Juno Therapeutics, a Seattle-based clinical cancer research firm valued at $3.8 billion, has been sued in a class-action lawsuit alleging that the company violated federal securities law. Juno and its CEO Hans Bishop are listed as defendants in the suit, which was brought by the law firm Block & Leviton on behalf of investors who bought Juno stock between June 4 and July 7.
The complaint alleges that Juno misled investors by not informing them of a patient death during a clinical trial in May:
The complaint alleges that Juno made misleading omissions regarding a patient death in the Phase 2 “ROCKET” trial of its lead product candidate, JCAR015. In May 2016, a patient in that trial died of a cerebral edema. Juno knew the patient death was important and consulted with the FDA about an appropriate response. Yet it failed to tell investors.
Instead, in early June, Juno issued a glowing press release about JCAR015 that boasted of “[flower side effects in patients with minimal disease at time of CAR T cell infusion” and made partial, misleading disclosures about side effects—revealing that “Grade 3 or higher neurotoxicity was observed in 15/51 (29%) patients” in a Phase 1 trial but failing to disclose the patient death in May.
The same trial was suspended by the FDA in early July following a second and third patient death, sending Juno’s stock plunging. The complaint alleges that “In the weeks after the misleading release was issued, Bishop and other Juno insiders sold heavily. ”
The suit was filed in Seattle’s United State District Court for Western Washington on July 12, five days after the trial’s suspension.
“We have reviewed the complaint and believe it is without merit,” said Christopher Williams, Juno Therapeutics vice president and head of corporate communications.
The Rocket trial was reinstated only days after the suit was filed, but Juno’s stock remained significantly lower than it had been. The stock has declined 21 percent this year, with shares now trading at around $34.75.
Juno is a rising star in Seattle’s biotechnology field, with several clinical trials of immunotherapy treatments underway. The company — a spin-out from the Fred Hutchinson Cancer Research Center, Memorial Sloan-Kettering Cancer Center and Seattle Children’s Research Institute with backing from ARCH Venture Partners, the Alaska Permanent Fund and others — completed a successful IPO in 2014, and has continued to grow through acquisitions.
Read the full complaint filing below: