Investor suit fueled by news articles over failed cancer drug ends in $24M settlement
Once riding high with a market value close to $1 billion, Geron on Tuesday said it settled an investor lawsuit for $24 million.
Stockholders claimed the company wrongly touted early data for a Janssen-partnered cancer drug candidate and failed to reveal the actual disappointing primary endpoint results.
Back in 2018, the company touted the favorable survival rate of the candidate known as imetelstat, saying it helps patients live longer with a type of bone marrow disorder, and the company compared the results to other clinical trials, the investors claimed, stating “that multiple outcome measures suggested clinical benefit from the use of imetelstat.”
But the investors cited 2018 news reports from Stat News‘ Adam Feuerstein, who called on Geron to “disclose the baseline disease characteristics of the 100 myelofibrosis patients enrolled in their Phase 2 study” and “to explain why they’ve delayed by almost one year the disclosure of primary endpoint results from the Phase 2 study that would show, definitively, if myelofibrosis patients respond to treatment with imetelstat,” both of which the company declined to do.
Several months later, Geron stock shares plunged by more than 25% after it “confirmed the journalist’s suspicions by revealing that the IMbark study failed to meet its primary efficacy endpoints. Additionally, Janssen terminated its collaboration agreement to develop imetelstat,” the suit notes.
That collaboration, which still brought Geron $35 million upfront, once had J&J promising to pay up to $935 million in fees and milestones.
While Geron did not admit any guilt in the settlement with investors, and its stock price rose by 3%, the company and Janssen appeared to have intentionally slowed the suit, according to court filings.
“The sole reason that the trial had to be postponed was because Janssen dragged its feet and had taken so long to produce the relevant documents,” Judge William Alsup of the US District Court for the Northern District of California, wrote in an order filed in July. He said that Janssen took a total of 104 days to produce certain requested records.
“If this causes additional expense, Janssen has no one to blame but itself and its lawyers. It is important to the Court that counsel be here in person to discuss these issues. (Moreover, it is improper to make a telephone request like Janssen’s counsel have made),” he added.
Janssen’s lawyer George McClellan told the court a month earlier that the delay was due to the volume of the records collected, and “some unexpected technical difficulties in processing the data.”