Class action filed against Aussie biotech

Biotech News: A class action against an ASX-listed biotech has been filed at the Federal Court of Australia.

The class action arises in relation to Mesoblast’s statements to the market regarding the potential application of Remestemcel-L (R-L) for children with steroid refractory acute Graft versus Host Disease and patients with acute respiratory distress syndrome caused by COVID-19.

The proceeding alleges that the biotech breached its continuous disclosure obligations, and engaged in misleading and deceptive conduct by misrepresenting the efficacy data and the significance of trial results, and misrepresenting to the market that the company was on schedule for launch of R-L during Q4 2020.

Mesoblast has already settled a US lawsuit for $2 million with no admission of liability. The company’s shares have plunged 85% since August 2020 to close at their lowest level since 2009 last week.

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Nick Northcott, Chrysalis Advisory Managing Partner, said “Commercial biotech and medtech companies are working in a highly regulated environment, but this requires strong corporate governance as well as strong research governance. Often, not enough attention and scrutiny goes to the research governance frameworks in place for these companies.

“Former Chief Scientist of Australian, Professor Ian Chubb, has previously called for an independent research integrity capability for public research institutions like universities and medical research institutes – and the same need exists for commercial biotech and medtech businesses to provide assurance for investors. This is evidenced by the difficulty that whistleblowers had in the infamous Theranos case.

“Yes, there are guides and codes that companies are required to comply with, but in the case where something does go wrong, there should be an independent and anonymous mechanism to receive complaints about research integrity issues – run by people who understand these complex issues.”

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