According to the law firm press release, the complaint charges Incyte and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Incyte is a pharmaceutical company that has obtained U.S. Food and Drug Administration (“FDA”) approval for distribution and sale in the United States of its drug Jakafi (ruxolitinib), which is indicated for the treatment of patients with intermediate or high-risk myelofibrosis.
The complaint alleges that during the Class Period, defendants made materially false and misleading statements concerning Incyte’s business and prospects, including about the demand for its myelofibrosis drug, Jakafi. Based on defendants’ reports of strong sales demand for Jakafi and their positive statements supporting the Company’s increased sales growth guidance for fiscal 2012, Incyte stock traded at inflated prices throughout the Class Period, reaching over $26 per share by July 10, 2012.
According to the complaint, however, Incyte’s reported fourth quarter 2011 and first quarter 2012 sales had been artificially inflated due to a large number of extremely sick, advanced-stage myelofibrosis patients being prescribed the drug initially upon FDA approval in November 2011, during the fourth quarter of 2011 and first quarter of 2012 – patients who had been too sick to participate in the clinical trials. Critically, many of these extremely sick, more advanced patients were discontinuing use of Jakafi during the second quarter of 2012, which was significantly diminishing Jakafi’s second quarter 2012 sales growth. And despite knowing that these more sickly patients had been precluded from participating in the FDA drug trials, defendants repeatedly assured investors they could rely on the drug dropout rates achieved during the clinical trials to determine the then-current dropout rates.
On August 2, 2012, Incyte announced the Company’s second quarter 2012 financial results for the period ended June 30, 2012, and disclosed that Jakafi sales growth had been much softer during the second quarter of 2012 than investors and certain stock analysts had been led to expect. Defendants also disclosed for the first time that many of the new patients prescribed Jakafi during the fourth quarter of 2011 and first quarter of 2012 “were [so] very advanced . . . they would not have been eligible for the Phase III trial in which life expectancy had to be at least six months.” Defendants also conceded that while prescriptions to these patients had increased fourth quarter 2011 and first quarter 2012 sales revenues, those were not revenues that would continue for the three years on average that defendants had claimed during the Class Period the pre-approval clinical data had suggested patients would remain on Jakafi, because, as defendants were forced to disclose during Incyte’s August 2, 2012 conference call, “early on we had people discontinue because they died.” In response to these disclosures, the price of Incyte stock fell precipitously from its August 1, 2012 close of $24.92 per share to close at $19.57 per share on August 2, 2012, a 22% decline, on extremely high volume.
On June 26, 2013, the Court issued an Order consolidating cases, appointing lead plaintiff, and approving the selection of lead counsel. On August 12, Lead Plaintiff filed a consolidated complaint.