- Company Name
- Zogenix, Inc.
- Stock Symbol
- Class Period
- February 6, 2019 to April 8, 2019
- Motion Deadline
- June 11, 2019
- Northern District of California
The complaint charges Zogenix and certain of its officers with violations of the Securities Exchange Act of 1934. Zogenix is a pharmaceutical company that develops and commercializes therapies for the treatment of central nervous system disorders in the United States. Its lead product candidate is ZX008, or “FINTEPLA,” which is a low-dose fenfluramine in Phase III clinical trials for the treatment of seizures associated with Dravet syndrome. On February 6, 2019, Zogenix announced the submission of its New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for FINTEPLA.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects, including that Zogenix’s NDA for FINTEPLA contained inadequate non-clinical data and an incorrect version of a clinical dataset, and, as a consequence, Zogenix’s NDA for FINTEPLA was unlikely to gain FDA approval. As a result of this information being withheld from the market, Zogenix securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of around $55 per share.
Then on April 8, 2019, Zogenix announced that the Company had received a refusal-to-file letter from the FDA stating that the Company‘s NDA for FINTEPLA “was not sufficiently completed to permit a substantive review . . . . [F]irst, certain non-clinical studies were not submitted to allow assessment of the chronic administration of fenfluramine; and, second, the application contained an incorrect version of a clinical dataset, which prevented the completion of the review process that is necessary to support the filing of the NDA.” In a conference call later that evening, the Company’s CEO stated that they had submitted historical studies on fenfluramine as part of the NDA rather than conducting their own non-clinical toxicology studies, as desired by the FDA, and that had Zogenix done its own studies it would have taken another 12 to 15 months. Market analysts were quick to point out the significance of Zogenix’s disclosures, with one Motley Fool analyst stating that “the submission of a wrong data set is cause for concern,” as “Zogenix basically committed an unforced error that could prove extremely costly in terms of future sales in the United States,” especially with the drug’s chief competitor “off to a blistering start.” On this news, the price of Zogenix stock fell $11.89 per share, or nearly 23%, to close at $39.96 per share on April 9, 2019.