Violations of federal antifraud provisions alleged against two hepatitis B treatment producers

By Wendy S. Salkin

Two investor class-action suits have been filed within days of one another against two different California-based pharmaceutical companies both of which produce hepatitis B treatments, Dynavax Technologies and Arrowhead Pharmaceuticals. The named plaintiffs in both shareholder class-action suits, David Soontjens and Yaki J. Meller, are represented by counsel at Pomerantz, LLP.[1]

Meller v. Arrowhead Pharmaceuticals, Inc., et al., complaint filed (C. D. Cal. Nov. 15, 2016)

On November 15th, named plaintiff Yaki J. Meller filed a Class Action Complaint in the United States District Court for the Central District of California against Pasadena-based Arrowhead Pharmaceuticals, Inc., its President and CEO (Christopher Anzalone), and its CFO (Kenneth Myszkowski). Arrowhead is a biopharmaceutical company that, according to its website, “develops medicines that treat intractable diseases by silencing the genes that cause them.”

Among its clinical stage drugs are ARC-520 and ARC-521, which “are designed to treat chronic hepatitis B virus infection by reducing the expression and release of new viral particles and key viral proteins with the goal of achieving a functional cure.” ARC-520 is the drug at issue. According to the Complaint, Arrowhead knew but failed to disclose that ARC-520 “could be fatal at its higher doses and that the FDA was unlikely to approve the treatment as a result.”[2] In particular, the Complaint alleges that Arrowhead:

made false and/or misleading statements and/or failed to disclose that: (i) the Company’s ARC-520 was unsafe at certain doses and caused deaths in an ongoing primate toxicology study; and (ii) as a result, Arrowhead’s public statements were materially false and misleading at all relevant times.

According to Meller’s Complaint, in so doing, Arrowhead violated Sections 10(b) (“Position Limits and Position Accountability for Security-Based Swaps and Large Trader Reporting.”) and 20(a) (“Liability to contemporaneous traders for insider trading.”) of the Securities Exchange Act of 1934, “Position Limits and Position Accountability for Security-Based Swaps and Large Trader Reporting” and “Liability to contemporaneous traders for insider trading,” respectively, and Securities and Exchange Commission Rule 10b-5, “Employment of manipulative and deceptive devices.”

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