SEC : AVEO Pharma Misled Investors About New Drug's Status With FDA

(RTTNews) - The U.S. Securities and Exchange Commission announced fraud charges against a Massachusetts-based biotech company and three former executives for misleading investors about the company's efforts to obtain Food and Drug Administration approval for its flagship developmental drug to treat kidney cancer.

The SEC alleges that AVEO Pharmaceuticals Inc. (AVEO) concealed the FDA's level of concern about Tivozanib in public statements to investors by omitting the critical fact that FDA staff had recommended a second clinical trial to address their concerns about patient death rates during the first clinical trial.

When the FDA made public months later that it had recommended an additional clinical trial, the company's stock price declined 31 percent. AVEO never conducted an additional trial, and the FDA later refused to approve Tivozanib.

AVEO agreed to pay a $4 million penalty to settle the SEC's charges without admitting or denying the allegations in the complaint filed today in federal court in Boston. The SEC's case continues against three of the company's former officers: CEO Tuan Ha-Ngoc, chief financial officer David Johnston, and chief medical officer William Slichenmyer.