California Drug Maker Avalanche Biotechnologies Inc. is in court after shareholders brought a proposed class action IPO suit regarding clinical trials aimed at combating vision loss.
The plaintiffs allege that Avalanche knew that its vision loss gene therapy was ineffective before its initial public offering (IPO). Avalanche initially claimed tentative positive safety trial results, and that the drug was “well tolerated” in ongoing clinical trials.
Avalanche seeks a dismissal of the IPO suit, stating that the shareholders’ assertions relied on a logical leap without the facts to back it up. In particular, the plaintiffs take issue with the safety of the drug, stating that just because the drug is not having harmful effects does not mean that it is working.
According to the shareholders, some of the safety data available to the company was not revealed to its investors – information that the market would have wanted to know.
Also at issue was how to interpret the meaning of “well tolerated” – either within the framework of the Food and Drug Administration safety frameworks or with respect to the gene therapy’s success.
If Avalanche’s motion to dismiss is denied, the case will continue moving forward. We will keep you updated with news as the case progresses.
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