BELLUS Health Inc. (BLU) Misled Investors About its Lead Product Candidate
BELLUS common stock began trading on September 5, 2019. In its Registration Statement, BELLUS touted the efficacy of BLU-5937 and its superiority over Merck & Co’s drug currently in development for chronic cough, gefapizant. Specifically, BELLUS noted that gefapizant reportedly caused taste alternation and/or loss in up to 80% of patients, while BLU-5937 caused temporary alteration in just 5% of patients and taste loss in no patients. The Registration Statement included information about the clinical development of gefapizant as support for the expected efficacy and safety of BLU-5937. Though the Registration Statement noted other similar products in various stages of development, it touted how BLU-5937 was different and better based on its high selectivity. BELLUS repeated these statements and sentiments throughout the class period. However, the Company failed to disclose that high selectivity contributed to the drug being potentially less effective and likely not to be able to meet the primary endpoint of its Phase 2 trial.
On July 6, 2020, BELLUS revealed that the trial “did not achieve statistical significance for the primary endpoint of reduction in placebo-adjusted cough frequency at any dose tested.” Only “[a] clinically meaningful and highly statistically significant placebo-adjusted reduction in cough frequency was achieved in a specified sub-group of high cough count patients (all patients at or above the baseline median average of 32.4 coughs per hour),” so the Company intended to move “forward into an adaptive Phase 2b trial enriched for higher cough count patients. We expect to begin this trial in the fourth quarter of 2020.” On this news, BELLUS’ stock price plummeted over 75% from a class period high of $12.02 on June 29, 2020, to close at $2.97 on July 8, 2020.
