A securities class action alleging wrongdoing by Puma Biotechnology Inc. is headed for trial early next year after a judge postponed proceedings, originally scheduled for Nov. 6.
The suit seeks more than $1.3 billion from the company over stock price inflation that plaintiffs allege was caused by misleading public statements from company executives.
The West Los Angeles-based biopharmaceutical company denies any wrongdoing and has tried to downplay the potential impact of the case in corporate filings. Puma claims in documents filed with the Securities and Exchange Commission that an adverse outcome at trial – set to begin Jan. 15 in federal court in L.A. – would have no “material adverse effect” on operations or finances.
But a court motion filed by Puma last month suggests otherwise, going so far as to claim an adverse outcome could jeopardize the company’s ability to deliver the breast cancer drug Nerlynx.
Lawyers for the company argue in the motion that a large jury award could have “significant implications for Puma’s ability to continue offering Nerlynx to breast cancer patients going forward.”
The 3-year-old case – with a mountain of documents and dozens of motions by each side – represents a rare securities class action filed against a biotech company that might actually go to trial, industry watchers and attorneys said.
“I’ve been investing in this space for more than 20 years. It’s incredibly rare to go to trial,” said Paul Yook, a general partner of New York-based LifeSci Venture Partners, and the founder of two biotech funds. “The majority are nuisance lawsuits.”
The law firm representing the plaintiff, San Diego-based Robbins Geller Rudman & Dowd, declined to comment as did Puma’s attorneys at downtown-based Latham & Watkins.
Puma Biotechnology was founded eight years ago by Puma Chief Executive Alan Auerbach. The biopharma firm won federal approval in July 2017 to sell its neratinib breast cancer drug, Nerlynx.
The company has been vociferous in its denial of wrongdoing throughout the litigation, repeatedly claiming plaintiffs’ allegations are baseless.
“After full development of the facts in discovery,” Puma attorneys said in a motion filed last fall, “… plaintiff’s securities fraud allegations fail at every level.”
A Puma filing this month to the SEC said the volatility of its common stock has opened the company up to securities lawsuits that could cause the company to incur substantial costs and resources.
The company expects to recoup $11.2 million in insurance reimbursements for legal expenses related to the class-action complaint, according to SEC filings.
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