AstraZeneca Hit with Securities Lawsuit After News of COVID-19 Vaccine Clinical Trial Results

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A proposed class action claims AstraZeneca PLC and three executives harmed investors financially by withholding information and issuing misleading statements about clinical trials for the biopharmaceutical giant’s COVID-19 vaccine candidate. 

According to the suit, stockholders took a monetary hit when share prices dropped upon a flurry of news reports that revealed “previously undisclosed problems and flaws” with AstraZeneca’s clinical trials.

“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the complaint alleges.

AstraZeneca in April 2020 partnered with Oxford University to develop a potential recombinant adenovirus vaccine, which was later called AZD1222, to combat COVID-19, the case begins. According to the lawsuit, however, the defendants made “false and/or misleading statements” and/or failed to disclose certain information about the clinical trials until last November, when “damaging revelations” began to come to light.

More specifically, the defendants allegedly failed to disclose that initial clinical trials for the AstraZeneca vaccine candidate had suffered from a “critical manufacturing error” that resulted in a significant number of trial participants receiving only half of the planned dosage amount. Moreover, the trials consisted of a “patchwork of disparate patient subgroups” with different treatments, which undermined the “validity and import” of the conclusions that could be drawn from the data, the suit goes on. Per the case, AstraZeneca also hid from investors that certain trial participants received their second dose up to several weeks after it had been scheduled to be delivered in accordance with the trial design.

Among the trials’ other undisclosed flaws, according to the suit, was the fact that AstraZeneca had failed to include a sufficient number of patients over 55 years of age even though this patient population is “particularly vulnerable” to the effects of COVID-19 and represents a target group for the marketing of the vaccine.

All told, the lawsuit claims AstraZeneca had failed to disclose to investors that the clinical trials for AZD1222 were plagued by widespread design flaws, execution errors and the defendants’ failure to properly communicate with regulatory bodies and the public, which, as a result, would likely hamper the vaccine’s approval for commercial use in the U.S. in the short term.

Relying on AstraZeneca’s allegedly misleading statements and omissions, investors purchased the company’s stock at artificially inflated prices between May and November, and were ultimately harmed when news of AZD1222’s flawed trials and likely failure to gain approval for use caused stock prices to drop, the case says.

According to the suit, AstraZeneca announced in November 2020 the results of an interim analysis of its ongoing trial for its vaccine candidate. The case claims the announcement, despite relaying that the vaccine had met its “primary efficacy endpoints,” raised questions and concerns among analysts and industry experts. AstraZeneca disclosed that the analysis included small-scale trials in the United Kingdom and Brazil that “for unexplained reasons, employed two different dosing regiments,” the lawsuit relays.

Upon this news, AstraZeneca American Depository Shares (ADS) dropped nearly $2.00 per share on “extremely high trading volume,” according to the suit.

While attempting to limit the fallout, AstraZeneca, the case says, then revealed in analyst conference calls that the half-dosing regimen some trial participants had received was “not a part of the original trial design” but the result of a manufacturer underpredicting the amount of doses by half in the U.K. trial.

Damaging news continued to come to light as Dr. Moncef Slaoui, the head of the U.S. vaccine initiative, Operation Warp Speed, revealed to reporters that the half-dose had not initially been tested on people over age 55 and that if AstraZeneca could not explain “the discrepancies” in its trial results, the vaccine candidate would not likely be approved, the lawsuit states.

Per the case, analysts and reporters “widely criticized” the clinical trials’ “faulty design” and the company’s apparent failure to be transparent with investors, describing the interim results as a “mess” of “irregularities and omissions” that are the result of “cherry picked . . . data” and “very shaky science.”

As negative news continued to come to light, AstraZeneca’s share price reportedly fell five percent over three trading days to close at $52.60 per share on November 25, 2020.

The suit looks to represent investors who acquired AstraZeneca securities between May 21 and November 20, 2020.

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