Celgene assured investors that it had three promising drugs, but the complaint for this securities class action claims that its overly optimistic statements about them were violations of the Securities Exchange Act of 1934.
The class for this action is all persons or entities who bought Celgene common stock between September 12, 2016 and February 27, 2018.
Celgene creates therapies for cancer and inflammatory diseases. Its most successful drug, Revlimid, provided more than 60% of the company’s total net product sales in 2016. These profits have been sustained by price increases, the complaint claims, as the company has tripled its price to $20,000 per month.
Revlimid’s patent will expire soon, allowing cheaper generics to cut into its market, but Celgene claimed it had three promising drugs to take Revlimid’s place:
The company put out a five-year plan that predicted $21 billion in net product sales by 2020, nearly triple the amount for 2014. The plan included hundreds of millions in sales from GED-0301 and an increase in sales of Otezla.
On September 12, 2016, the start of the class period, the company put out data from an endoscopy trial of GED-0301 which it claimed showed “both endoscopic improvements and clinically meaningful responses and remission at an early timepoint…” Unfortunately, the complaint claims that the company had designed a flawed trial to dispel investor concerns and that it had not shown real efficacy.
During the next year, the complaint claims that the company continued to say that GED-0301 was promising and that its 2020 guidance would be met. It also made claims for its two other drugs, saying they could “literally, change the entire landscape” of how their target diseases were treated. On September 26, 2017, the company claimed that non-US sales of Otezla were growing “at a greater than 100% clip” and, again, that the 2020 predictions would be met or exceeded.
Less than a month later, on October 19, the company announced it would abandon GED-0301 and take a $1.6 billion impairment charge.
A week later, the company released its third-quarter results, showing that Otezla had slowed to only 2% growth in US sales. Although the company modified its 2020 projections, it raised its projections for Revlimid and other existing products. After that, the company touted its drug Ozanimod as having the potential for billions of dollars in sales.
On February 27, 2018, however, the company announced that the FDA had issued a Refusal to File letter for Ozanimod, stating that the information submitted was insufficient for review.
At each piece of news, the company’s stock fell, until at last it was trading more than 40% below its high during the class period.