A securities class action suit was recently filed against Arrowhead Research Corporation, as well as certain officers.
Arrowhead is a biopharmaceutical firm that develops targeted RNA Interference therapeutics. The company currently focuses on developing drugs that silence disease-causing genes. Clinical programs in obesity and chronic hepatitis B are both included in Arrowhead's pipeline.
Securities class action suit filed
On Oct. 13, 2014, Pomerantz LLP announced it had brought forth a class action suit to represent all organizations and individuals who bought company securities between Aug. 12, 2014 and Oct. 8, 2014. These dates are inclusive, and represent the class period.
The law firm filed this suit in the United States District Court, Central District of California, in an effort to recover damages that allegedly stemmed from alleged violations of the Securities Exchange Act of 1934.
The suit involved claims the defendants made material misstatements throughout the class period. More specifically, the legal claim alleged that during this time, the defendants materially misstated clinical trial information regarding ARC-520, the company's experimental hepatitis B therapy, by overstating its efficacy.
Bernstein securities class action suit
A separate securities class action suit was filed against the company by Bernstein Liebhard LLP, who announced the legal action on Oct. 14, 2014. This legal action was also brought forth in the United States District Court for the Central District of California, and involved allegations of materially misstated clinical trial information.
The Bernstein suit varied from the Pomerantz legal action in that it was specifically brought forth to represent those who bought common stock between Aug. 12, 2014 and Oct. 8, 2014.
ARC-520 results
On Oct. 8, 2014, the company released data for ARC-520 that was disappointing, the Pomerantz suit alleged. The markets were informed, through a TheStreet.com article published that same day, that company executives had been providing misleading information.
The article reported that for months, company CEO Chris Anzalone and his team were aware that taking doses of ARC-520 between 1 and 2 mg per kg reduced viral load by between 0.2-log and 0.3-log. However, company executives led investors to believe that these doses caused reductions in viral load by no less than 0.7-log.
The suit also alleged that on Aug. 12, 2014, defendants held a conference call where they made materially false and misleading statements, and or failed to disclose key information. More specifically, they suggested that ARC-520 had a viral reduction similar to 0.8-log. When markets found out the true efficacy of the drug – that a dose of 2mg/kg generated a 0.3-log reduction – company shares plunged $5.48 to $7.03 on Oct. 8, 2014.