The biopharmaceutical company Alcobra Ltd. was recently hit with a securities class action lawsuit stemming from allegations that the firm and some of its executives made false or misleading statements about the company’s operations. To learn more about this case, visit Battea’s Alcobra case summary.
Specifically, the suit – filed in the U.S. District Court for the Southern District of New York – alleges that these false or misleading statements downplayed the results of a Phase III study, which concluded in October 2014, for the drug MDX. That study found there was no statistically significant benefit to taking MDX to treat adult ADHD. The statements the company made at the time related to discounting extreme placebo responses among certain patients from the overall analysis of the study. And because the firm’s statements did not include this information, the suit alleges that all statements made about the company’s business, operations and prospects were false and misleading on an ongoing basis.
Further information about the study did not emerge until late September of last year, when the company placed the Phase III trial on clinical hold, and then in mid-January 2017 when that study missed a primary endpoint.
The suit has a class period from Aug. 13, 2015 to Jan. 17, 2017.
On that date in January, Alcobra revealed that its results from the Phase III study – known as MEASURE – did not meet expectations for helping adult ADHD patients above and beyond what placebos did, according to a report from the company. While the drug was well-tolerated by patients, it did not alter their ratings on the Conners’ Adult ADHD Rating Scales.
“We are exceedingly disappointed with these top-line results. In the coming weeks, the Company intends to review the full data set from MEASURE,” said Dr. Yaron Daniely, President and CEO of Alcobra. “Consequently, we will evaluate our options and communicate our strategic plan to investors. We wish to reiterate our sincere appreciation to all of the patients, investigators and others who aided us in conducting this study.”
How did the stock move?
On Aug. 13, 2015 – the day the class period in this suit opens – Alcobra released its second-quarter results for 2015 and they were largely positive. The next day, its stock price had jumped to $8.71 per share. But in the months to come, that turned out to be a significant high. By Sept. 28, 2016 – the date on which Alcobra placed a hold on the study – that price had dropped to $4.62 per share. The next day, it was at just $2.51.
Then, from Jan. 13 to Jan. 17 (the latter date being when the final results of the study were revealed), the stock price fell even more sharply – from $1.90 per share to less than $0.97. Since then it has recovered somewhat, and is now trading at $1.19 per share.
For more information on this case or other class action litigations, please contact Sam Wankel, Senior Vice President, Research, Battea Global Litigation Research, Inc., at 203-987-4949 or firstname.lastname@example.org.