Puma Biotech agrees to pay investors $54.2 mln in fraud case

A street sign for Wall Street is seen in the financial district in New York, U.S., November 8, 2021. REUTERS/Brendan McDermid
  • Settlement represents full judgment following jury trial
  • Case was only 15th investor fraud class action to go to trial since PSLRA

(Reuters) - California pharmaceutical company Puma Biotechnology Inc has settled a class action brought by investors accusing it of misrepresenting clinical trial results for a cancer drug, agreeing to pay a $54.2 million judgment rather than continue to appeal.

Lawyers for the plaintiffs in a court filing on Monday asked U.S. District Judge David Carter in Santa Ana, California to approve the deal. Investors and Puma told the court in October that they had reached a tentative settlement, but did not disclose its terms.

Lawyers for the plaintiffs and Puma did not immediately respond to requests for comment.

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A jury in 2019 found Puma and its CEO, Alan Auerbach, liable for securities fraud for a statement Auerbach made on a call with stock analysts in July 2014. The case was only the 15th shareholder fraud class action to be tried to a verdict since the passage of the Private Securities Litigation Reform Act in 1995, which made it more difficult for such lawsuits to survive dismissal.

The jury said Auerbach knowingly misrepresented clinical trial results on the disease-free survival rate of breast cancer patients treated with its drug Nerlynx, causing the company's share price to be inflated by $4.50.

Both sides had claimed victory after the verdict, with Puma touting the fact that the jury had found it not liable for three other alleged misstatements, and responsible for only a fraction of the billion-dollar loss in its market value when unfavorable results about Nerlynx became public.

The case is Hsu v. Puma Biotechnology Inc, U.S. District Court, Central District of California, No. 8:15-cv-00865.

For plaintiffs: Tor Gronborg of Robbins Geller Rudman & Dowd

For Puma: Michele Johnson of Latham & Watkins

Read more:

In rare class action trial, jury finds Puma Biotech liable for fraud – but Puma claims victory

Feuding sides in $54 million Puma class action agree: Judge erred in dismissal

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Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.