Nearly three years after an experimental kidney cancer drug developed by Aveo Pharmaceuticals Inc. was rejected by US regulators, the Securities and Exchange Commission has charged the Cambridge biotech company and three of its former executives with fraud.
SEC officials in Boston alleged Tuesday that Aveo and the trio -- chief executive Tuan Ha-Ngoc, chief financial officer David Johnston, and chief medical officer William Slichenmyer -- misled investors about the Cambridge biotech company’s efforts to win Food and Drug Administration approval for the drug candidate, known as Tivozanib.
Aveo agreed to pay a $4 million penalty to settle the charges, according to the SEC. The company did not admit or deny the allegations. The case against the three ex-executives is continuing. Neither the company nor the executives could immediately be reached for comment.
The agency alleged that Aveo and its executives concealed the depth of FDA unease about clinical development of Tivozanib in its public statements in 2012 and 2013 and failed to tell investors that regulators had recommended a second clinical trial to address concerns about the patient death rate during the first trial.
Ultimately, the FDA itself disclosed that it had proposed a second study, sending Aveo’s stock down by nearly a third. Aveo chose not to conduct a second trial, and the FDA rejected the drug application in May 2013.