Juno Facing Class Action Lawsuit Following Patient Deaths

August 17, 2016
By Alex Keown, BioSpace.com Breaking News Staff

SEATTLE – Juno Therapeutics is facing a class action lawsuit that alleges the company violated federal securities law. The lawsuit, filed in July alleges Hans Bishop, Juno’s chief executive officer, and the company, did not inform investors of a patient death in a Phase II trial of its lead drug.

In total three patients died during the mid-stage trial of JCARO15, a CAR-T therapy for patients with relapsed or refractory B cell acute lymphoblastic leukemia. The first patient died in May. The trial was ultimately placed on hold by the U.S. Food and Drug Administration (FDA), but was allowed to resume last month, only days after the lawsuit was filed. The trial though had a revised protocol, only allowing the enrollment of patients with cyclophosphamide pre-conditioning only.

In a July conference call, Bishop said there were “confounding factors and a change in plans was not warranted” following the first death in May. BioSpace previously reported the first patient had received not only JCAR015, but also the chemotherapy drug, fludarabine. The other two patients had also received the chemotherapy drug as part of treatment protocol. All three patients died from cerebral edema, selling in the brain caused by excess fluid.

Under the initial trial protocol, the patients received a dose of drugs that kill their existing T-cells and then have them replaced with genetically engineered T-cells that are designed to target the cancer cells. Fludarabine was added to the mix to help the newly administered T-cells take hold. Once the company made the connection of the deaths to fludarabine, Juno sought permission to renew the trial only with cytoxan and JCAR015, which was what was being done earlier in the trial.

The lawsuit was filed by Block & Leviton LLP and Tousley Brain Stephens PLLC on behalf of investors. In the lawsuit the plaintiffs say Juno consulted with its data safety monitoring board as well as the FDA following the death. However, the plaintiffs allege the company failed to tell investors about the first death and instead issued a press release they called “glowing” and included what they termed “misleading disclosures.” However, the plaintiffs said there was no mention of the first patient death. It wasn’t until the other two deaths were revealed that the first one came to light, the plaintiffs said. They also allege that Bishop and “other Juno insiders old heavily in the weeks prior to these revelations.”

According to the lawsuit, Bishop sold more than $8.6 million shares of Juno stock in June—more than twice his total sales for the entirety of 2015. After news of the deaths went public, Juno’s stock fell more than 30 percent. The lawsuit likens Bishop’s actions to his tenure at Dendreon Corporation , which ultimately went bankrupt following disappointing drug development and sales. Bishop served that company as chief operations officer. However, he, along with other executives, were accused of selling millions of dollars of stock before releasing disappointing news about the leukemia drug it was developing.

The lawsuit was initially filed on behalf of a Bulgarian resident, Goce Velkanoski, who bought Juno stock in June, before information of the first patient death was reported. The lawsuit said he has been “damaged by the revelation of the company’s material misrepresentations and material omissions.”

Christopher Williams, a spokesperson for Juno, told GeekWire that the lawsuit was without merit.

Shares of Juno hit a morning high of $34.44 as of 9:50 a.m. The stock has slowly recovered following the 30 percent plunge. However, it’s still down from a high one year ago of $56.57 per share in November of 2015.

Juno’s stumble though was a chance for other companies working on CAR-T therapies to move forward in the immuno-oncology race. Following the revelation of Juno’s death, Kite Pharma announced its program was on track and said it had “done all the due diligence a company should do, including for the chemo-conditioning dose.”