Geron Conceals Study Results, Sells Inflated Stock Class Action

Geron Corporation, a biopharmaceutical company, had just one drug in its pipeline, imetelstat. The complaint for this class action alleges that a Phase 2 clinical trial for the drug produced disappointing results. Despite this, according to the complaint, company insiders sold a large amount of stock without disclosing the results of the trial. This class action brings suit against Geron and its president and CEO, John A. Scarlett, alleging violations of the Securities Exchange Act of 1934, among other things.

The class for this action is all those who bought the common stock of Geron between March 19, 2018 and September 28, 2018.

Imetelstat was intended to treat a myelofibrosis (MF), a chronic blood cancer. The complaint alleges, “MF has the worst prognosis and poorest quality of life of all the chronic blood cancers.” Patients may have enlarged spleens as well as abdominal pain, fatigue, fever, weight loss, bone pain, and itching.

Geron and its development partner, Janssen Biotech, Inc., undertook a Phase 2 clinical trial of the drug called IMbark. According to the complaint, the primary questions were whether the drug would reduce spleen size by at least 35% and other symptoms by at least 50%. The study did not choose overall survival rate as a primary endpoint, the complaint alleges, because it did not have a control group.

Unfortunately, the complaint alleges, 90% of the participants did not achieve the targeted reduction in spleen size and 68% did not achieve the targeted reduction in other symptoms.

An earlier Mayo Clinic pilot study had showed more than 21% of patients had a complete or partial remissions, but in IMbank, the complaint says, no patients had a complete remission and only one had a partial remission. The complaint alleges that Geron then “shifted focus to IMbark’s study data concerning overall survival, a secondary, less important endpoint that was unreliable because IMbark lacked a control group.”

However, the complaint alleges that Janssen “did not agree that IMbark’s overall survival data demonstrated imetelstat’s clinical efficacy” and closed down IMbark in March 2018.

This negative view, the complaint claims, was “a disaster for Geron because Janssen was evaluating whether to continue its partnership with Geron and whether to make a milestone payment to Geron of at least $65 million in 2018…”

The complaint alleges that Geron covered up the situation, concealing Janssen’s disappointment and making misleading representations about IMbark results and imetelstat’s prospects.

Mere weeks after a March meeting with Janssen on the study, the complaint alleges, Geron and its CEO “began to raise over $84 million in offerings of inflated Geron stock…” Geron insiders sold millions of dollars of stock at high prices, even though before this “Geron had not raised capital since 2015, and the selling insiders had never sold Geron stock on the open market before their respective sales.”

Eventually, the complaint alleges, “Geron’s stock crashed by over 71% and has never recovered.”

Article Type: Lawsuit
Topic: Investments
Tags: Concealing Information, Investment Losses, Pharmaceuticals, Securities, Stock Losses