PTC Therapeutics, Inc. (NASDAQ:PTCT) and Insys Therapeutics Inc (NASDAQ:INSY) would soon be facing a securities class action lawsuit, from various LLPs on charges of incomplete or false disclosure. In the case of PTCT, the company’s officers would be held responsible for violations of SEC laws. The lawsuit concerns PTC’s rapidly progressing drug, Translarna, in particular. Similarly, in the case of INSY, the company faces charges of hiding information about its engagement in illegal off-label marketing of Subsys. Consequently, for a certain period, all financial statements from the company were misleading.
The lawsuit against PTCT was initiated after the company’s application for its new drug Translarna was turned down, by the FDA. In its refuse to file letter, the regulatory body had stated that PTC had submitted incomplete data, which made it impossible for the FDA to reach a conclusive decision. Translarna is a protein restoration therapy, being developed to treat nonsense mutation Duchenne Muscular Dystrophy.
As a result, LLPs have stated that shareholders, who had bought the stock between May 7, 2014 and February 29, 2016, had suffered losses. The LLPs state that this is because the company misrepresented its NDA application, which is also in violation of SEC laws. The claims state that the application did not contain sufficient evidence to prove Translarna’s effectiveness. Added to this, it is also claimed that the company removed some data from the phase-3 trials of the drug.
Similarly, Insys investors, who had bought the stock between March 3, 2015 and January 25, 2016, had been affected by the company. The lawsuits claim that the company misled investors, through its financial statements, by not disclosing its involvement in improper and illegal off-labeling of Subsys. Furthermore, the claims also state that certain INSY employees were also involved in kickback schemes, so as to increase the prescriptions of Subsys. The drug is mainly used for treatment of pain, mainly in cancer patients. The claims were filed, after the publishing of a report titled: “The Brotherhood of Thieves: Insys Therapeutics”, which claims that INSY had pressured employees to develop schemes to increase the market of the drug.