Pomerantz LLP announces that a class action lawsuit has been filed against INSYS Therapeutics, Inc. (“Insys” or the “Company”) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 17-cv-01954, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired Insys securities between February 23, 2016 and March 15, 2017 both dates inclusive (the “Class Period”), seeking to recover compensable damages caused by defendants’ violations of the Securities Exchange Act of 1934.
Insys, a specialty pharmaceutical company, develops and commercializes supportive care products. The Company markets Subsys, a sublingual fentanyl spray for breakthrough cancer pain in opioid-tolerant cancer patients in the United States. Its lead product candidate is Syndros, an orally administered liquid formulation of dronabinol. The Company is also developing Cannabidiol Oral Solution, a synthetic cannabidiol for childhood catastrophic epilepsy syndromes; and other product candidates, including other dronabinol line extensions and sublingual spray product candidates.
The complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Insys had overstated its 2015 net revenue; (ii) Insys had misstated its sales allowances for 2016; (iii) accordingly, the Company lacked effective internal controls over financial reporting; and (iv) as a result of the foregoing, Insys’s public statements were materially false and misleading at all relevant times.
On March 15, 2017, post-market, Insys announced that it would delay the release of its financial results for the quarter and year ended December 31, 2016. Insys advised investors that “[t]he Audit Committee of the Company’s Board of Directors has been conducting an independent review of the Company’s processes related to estimation of, and increases to, certain sales allowances recorded during 2016, with a potential reduction of 2015 net revenue and pre-tax income not expected to exceed $5 million, as well as extended payment terms offered to certain customers during the third quarter of 2016.”
On this news, Insys’s share price fell $0.49, or 4.64%, to close at $10.06 on March 16, 2017.