Complex medical devices are regulated by the Food and Drug Administration (FDA). If a company doesn’t have FDA approval for a device, it doesn’t have a product. The complaint for this securities class action claims that Rewalk Robotics Ltd. could not provide the FDA with an adequate plan for a post-market surveillance study of its exoskeletons, and that it also failed to inform investors of the risks this posed to the company, in violation of the Securities Act of 1935 and the Exchange Act of 1934.
The class for this action is (a) all persons and entities who bought Rewalk securities between September 12, 2014 and February 29, 2016, and (b) all persons and entities who bought Rewalk common stock pursuant or traceable to Rewalk’s initial public offering (IPO) on September 12, 2014.
Rewalk, previously known as Argo Medical Technologies, Inc., designs exoskeletons that help people walk again after spinal cord injuries.
In 2013, the company asked the FDA for a reclassification of its exoskeleton. The FDA agreed but required that the company conduct a post-market surveillance study. In a June 26, 2014 order, it said falls with the device “would be reasonably likely to cause serious user injury and/or death” such as through traumatic brain injury, spinal cord injury, or fractures.
Less than three months later, on September 12, the company completed its IPO, selling 3 million shares of stock. The IPO Registration Statement called the device a “breakthrough product” supported by “compelling clinical data” from “rigorous trials” but the complaint says it did not disclose the reasons for the additional study or the FDA’s reservations about safety.
On September 29, the FDA told the company that its plan was deficient and asked for a rewrite within thirty days. On November 5, the FDA informed the company that the rewrite was overdue. The following day, the company presented another plan, which the FDA also rejected.
Again, the complaint says the company did not respond by deadline; it said it would respond by April 15, but again failed to do so.
On April 16, the FDA asked after the overdue response. Over a month later, the company asked for a discussion of “one issue” that it “was not in a position to respond to.” The complaint claims that the FDA made multiple attempts to set up a teleconference but failed.
On August 10, the company said it was proposing substantial changes to the plan. The FDA gave feedback on September 5 and again requested a revised plan, as soon as possible.
When it did not receive a response by September 30, 2015, the FDA sent a Warning Letter, noting that the law required the post-surveillance study to be approved within fifteen months. That deadline had expired on September 28. Therefore, the company’s product was now misbranded.
In February 2016, the FDA again rejected a plan. On Mach 1, 2016, the FDA published its September 30, 2015 Warning Letter on its website, at which the company’s stock price fell, until it was trading at only 88% of the price at the IPO.