A law firm in Australia is preparing a fresh class action claim against Mesoblast that alleges misleading or deceptive conduct to investors and breaches of continous disclosure in the way in which the biotech promoted the prospects of its main product candidate, Remestemcel-L.
Specialist class action firm Phi Finney McDonald is preparing a class action against the $1.5 billion company led by founder and chief executive Silviu Itescu on behalf of investors who acquired shares between February 22, 2018 and December 17, 2020.
Mesoblast is already facing multiple class action lawsuits in the US after being accused overseas of making false or misleading statements to investors, as well as failing to disclose material adverse facts about Remestemcel-L.
Phi Finney McDonald said in documents sent to investors the claim will allege that Mesoblast misrepresented the efficacy and potential benefit of treating patients with Remestemcel-L; misrepresented the significance of trial results; did not disclose to the market material information, including the deficiencies in study design and statistics presented.
Mesoblast allegedly failed to disclose”all information required by a lay person to assess the likelihood of whether Remestemcel-L would be shown to be effective” in treating steroid-refractory acute Graft Versus Host Disease (SR-aGHVD) or acute respiratory distress syndrome (ARDS) caused by COVID-19, the investor document said.
Remestemcel-L is the stem cell company’s top drug candidate to treat this life-threatening inflammatory condition (aGVHD) in children.
Phi Finney McDonald director Tim Finney told The Australian Financial Review the claims the firm is making differ slightly to those in the US actions, but allege a pattern of behaviour by Mesoblast.
“The proposed claim alleges the same pattern of conduct in relation to both aGVHD and COVID-related treatments, in that Mesoblast reported the progress of clinical trials in a manner which was likely to mislead the market,” he said.
“In particular – in terms of the potential application for COVID induced ARDS – we intend to allege Mesoblast made claims regarding the success of trials that did not compare apples to apples in terms of clinical outcomes.”
Mr Finney said while the investor notice went out this week the firm has been working on the claim since last year.
Mesoblast had a horror few months last year when the stock plunged 28 per cent on August 11 following news from the US regulator on its application to market treatment for aGVHD in pediatric patients.
By December 18 the stock fell another 36 per cent after it revealed news the COVID-19 trial using its Remestemcel-L drug was not likely to meet its primary objectives and would be pulled.
In February, the regenerative medicine company released mixed results from its highly anticipated Phase III trial into back pain using its rexlemestrocel-L drug.
Mesoblast, which did not respond to requests for comment, was recently thrown a lifeline after US-based strategic investor SurgCenter Development provided needed funding via a $US110 million ($142 million) private placement.