According to the complaint for this securities class action, Seattle Genetics, Inc. touted the technology in its new drug candidate, claiming that it was more effective and did not have the health risks of an earlier version. These statements were false or misleading, the complaint claims, and they were violations of the Securities Exchange Act of 1934.
The class for this action is all persons or entities who acquired Seattle Genetics common stock between October 27, 2016 and December 27, 2016.
Seattle Genetics is a development-stage biopharmaceutical company. One of its drug candidates is SGN-CD33A, a type of cancer drug known as an ADC that delivers locally strong anti-cancer agents that would be too toxic if generally delivered. SGN-CD33A is meant to treat acute myeloid leukemia (AML).
Both Seattle and Pfizer had previously developed ADCs. Pfizer’s was on the market from 2000 to 2010 until the Food and Drug Administration (FDA) requested it be withdrawn when an advanced trial showed a higher toxicity than chemotherapy without a corresponding benefit. Seattle abandoned its original ADC around the same time, saying that clinical trials did not show extended survival, but no statements were made about toxicity or other safety issues.
According to the complaint, Seattle claimed that its new ADC, SGN-CD33A, had a better design, used more advanced ADC technology, and did not share the toxicity of the earlier drugs. But the complaint claims that these statements were false because the drug was in fact hepatoxic, that is, toxic to the liver.
The complaint contends that the company knew this in a number of ways.
On December 27, 2016, the end of the class period, the FDA put holds on the company’s trials of SGN-CD33A, with a full hold placed on one and two others allowed to continue only if the patients involved signed a revised consent form.
At this news, the company’s stock fell by 15%.
On March 6, 2017, the company announced that it was abandoning the first trial and would take measures to mitigate hepatoxicity risks in the other two.
On June 19, 2017, the company announced it would discontinue a Phase III study of the drug because of a high rate of deaths in the trials due to “fatal infections” of an unspecified nature. It also suspended enrollment in other trials for the drug.