Robbins Arroyo LLP: Tokai Pharmaceuticals, Inc. (TKAI) Misled Shareholders According to a Recently Filed Class Action
Robbins Arroyo LLP announces that a class action complaint was filed against Tokai Pharmaceuticals, Inc. (NASDAQGM: TKAI) in the U.S. District Court for the Southern District of New York. The complaint is brought on behalf of all purchasers of Tokai securities between June 24, 2015 and July 25, 2016, for alleged violations of the Securities Exchange Act of 1934 by Tokai’s officers and directors. Tokai is a biopharmaceutical company that focuses on developing and commercializing therapies for prostate cancer and other hormonally-driven diseases. The company’s lead drug candidate is galeterone, an oral small molecule that was in various clinical trials for the treatment of patients with metastatic castration-resistant prostate cancer (“CRPC”).
Tokai Accused of Misrepresenting Its Drug Trial
According to the complaint, Tokai submitted numerous filings with the U.S. Securities and Exchange Commission and issued several press releases touting the company’s strong financial position and its Phase 3 galeterone study, ARMOR3-SV. The company stated, “Given the encouraging clinical data reported to date for galeterone and the precision medicine approach being employed in Tokai’s pivotal trial, this study has the opportunity to alter the treatment landscape for metastatic CRPC patients.” However, the complaint alleges that Tokai officials failed to disclose that: (i) there were significant structural problems with the trial design for ARMOR3-SV; (ii) consequently, ARMOR3-SV was unlikely to succeed in meeting its primary endpoint; and (iii) as a result, commercialization of galeterone was less likely and/or imminent than Tokai had led investors to believe.
On November 2, 2015, Seeking Alpha published a report detailing peculiar practices occurring at Tokai, including that Tokai had dramatically changed its trial design between Phase 2 and Phase 3, that the FDA had warned Tokai about problems with its design, insider selling had been rampant ahead of preliminary data in 2016, and to expect 60-70% near-term downside in the stock. Then, on July 26, 2016, Tokai announced plans to discontinue the ARMOR3-SV trial, stating that it would likely not succeed in meeting its primary endpoint. On July 29, 2016, Tokai announced in a press release that it is reducing its workforce by approximately 60 percent in order to reduce operating expenses while it evaluates options for galeterone. Since news of Tokai’s struggles became public, Tokai stock fell over 89% to close at $1.17 per share on August 4, 2016.
Tokai 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.
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