Applied Therapeutics (APLT) is embroiled in a federal securities class-action lawsuit filed by investors who allege the company disseminated misleading information regarding its clinical trials for govorestat, a drug candidate for Galactosemia. The lawsuit, led by Adrian Alexandru, claims that Applied Therapeutics failed to disclose critical adverse facts, leading to significant financial losses for shareholders who purchased securities between January 3, 2024, and December 2, 2024.
The core of the legal action revolves around the Phase 3 INSPIRE trial for govorestat. Applied Therapeutics allegedly touted positive results without revealing significant issues, including problems with electronic data capture and dosing errors during the dose-escalation phase of the study. These alleged omissions are claimed to have artificially inflated the company's stock price.
FDA's Complete Response Letter and Warning
Investor confidence in Applied Therapeutics began to wane on November 27, 2024, when the company received a Complete Response Letter (CRL) from the FDA regarding its New Drug Application (NDA) for govorestat. The FDA stated that it could not approve the application in its current form due to deficiencies in the clinical application. This negative news was compounded on December 2, 2024, when Applied Therapeutics disclosed a warning letter from the FDA, highlighting unresolved clinical trial issues.
The FDA's warning letter specifically pointed to electronic data capture problems and a dosing error that resulted in lower-than-targeted doses for some patients during the early phase of the trial. While Applied Therapeutics maintains that it addressed these issues through detailed records and prior communications with the agency, investors reacted negatively, further diminishing the stock's value.
Leadership Changes at Applied Therapeutics
Amidst these challenges, Applied Therapeutics has undergone leadership changes. John Johnson has been appointed as executive chairman, while Shoshana Shendelman has stepped down from her roles as Chair and CEO. Les Funtleyder, the company's CFO, has been named as the interim CEO.
The lawsuit seeks to recover damages for investors who purchased shares at allegedly inflated prices, arguing that the company's failure to provide accurate and complete information misled the market. The case underscores the critical importance of transparency and accurate data reporting in pharmaceutical research and development, particularly when seeking regulatory approval for novel therapies.
