September 18, 2018

Clovis Oncology Inc., along with its CEO, Patrick Mahaffy, and former CFO, Erle Mast, have agreed to pay civil penalties totaling over $20 million to resolve allegations that it violated the Securities Act and Securities Exchange Act by misleading investors about the efficacy of a lung cancer drug that it was developing. According to the complaint, in 2015, the company reported to investors that the drug was 60% effective and continued to do so for months after it learned that the drug was really only 28% effective, which allowed it to raise about $298 million at a public stock offering. With the disclosure of its true efficacy, however, Clovis’s stock value dropped by approximately 70%, and the drug ceased to be developed in 2016. To compensate investors harmed by the misinformation, the SEC will create a Fair Fund to distribute penalties. SEC

Tagged in: Misrepresentations, Securities Fraud,