Robbins Arroyo LLP: KemPharm, Inc. (KMPH) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP, announces that a class action complaint was filed against KemPharm, Inc. (“KemPharm”) (NASDAQGM: KMPH) in the Iowa District Court for Johnson County. The complaint is brought in connection with the company’s April 16, 2015 Initial Public Offering (“IPO”) for alleged violations of the Securities Act of 1933 by KemPharm’s officers and directors. KemPharm, a clinical-stage specialty pharmaceutical company, discovers and develops new proprietary prodrugs in the United States. KemPharm’s most advanced drug candidate, known as Apadaz, is designed to treat acute to moderately severe pain.
KemPharm Accused of Exaggerating the Capabilities of Its Lead Drug Candidate
According to the complaint, in December 2015, KemPharm submitted a New Drug Application to the U.S. Food and Drug Administration (“FDA”) for Apadaz. Apadaz was intended to be labeled as an “abuse-deterrent” opioid product that offers equivalent efficacy to the existing standard-of-care products, but with reduced addictive effect. Such labeling would give the drug a competitive advantage in the market for painkillers. On April 16, 2015, KemPharm held its IPO, selling 5,090,909 common shares at $11.00 per share, generating net proceeds of $52,079,999. The complaint alleges that KemPharm officials omitted material facts from the registration statement and incorporated offering materials that the company filed with the U.S. Securities and Exchange Commission in support of the IPO. In particular, KemPharm did not disclose that the company constructed a deficient study regarding Apadaz’s abuse-deterrent properties, and, as such, Apadaz would not be labeled as an “abuse-deterrent” product by the FDA.
On May 5, 2016, KemPharm announced that the Anesthetic and Analgesic Drug Products Advisory Committee and the Drug Safety and Risk Management Advisory Committee of the FDA had reviewed and voted on Apadaz, with a vote of 18 to 2 against inclusion of abuse-deterrent labeling for the product. James Tolliver, pharmacologist for the controlled substance staff within the Office of the Center Director, Center for Drug Evaluation and Research at the FDA, stated that there was an issue with the study design of Apadaz that made it difficult to use in assessing the abuse-deterrent effect of the drug. On this news, the company’s stock price fell 56% to close at $6.91 per share on May 6, 2016.
KemPharm Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.