boston Regional Office, said: “Companies must be forthcoming about their communications with regulators so investors can make informed investment decisions while knowing what challenges may lay ahead.”
In corporate communications, AVEO and its officers suggested that they intended to satisfy FDA requests by presenting new analyses of the data that had been gathered in the previous clinical trial though they actually went so far as to design a second trial and present trial designs to FDA.
One company executive made public statements during investor conferences suggesting that FDA staff had asked only for an explanation of the survival results, though in reality, FDA staff had recommended a second trial.
The SEC’s complaint charges AVEO and the three former executives with violations of the antifraud provisions of the federal securities laws and various other violations. The settlement is subject to court approval.
SEC: Biotech Company Misled Investors About New Drug's Status With FDA