Now that Aveo's share price has been badly mauled in the aftershock of an FDA panel vote rejecting its kidney cancer drug tivozanib, the class action suits are starting to pile up at the front door. On Sunday, Federman & Sherwood became at least the third law firm in four days to file a class action suit against the biotech company ($AVEO), claiming investors had been badly damaged by the company's "false misrepresentations." It isn't likely to be the last.
Aveo isn't the first publicly traded biotech company to get hit with lawsuits after a regulatory setback. But with some analysts calling for the resignation of CEO Tuan Ha-Ngoc after the beating delivered by the FDA's oncology chief, Richard Pazdur, the legal insults are multiplying at a rapid-fire pace in the wake of the public humiliation.
Aveo's PR and regulatory disaster began when the FDA's internal review revealed that regulators were having severe misgivings about the biotech's development strategy for tivozanib way back in the spring of 2012. Regulators didn't care for the rare appearance of American patients in the study, which was heavily weighted toward Eastern Europe, nor was it buying Aveo's rationale for the embarrassing fact that the drug--while meeting the primary goal on progression-free survival--had been bested by Nexavar on the overall-survival front.
Even at that time, the company was being advised to consider a follow-up study. Aveo, though, maintained that the OS data was skewed by the fact that patients whose disease had progressed were switched to new drugs, often tivozanib. And the company won over a legion of analysts who remained confident that Aveo would win out in the end.
Once Pazdur took to the floor during the panel review, the game was over for Aveo. Pazdur argued vehemently against tivozanib, saying that a vote in favor of a drug that had produced data of an increased risk of death would set a dangerous precedent. In the end, the panel voted 13 to one against an approval, leaving Aveo to suffer in silence until the formal decision comes down.
Over the past year, the company's shares have fallen 78%, leaving Aveo in a badly weakened condition as it faces one of its biggest challenges.
- here's the release on the latest filing
Special Report: Tivozanib – Top 10 Late-Stage Cancer Drugs – 2012