Spectrum Pharmaceuticals Inc. (SPPI) Misled Investors Regarding the Viability and Efficacy of its New Drug
A shareholder filed a class action on behalf of all purchasers of Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) common stock between December 6, 2021 and September 22, 2022, for violations of the Securities Exchange Act of 1934. Spectrum purports to be a biopharmaceutical company focused on acquiring, developing, and commercializing novel and targeted oncology therapies.
According to the complaint, before the class period, defendants were conducting a Phase 2 clinical trial called ZENITH20 to evaluate the safety and tolerability of poziotinib in patients with locally advanced or metastatic non-small cell lung cancer that have certain mutations and were previously treated with the standard of care.
On December 6, 2021, Spectrum issued a press release announcing it submitted a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for poziotinib’s use in patients with previously treated locally advanced or metastatic NSCLC with HER2 exon 20 insertion mutations. The NDA submission was based on purportedly “positive results of Cohort 2 from the ZENITH20 clinical trial, which assessed the safety and efficacy of poziotinib.”
During the class period, defendants represented the safety and efficacy data from the ZENITH20 trial were positive and that they had initiated the required confirmatory phase 3 study. However, unknown to investors, this was not true.
On September 20, 2022, the FDA released a briefing document ahead of its scheduled September 22, 2022 Oncologic Drugs Advisory Committee (“ODAC”) meeting regarding poziotinib. In sharp contrast to defendants’ representations that the ZENITH20 data was positive and that the required confirmatory Phase 3 trial was initiated and patients were being randomized, the briefing document identified material negative concerns about the efficacy and safety data supporting the poziotinib NDA, and revealed that defendants’ Phase 3 confirmatory trial had not enrolled a single patient.
On this news, shares of Spectrum common stock declined from a closing price of $1.06 per share on September 19, 2022, to a close at $0.66 per share on September 20, 2022, a decline of $0.40 per share. Analysts began reporting negatively regarding the ODAC meeting.
Then, according to Reuters, on September 22, 2022, before the opening of the market, trading in Spectrum shares was halted at $0.63 per share pending the outcome of the FDA ODAC meeting. That same day, ODAC voted 9-4 not to recommend poziotinib for Accelerated Approval.
On September 23, 2022, when trading in Spectrum common stock resumed, shares declined from a closing price of $0.63 per share on September 21, 2022, before trading was halted, to a close at $0.43 per share on September 23, 2022, a decline of $0.20 per share, or over 31%.
On November 25, 2022, defendants caused Spectrum to issue a press release disclosing that the Company received a CRL from the FDA indicating the poziotinib NDA cannot be approved in its present form.
What Now: Shareholders who purchased shares of Spectrum Pharmaceuticals between December 6, 2021 and September 22, 2022, have until February 2, 2023, to seek appointment as lead plaintiff. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
