Well you knew it was coming. parts of the Globe Newswire article below:
Pomerantz Grossman Hufford Dahlstrom & Gross LLP has filed a class action lawsuit against Aveo Pharmaceuticals, Inc. ("Aveo" or the "Company") (AVEO) and certain of its officers. The class action, filed in United States District Court, District of Massachusetts, and docketed under 1:13-cv-11157, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of Aveo between January 3, 2012 and May 1, 2013, both dates inclusive (the "Class Period"). This class action seeks to recover damages against the Company and certain of its officers and directors as a result of alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
The Complaint alleges that throughout the Class Period, Defendants conditioned investors to believe that the Company's drug Tivopath or tivozanib, would receive approval from the U.S. Food and Drug Administration ("FDA") through a host of materially false and misleading statements regarding its Phase III ("TIVO-1") trial design and results. Specifically: (a) the Company failed to disclose to investors that the FDA had recommended to the Company to conduct an additional Phase III trial due to adverse trends in the Company's first study; (b) the Company misled investors regarding the overall safety and efficacy of the product, including failure to disclose the 25% higher rate of death associated with tivozanib therapy compared to the control drug, sorafenib; (c) the Company failed to disclose that almost 90% of the patients studied in TIVO-1 were enrolled from sites in Central and Eastern Europe with inconsistent treatment patterns from those in the US. As a result of the foregoing, the Company's statements were materially false and misleading at all relevant times.
My take: (a) seems to have merit; (b),(c) not so much
Again not a securities lawyer, but (b) and (c) seem to be a stretch. Aveo published their data and I believe made clear the OS trend as well as the location of the enrolled peeps. (A) does seem to have some merit. Looking at the case law, companies are generally shielded from having to disclose questions or issues discussed with the FDA, but, as we understand the facts so far, here the FDA gave a specific recommendation. This seems substantially different than "normal questions" from the FDA that are not required to be disclosed. Should be interesting but I imagine either way the shareholders will lose. Just goes to show how sound management is paramount when investing. Lesson learned.