Why did TG Therapeutics, Inc. abandon part of its new drug study? The complaint for this securities class action doesn’t answer that question, but it quotes an investor publication that is scathing in its evaluation of the effects. The complaint claims that the company’s positive statements about the drug’s trial during the class period did not hint at difficulties and were violations of the Securities Exchange Act of 1934.
The class for this action is all persons who acquired TG Therapeutics securities between September 15, 2014 and October 12, 2016.
TG Therapeutics specializes in biopharmaceuticals for novel treatments of B-cell malignancies and autoimmune diseases. During the class period, the company was developing two treatments for hematological malignancies and autoimmune disease, known as TG-1101 and TGR-1202.
On September 17, 2014, the beginning of the class period, TG announced it had agreed with the Food and Drug Administration (FDA) on a Special Protocol Assessment (SPA) for the design of a Phase III trial of a drug combination.
The trial, which the company named Genuine, had two parts. The first would test overall response rate (ORR) to a combination of TG-1101 and another drug (ibrutinib) in about 200 patients, meant to support a request for accelerated approval of TG-1101. The second would then follow about 330 patients to evaluate the same combination on progression-free survival (PFS), meant to support full approval of TG-1101.
During the class period, the complaint claims that TG made positive statements about the trial, calling the drug combination a “best-in-class treatment” that would “offer patients a novel chemo-free treatment option.”
On August 10, 2015, on a conference call, TG’s CEO said the study was supported by “very compelling data demonstrating the safety and activity of this regimen.” And on a March 9, 2016 conference call, he said that “we believe we’re nearing that key inflection point where these types of studies accelerate dramatically.”
But on October 13, 2016, the company announced that it was giving up on the second part of the trial. The complaint alleges that this had two bad effects: First, it invalidated the SPA. Second, because the primary endpoint was reduced to ORR and enrollment to 120 patients, it might take the company another two years to test the combination on 300 patients, the number needed to show a PFS benefit.
On the same day, TheStreet published an article saying that TG had “a management credibility problem.” The CEO had called the change “a milestone” and the article said, “Sure, if you define a milestone as blowing up a Special Protocol Assessment … cutting planned enrollment by one third, eliminating important efficacy endpoints and generally loading up the study and the company’s regulatory strategy with way more risk.”
The company’s stock fell by about 27% in reaction to the news.