This is a securities fraud class action lawsuit against Nuvelo Inc and certain officers and directors.
Nuvelo is a biopharmaceutical company engaged in the development and commercialization of acute cardiovascular and cancer therapies.
The class action complaint alleges that Nuvelo misrepresented its chances of obtaining Food and Drug Administration ("FDA") approval of a purported new blood clot dissolver, alfimeprase. The class action lawsuit alleges that despite the fact that 80% of Nuvelo's value was attributed to this drug, Nuvelo's top officers concealed that their own clinical data demonstrated alfimeprase was ineffective in dissolving blood clots. On December 14, 2005 Nuvelo announced it had received a Special Protocol Assessment ("SPA") agreement from the FDA, claiming that the SPA would solidify the regulatory pathway to approval for alfimeprase. Nuvelo also stated their "power calculations" demonstrated alfimeprase's efficacy as a drug candidate. During a January 5, 2006 conference call, Nuvelo confirmed they believed alfimeprase would reach the U.S. consumer market by 2008 and that alfimeprase would generate $500 million in annual sales in the U.S. alone.
The class action complaint alleges Nuvelo's stock price surged on this news and remained inflated throughout the Class Period while Nuvelo issued and sold 7.5 million shares of its common stock in an underwritten offering on January 30, 2006, receiving over $119 million in proceeds. Then on December 11, 2006, Nuvelo disclosed that alfimeprase had completely failed its clinical trials. During the conference call following the announcement, Nuvelo's CEO admitted that alfimeprase failed to perform better than placebos and that previously reported positive results were due to drug injections washing clots away rather than dissolving them.
On this news Nuvelo's stock fell 80%, erasing over $800 million in market capitalization. According to the class action complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were that:
(i) Nuvelo had no reliable clinical data suggesting that alfimeprase "dissolved" blood clots when applied to them through a catheter, other than physically washing them away;
(ii) Nuvelo had no "power calculations" suggesting alfimeprase would out-perform a placebo as required to demonstrate the efficacy the FDA would demand; and
(iii) Nuvelo knew the decision of Amgen, the drug's original developer, to walk away in December 2004 was based on Amgen's educated suspicion (based on clinical data also known to Nuvelo) that alfimeprase would likely not pass FDA muster and thus was not a commercially viable.
Name (Stock Symbol)
Nuvelo, Inc. (ABIO)
On January 27, 2009, ARCA biopharma merged with Nuvelo, Inc.. Together the merged company is a biotech company.
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