Avoiding And Defeating Securities Fraud Actions Against Clinical-Stage Biopharmaceutical Companies

10 July 2015
Bloomberg BNA Life Sciences Law & Industry Report

In March 2014, a clinical-stage biopharmaceutical company announced that the FDA had ordered it to suspend ongoing clinical trials for the company’s sole product as a result of concerns about possible liver toxicity. The next day, the company’s stock price dropped significantly. Two days later, plaintiffs’ lawyers filed a securities fraud class action alleging that the company and its executives failed to disclose possible liver damage issues identified during the clinical trials, resulting in an artificially inflated stock price.