Frequency Therapeutics, Inc. (FREQ) Misstated the Potential of its Hearing Loss Treatment FX-322
Frequency Therapeutics began its Phase 2a trial for FX-322 in October 2019. The trial results failed to live up to the Company’s expectations, as they revealed no discernable difference between FX-322 and the placebo. However, the Company continued to conduct the trial and released positive statements in earnings calls, press releases, SEC filings, and pharmaceutical presentations about FX-322’s potential. At the same time, CEO David Lucchino sold over 350,000 shares and earned over $10.5 million in the months prior to releasing the results of the Phase 2a trial. On March 23, 2021, Frequency Therapeutics disclosed disappointing Phase 2a results, revealing that subjects with mild to moderate SNHL did not demonstrate improvements in hearing measures versus placebo. On this news, Frequency Therapeutics’ shares fell 78% from $36.29 to $7.99, losing approximately $955 in market capitalization.
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