The makers of the multiple sclerosis (MS) drug Tecfidera face a lawsuit brought on behalf of shareholders, which alleges the company ignored safety signals about the potentially harmful side effects of Tecfidera, leading investors to believe the drug, and thus the company, was more valuable than it really was.
The shareholder derivative complaint (PDF) was filed by Mary Ann Mullaney last month in the U.S. District Court for the District of Delaware, against Biogen Inc. and a number of its top executives.
The case was filed just days before the FDA approved new warning labels about the risk of liver injury from Tecfidera, indicating that clinically signficant cases of liver problems have surfaced within a few days to several months after starting treatment.
Tecfidera (dimethyl fumarate) is the top selling oral multiple sclerosis (MS) drug in the world, with sales of $1.03 billion in the third quarter of 2016. Side effects of Tecfidera have also been linked to an increased risk of a rare brain infection known as progressive multifocal leukoencephalopathy (PML).
In November 2014, the FDA issued a drug safety communication about the risk that Tecfidera may cause PML brain infections, which may be life-threatening.
The Tecfidera lawsuit indicates that since at least 2014, Biogen has known that research indicated Tecfidera could also lower lymphocytes, a type of white blood cell that affects the immune system, to dangerously low levels. According to the complaint, researchers at the MS Institute at the Shepherd Center in Atlanta, Georgia conducted blood tests which indicated that the drug could cause such low lymphocyte levels that the condition could be mistaken for Acquired immune Deficiency Syndrome (AIDS).
The shareholder complaint indicates that Dr. Ben Thrower, the medical director at the institute and one of the doctors involved in the original Tecfidera clinical trials, tried to warn Biogen officials that the drug was not as safe as Biogen was advertising.
In the second quarter of 2014, according to the lawsuit, Biogen officials were notified that the Shepherd Center was removing patients from Tecfidera, and that new prescriptions had “plummeted,” which led to other neurologists around the nation to follow suit.
By August 2014, the center had stopped prescribing the drug altogether, and had placed about half of the 400 patients using Tecfidera onto other treatments.
“Defendants did not disclose any of these devastating developments to the public,” the lawsuit notes. “Rather, they publicly trumpeted Tecfidera’s safety profile and growing sales, and omitted any mention of the fact that the number one source of Tecfidera prescriptions in the United States, the Shepherd Center, completely stopped prescribing Tecfidera and discontinued off that drug at least half of its existing patients then taking Tecfidera because of its dangerous side effects.”
The company was forced to acknowledge some problems in October 2014 after a patient died of PML. However, the lawsuit notes that the company continued to mislead the public about the drug’s overall safety.
As more incidents occurred, and the public and experts began to doubt Biogen’s claims, it began to affect the company’s stock, until the company admitted there was a problem in July 2015.
“On this news, Biogen’s common stock plummeted from $385.05 per share at the close on July 23, 2015 to $300.03 per share at the close on July 24, 2015, a decline of more than 22% in a single day,” the lawsuit notes.
The lawsuit accuses the defendants of breach of fiduciary duties, unjust enrichment, and Securities Exchange Act violations.