Ju­ry finds for­mer Aveo CFO David John­ston li­able for scheme to mis­lead in­vestors

SEC at­tor­ney Er­ic Forni likened ex-Aveo CFO David John­ston to a crooked used car sales­man in mak­ing the case that he had schemed to de­fraud the biotech’s in­vestors when he told them that the FDA had plen­ty of pos­i­tive things to say about ti­vo.

David John­ston

Yes, John­ston — now the CFO at pub­licly trad­ed Im­muno­Gen — not­ed that the FDA had some con­cerns. But that was like a sales­man telling a car-buy­ing cus­tomer that the en­gine was mak­ing a few nois­es, while leav­ing out the part about the brand new en­gine that was need­ed, ac­cord­ing to a sto­ry in Law360.

“Good faith would just be dis­clos­ing it all,” Forni told the ju­ry con­sid­er­ing John­ston’s case.

The ju­ry agreed. 

John­ston was found li­able for se­cu­ri­ties fraud af­ter the SEC made the case that the CFO had played an ac­tive role in a scheme to mis­lead in­vestors, push­ing the line that ti­vo was head­ed for the mar­ket — fail­ing to tell them of the many big is­sues that Richard Paz­dur’s group at the FDA had about their tri­al de­sign and how it was de­scribed to in­vestors.

I asked Im­muno­Gen if the com­pa­ny had any com­ment about the ver­dict and a com­pa­ny spokesper­son replied:

This case is not re­lat­ed to Im­muno­Gen, so we are not in a po­si­tion to com­ment. How­ev­er, we are aware of yes­ter­day’s out­come and await the fi­nal rul­ing from the court. As CFO of Im­muno­Gen, Dave con­tin­ues to make sig­nif­i­cant con­tri­bu­tions to the com­pa­ny’s progress to­wards be­com­ing a ful­ly in­te­grat­ed biotech­nol­o­gy com­pa­ny as we strive to de­vel­op tar­get­ed ther­a­pies that im­prove out­comes for can­cer pa­tients.

Whether he con­tin­ues to or not, though, isn’t en­tire­ly in Im­muno­Gen’s hands. This was a civ­il pro­ceed­ing, not a crim­i­nal pros­e­cu­tion, and a hear­ing will be sched­uled to de­ter­mine a fi­nan­cial penal­ty plus whether or not John­ston should be barred from serv­ing as an of­fi­cer or di­rec­tor of a pub­lic com­pa­ny.

The FDA has oc­ca­sion­al­ly voiced its con­cerns that quite a few biotechs tend to play fast and loose with the facts in de­scrib­ing their deal­ings with the agency. A few years ago An­drew Ceres­ney — then the en­force­ment di­rec­tor at the SEC — raised the sub­ject in a pub­lic warn­ing to bio­phar­ma, cit­ing sev­er­al cas­es that had come up to il­lus­trate the prob­lem.

The FDA, though, is bound by law to stay mum, ex­cept in a few pub­lic are­nas such as the FDA’s ad­vi­so­ry pan­el re­views, where reg­u­la­tors fa­mous­ly lit in­to Aveo’s crew when they tried to push for an ap­proval of ti­vo in 2013, de­spite a study il­lus­trat­ing a 25% in­crease in the risk of death.

Aveo’s share price was crushed, and the com­pa­ny spent much of the next 5 years deal­ing with the con­se­quences.

This is the fi­nal chap­ter of Aveo’s cau­tion­ary tale. The com­pa­ny agreed to pay $4 mil­lion to set­tle the SEC’s charges — fol­low­ing an $18 mil­lion set­tle­ment of share­hold­er suits back in Feb­ru­ary. That suit cen­tered on charges that the com­pa­ny failed to dis­close the FDA had raised their con­cerns that the piv­otal tri­al was so se­ri­ous­ly flawed they found it hard to de­ter­mine how tox­ic the drug was.

For­mer CEO Tu­an Ha-Ngoc and R&D chief William Slichen­my­er had al­so agreed ear­li­er to pay $80,000 and $50,000 in civ­il penal­ties. 

The SEC had this to say in a fol­lowup:

The ju­ry’s ver­dict makes clear that a com­pa­ny and its of­fi­cers are re­quired to be hon­est in their pub­lic com­mu­ni­ca­tions, in­clud­ing about mat­ters as crit­i­cal as com­mu­ni­ca­tions with reg­u­la­tors about ap­proval of a key prod­uct.

The top 10 block­buster drugs in the late-stage pipeline — Eval­u­ate adds 6 new ther­a­pies to heavy-hit­ter list

Vertex comes in for a substantial amount of criticism for its no-holds-barred tactical approach toward wresting the price it wants for its commercial drugs in Europe. But the flip side of that coin is a highly admired R&D and commercial operation that regularly wins kudos from analysts for their ability to engineer greater cash flow from the breakthrough drugs they create.

Both aspects needed for success in this business are on display in the program backing Vertex’s triple for cystic fibrosis. VX-659/VX-445 + Tezacaftor + Ivacaftor — it’s been whittled down to 445 now — was singled out by Evaluate Pharma as the late-stage therapy most likely to win the crown for drug sales in 5 years, with a projected peak revenue forecast of $4.3 billion.

The latest annual list, which you can see here in their latest world preview, includes a roster of some of the most closely watched development programs in biopharma. And Evaluate has added 6 must-watch experimental drugs to the top 10 as drugs fail or go on to a first approval. With apologies to the list maker, I revamped this to rank the top 10 by projected 2024 sales, instead of Evaluate's net present value rankings.

It's how we roll at Endpoints News.

Here is a quick summary of the rest of the top 10:

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How small- to mid-sized biotechs can adopt pa­tient cen­tric­i­ty in their on­col­o­gy tri­als

By Lucy Clos­sick Thom­son, Se­nior Di­rec­tor of On­col­o­gy Pro­ject Man­age­ment, Icon

Clin­i­cal tri­als in on­col­o­gy can be cost­ly and chal­leng­ing to man­age. One fac­tor that could re­duce costs and re­duce bar­ri­ers is har­ness­ing the pa­tient voice in tri­al de­sign to help ac­cel­er­ate pa­tient en­roll­ment. Now is the time to adopt pa­tient-cen­tric strate­gies that not on­ly fo­cus on pa­tient needs, but al­so can main­tain cost ef­fi­cien­cy.

John Reed at JPM 2019. Jeff Rumans for Endpoints News

Sanofi's John Reed con­tin­ues to re­or­ga­nize R&D, cut­ting 466 jobs while boost­ing can­cer, gene ther­a­py re­search

The R&D reorganization inside Sanofi is continuing, more than a year after the pharma giant brought in John Reed to head the research arm of the Paris-based company.
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UP­DAT­ED: Chica­go biotech ar­gues blue­bird, Third Rock 'killed' its ri­val, pi­o­neer­ing tha­lassemia gene ther­a­py in law­suit

Blue­bird bio $BLUE chief Nick Leschly court­ed con­tro­ver­sy last week when he re­vealed the com­pa­ny’s be­ta tha­lassemia treat­ment will car­ry a jaw-drop­ping $1.8 mil­lion price tag over a 5-year pe­ri­od in Eu­rope — mak­ing it the plan­et’s sec­ond most ex­pen­sive ther­a­py be­hind No­var­tis’ $NVS fresh­ly ap­proved spinal mus­cu­lar at­ro­phy ther­a­py, Zol­gens­ma, at $2.1 mil­lion. A Chica­go biotech, mean­while, has been fum­ing at the side­lines. In a law­suit filed ear­li­er this month, Er­rant Gene Ther­a­peu­tics al­leged that blue­bird and ven­ture cap­i­tal group Third Rock un­law­ful­ly prised a vi­ral vec­tor, de­vel­oped in part­ner­ship with the Memo­r­i­al Sloan Ket­ter­ing Can­cer Cen­ter (MSK), from its grasp, and thwart­ed the de­vel­op­ment of its sem­i­nal gene ther­a­py.

Neil Woodford. Woodford Investment Management via YouTube

Wood­ford braces po­lit­i­cal storm as UK fi­nan­cial reg­u­la­tors scru­ti­nize fund sus­pen­sion

The shock of Neil Wood­ford’s de­ci­sion to block with­drawals for his flag­ship fund is still rip­pling through the rest of his port­fo­lio — and be­yond. Un­der po­lit­i­cal pres­sure, UK fi­nan­cial reg­u­la­tors are now tak­ing a hard look while in­vestors con­tin­ue to flee.

In a re­sponse let­ter to an MP, the Fi­nan­cial Con­duct Au­thor­i­ty re­vealed that it’s opened an in­ves­ti­ga­tion in­to the sus­pen­sion fol­low­ing months of en­gage­ment with Link Fund So­lu­tions, which tech­ni­cal­ly del­e­gat­ed Wood­ford’s firm to man­age its funds.

John Chiminski, Catalent CEO - File Photo

'It's a growth play': Catal­ent ac­quires Bris­tol-My­er­s' Eu­ro­pean launch pad, ex­pand­ing glob­al CD­MO ops

Catalent is staying on the growth track.

Just two months after committing $1.2 billion to pick up Paragon and take a deep dive into the sizzling hot gene therapy manufacturing sector, the CDMO is bouncing right back with a deal to buy out Bristol-Myers’ central launchpad for new therapies in Europe, acquiring a complex in Anagni, Italy, southwest of Rome, that will significantly expand its capacity on the continent.

There are no terms being offered, but this is no small deal. The Anagni campus employs some 700 staffers, and Catalent is planning to go right in — once the deal closes late this year — with a blueprint to build up the operations further as they expand on oral solid, biologics, and sterile product manufacturing and packaging.

This is an uncommon deal, Catalent CEO John Chiminski tells me. But it offers a shortcut for rapid growth that cuts years out of developing a green fields project. That’s time Catalent doesn’t have as the industry undergoes unprecedented expansion around the world.

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Arc­turus ex­pands col­lab­o­ra­tion, adding $30M cash; Ku­ra shoots for $100M raise

→  Rare dis­ease play­er Ul­tragenyx $RARE is ex­pand­ing its al­liance with Arc­turus $ARCT, pay­ing $24 mil­lion for eq­ui­ty and an­oth­er $6 mil­lion in an up­front as the two part­ners ex­pand their col­lab­o­ra­tion to in­clude up to 12 tar­gets. “This ex­pand­ed col­lab­o­ra­tion fur­ther so­lid­i­fies our mR­NA plat­form by adding ad­di­tion­al tar­gets and ex­pand­ing our abil­i­ty to po­ten­tial­ly treat more dis­eases,” said Emil Kakkis, the CEO at Ul­tragenyx. “We are pleased with the progress of our on­go­ing col­lab­o­ra­tion. Our most ad­vanced mR­NA pro­gram, UX053 for the treat­ment of Glyco­gen Stor­age Dis­ease Type III, is ex­pect­ed to move in­to the clin­ic next year, and we look for­ward to fur­ther build­ing up­on the ini­tial suc­cess of this part­ner­ship.”

Gilead baits new al­liance with $45M up­front, div­ing in­to the busy pro­tein degra­da­tion field

Gilead is jump­ing on board the pro­tein degra­da­tion band­wag­on. And they’re turn­ing to a low-pro­file Third Rock start­up for the ex­per­tise. But if you were look­ing for a trans­for­ma­tion­al deal to kick up fresh en­thu­si­asm for Gilead, you’ll have to re­main pa­tient.

This one will have a long way to go be­fore they get in­to the clin­ic.

The big biotech said Wednes­day morn­ing that it is pay­ing $45 mil­lion up­front and re­serv­ing a whop­ping $2.3 bil­lion in biotech bucks if San Fran­cis­co-based Nurix can point the way to new can­cer ther­a­pies, as well as drugs for oth­er, un­spec­i­fied dis­eases.

A new num­ber 1 drug? Keytru­da tapped to top the 10 biggest block­busters on the world stage by 2024

Analysts may be fretting about Keytruda’s longterm prospects as a host of rival therapies elbow their way to the market. But the folks at Evaluate Pharma are confident that last year’s $7 billion earner is headed for glory, tapping it to beat out the current #1 therapy Humira as AbbVie watches that franchise swoon over the next 5 years.

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