Aveo Pharmaceuticals agreed to pay $4 million to settle charges that it misled investors about efforts to obtain regulatory approval for its flagship drug, a kidney cancer treatment called Tivozanib, the US Securities and Exchange Commission said today. However, the agency is still pursuing a case against three former executives, including Tuan Ha-Ngoc, who was the chief executive officer.
The biotech allegedly concealed concerns that the US Food and Drug Administration had about the medicine in public statements to investors. In particular, Aveo failed to disclose that FDA staff had recommended at a May 2012 meeting that the company should run a second clinical trial to address issues concerning patient death rates that were seen during an earlier clinical trial, according to the SEC.
Richard Pazdur, who heads the FDA’s Office of Hematology and Oncology Products, had described Aveo clinical data as “confounding.” Other FDA staffers complained that the trial design made it difficult to interpret the findings, even though the drug appeared to be effective in treating renal cell carcinoma, The Boston Globe reported last fall.
The FDA also criticized the large number of clinical trial patients from central and eastern Europe, where Aveo found it easier to enroll participants, the paper noted. There were also concerns that patients were given a rival drug at the start of the trial, but were allowed to switch to Tivozanib in a later stage for humanitarian reasons. This made it difficult to evaluate the drug.
In January 2013, meanwhile, Aveo raised $53 million in a public stock offering.
The SEC noted that several months later, the FDA disclosed it had recommended an additional trial. Aveo’s stock then plummeted 31 percent, prompting investor lawsuits. The biotech, meanwhile, designed a second clinical trial and presented the trial designs to the FDA, but never started the study, according to court documents that stemmed from a lawsuit the SEC filed in federal court in Boston.
For its part, the FDA later refused to approve Tivozanib.
The SEC alleged that the biotech indicated FDA requirements would be met by presenting new data analyses from the initial clinical trial. For instance, Ha-Ngoc, who resigned last year, and David Johnston, the former chief financial officer, approved a press release and filings made with the SEC that never disclosed the FDA recommended another clinical study.
In public statements made to investors, Johnston also suggested the FDA had only asked for an explanation of survival results, not another trial, the documents stated. And the SEC said that former chief medical officer William Slichenmyer misled investors by falsely stating he could not “speculate” on what the FDA “might be thinking” and “might want [AVEO] to do in the future.” Yet the SEC alleged that he knew another trial was recommended.
Aveo did not admit or deny any of the allegations, according to court documents. Ha-Ngoc, Johnston, and Slichenmyer could not be reached for comment.
A spokesman for Aveo wrote us that “we hope to have this matter behind us and to be able to pursue our new strategy without being distracted by these claims” The new strategy, he said, began early last year and includes running a second Phase III study for the Tivozanib drug in the second quarter of this year.