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.

Am­gen lays off about 300 work­ers, cit­ing 'in­dus­try head­wind­s'

Amgen has laid off about 300 employees, a company spokesperson confirmed to Endpoints News via email Sunday night.

Employees posted to LinkedIn in recent days about layoffs hitting Amgen last week. The Thousand Oaks, CA-based biopharma, which employs about 24,000 people, said the reduction “mainly” impacted US-based workers on its commercial team.

Drug developers of all sizes, including small upstarts and pharma giants, have let employees go in recent months as the biopharma market drags through a quarters-long winter doldrum.

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Bob Bradway, Amgen CEO (Stephen Lam/Reuters)

Am­gen launch­es the first US Hu­mi­ra biosim­i­lar at two dif­fer­ent list prices

The bizarre dynamics of the US prescription drug market were on full display once again this morning as Amgen announced that it would launch the first US biosimilar for Humira, the best-selling drug of all time, at two completely different list prices.

One price for Amgen’s Amjevita (adalimumab-atto) will be 55% below the current Humira list price, which is about $84,000 per year, and another at a list price 5% below the current Humira list price, but presumably (pharma companies don’t disclose rebates) with high rebates to attract PBMs and payers.

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Dirk Thye, Quince Therapeutics CEO

Af­ter piv­ot­ing from Alzheimer's to bone con­di­tions, biotech piv­ots again — and halves its head­count

When troubled public biotech Cortexyme bought a private startup named Novosteo and handed the keys to its executive team, the company — which changed its name to Quince Therapeutics — said it would shift its focus from an unorthodox Alzheimer’s approach to Novosteo’s bone-targeting drug platform.

Less than a year later, Quince is pivoting again.

The biotech has decided to out-license its bone-targeting drug platform and its lead drug, NOV004, and instead look for clinical-stage programs to in-license or acquire, according to a press release.

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New York City in­vests $20M in­to biotech 'in­no­va­tion space' at the Brook­lyn Navy Yard

New York City is investing $20 million in biotech this year in the form of a 50,000-square-foot “innovation space” at the Brooklyn Navy Yard, complete with offices, research laboratories and events and programming space to grow biotech startups and companies.

Mayor Eric Adams said during his State of The City Address last Thursday that there will be an “emphasis” on making more opportunities for women and people of color to further diversify the industry. The City first reported the news.

Boehringer In­gel­heim touts pre­ven­tion re­sults in rarest form of pso­ri­a­sis

Boehringer Ingelheim uncorked some positive results suggesting that Spevigo can help prevent flare-ups in patients with a severe form of psoriasis, months after the drug was approved to treat existing flares.

Spevigo, an IL-36R antibody also known as spesolimab, met its primary and a key secondary endpoint in the Phase IIb EFFISAYIL 2 trial in patients with generalized pustular psoriasis (GPP), Boehringer announced on Monday. While the company is keeping the hard numbers under wraps until later this year, it said in a news release that it anticipates sharing the results with regulators.

As­traZeneca, No­vo Nordisk and Sanofi score 340B-re­lat­ed ap­peals court win over HHS

AstraZeneca, Novo Nordisk, and Sanofi won an appeals court win on Monday, as the US Court of Appeals for the Third Circuit found that the companies cannot be forced to provide 340B-discounted drugs purchased by hospitals from an unlimited number of community and specialty pharmacies.

“Legal duties do not spring from silence,” the decision says as the court makes clear that the federal government’s interpretation of the “supposed requirement” that the 340B program compels drugmakers to supply their discounted drugs to an unlimited number of contract pharmacies is not correct, noting:

Ap­peals court toss­es J&J's con­tro­ver­sial 'Texas two-step' bank­rupt­cy case

A US appeals court has ruled against Johnson & Johnson’s use of bankruptcy to deal with mounting talc lawsuits, deciding that doing so would “create a legal blind spot.”

The Third Circuit Court of Appeals reversed a previous bankruptcy court decision on Monday, calling for the dismissal of a Chapter 11 filing by J&J’s subsidiary LTL Management.

Faced with more than 38,000 lawsuits alleging its talc-based products caused cancer, J&J spun its talc liabilities into a separate company called LTL Management back in October 2021 and filed for bankruptcy, a controversial move colloquially referred to as a “Texas two-step” bankruptcy. Claimants argued that the strategy is a misuse of the US bankruptcy code — and on Monday, a panel of judges agreed.

Troy Tazbaz, FDA's newly-named director of the Digital Health Center of Excellence (Oracle via YouTube)

Or­a­cle ex­ec­u­tive Troy Tazbaz named new FDA di­rec­tor of dig­i­tal health

The FDA has found a brand new director of the Digital Health Center of Excellence in Troy Tazbaz, a former senior vice president at Oracle.

According to Tazbaz’s LinkedIn, he took a five-month break after leaving an 11-year career at Oracle before joining the FDA in January. Stat News first reported the hire. Tazbaz also said on his LinkedIn that he biked all the way from Chesapeake Bay to the San Francisco Bay over 58 days during his career break.

Chad Mirkin, Flashpoint co-founder

‘The field is at a flash­point’: New Chad Mirkin-found­ed biotech hopes to make more ef­fec­tive can­cer vac­cines

Following the success of the mRNA Covid vaccines, cancer vaccines are seeing renewed interest after years of middling results. But a group of researchers suggests that more attention needs to be paid not to what goes into those vaccines, but how the parts are put together.

In a recent paper published in Nature Biomedical Engineering, researchers led by Northwestern University’s Chad Mirkin describe how the placement of different antigens in a cancer vaccine impacts its efficacy. The paper builds on past work done by Mirkin’s lab that suggests the structure, or how the parts of a vaccine are arranged, impact a vaccine’s efficacy, not just its components.

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