A securities class action suit was filed against a clinical-stage biopharmaceutical company following allegations that the company violated federal securities laws.
The lawsuit was filed against Tetraphase Pharmaceuticals Inc. in the U.S. District Court for the District of Massachusetts on behalf of investors who purchased shares in the company during the class period between March 5, 2015 and Sept. 9, 2015, according to a press release. The class action filing claims that Tetraphase issued materially false and misleading statements to investors in violation of the Securities Exchange Act of 1934. The company uses proprietary chemistry technology to develop novel antibiotics for various diseases. Since 2006 Tetraphase has worked on treatments for broad-spectrum and multidrug-resistant bacterial infections.
“Tetraphase allegedly did not disclose the true status of one of its drugs.”
Despite revenue losses, Tetraphase stock appreciated in recent years
Though the company reported revenue losses in recent years, it watched its stock prices grow substantially. Tetraphase’s total revenue fell to $9.10 million in 2014 from $10.49 million in 2013. It’s respective net loss grew to $66.74 million from $29.64 million. Despite these losses the company’s stock improved from $8.83 per share in May 2014 to $51.75 per share in July 2015.
The class action lawsuit alleges that the company, as well as certain officers, did not disclose the true status of one of its drugs to its investors, putting them at risk. It claims that Tetraphase issued positive statements about its Eravacycline, one of its drugs. The biopharmaceutical firm’s statements spoke to both the drug’s efficacy and its potential to be approved by the Food and Drug Administration. The class action filing alleges that the company made these positive allusions about Eravacycline despite knowledge that the drug would experience setbacks during crucial phases of its clinical trials.
Tetraphase announced in September the clinical trials for Eravacycline did not go as expected
The lawsuit alleges that the defendants were aware that the drug’s IGNITE2 phase 3 clinical trial would show that it failed to meet the primary endpoint illustrating statistical non-inferiority compared to another antibiotic, Levofloxacin. On Sept. 18, 2015, the company announced that Eravacycline did not achieve its primary endpoint for the “pivotal portion of its IGNITE2 phase 3 clinical trial.” Following this news the company’s stock prices dropped significantly, 80 percent, from $44.78 per share on Sept. 8, 2015 to $8.36 per share at close on Sept. 10, 2015.
For more information on this case or other class action litigations, please contact Adam Foulke at 203-987-4949 or firstname.lastname@example.org.