The complaint for this class action alleges that Avinger, Inc. knew about problems with its products and technology by the time of its initial public offering (IPO) but did not disclose them in its Registration Statement or Prospectus, as required by the Securities Act of 1933.
The class for this action is all persons and entities who acquired shares of Avinger common stock pursuant or traceable to the company’s Registration Statement (including the Prospectus) for its January 30, 2015 IPO.
Avinger is a commercial-stage medical device company that designs and makes image-guided, catheter-based systems used to treat those with peripheral artery disease (PAD). The company seeks to improve the treatment of vascular problems through products based on its lumivascular platform, which it describes as “the only intravascular image-guided system available on the market.”
Its products at the time of the IPO included the Lightbox Imaging Console and the Wildcat, Kittycat, and Ocelot catheters, and its Prospectus spoke of Pantheris, a product that was under development, described by the company as an “image-guided atherectomy device, designed to allow physicians to remove arterial plaque in PAD patients with precision.” The company said that Pantheris was going through a clinical trial for a 510(k) submission to the FDA in the second half of 2015.
The company claimed that its Lumivascular technology offered a real-time look inside arteries that would improve treatment of PAD patients and minimize the invasiveness of the procedure and the vascular injury that can occur with other treatments.
At its IPO, the company sold five million shares at $13, raising over $56 million.
Unfortunately, in July 2016, the company announced disappointing second-quarter 2016 results, due in part to “lower than expected” use of Pantheris. The company claimed to be working on improvements to the product, but lowered its full-year revenue guidance, from a range of $25 million to $30 million to a range of $19 million to $23 million.
By the time it announced its even more disappointing first-quarter 2017 results, the company was reviewing potential strategic alternatives, including a sale or merger. It admitted it had had problems with product reliability and the commercialization of its Lumivascular technolocy, and that it was laying off about a third of its workforce and almost half of its sales force.
Within just over a month after this disclosure, the company’s stock closed at $0.38, down roughly 97% from is IPO price of $13.
The complaint claims that the company knew, by the time of its IPO, that the Pantheris product and other Lumivascular products had reliability problems, that they were not viable commercial products, making its Registration Statement and Prospectus false or misleading.