Pomerantz Appointed Lead Counsel in Fortress Biotech Securities Litigation

On April 19, 2021, U.S. District Judge Kiyo A. Matsumoto of the Eastern District of New York appointed Pomerantz LLP as Lead Counsel on behalf of Lead Plaintiffs Yasser Abed and Evay Avbenake in Cushman v. Fortress Biotech, Inc., 20-cv-5767 (E.D.N.Y.), a securities action brought on behalf of a class of defrauded investors concerning allegations that Fortress Biotech, Inc. (“Fortress” or the “Company”) failed to disclose that IV Tramadol, its pain management medication, was not safe for the intended patient population.

Fortress is a pharmaceutical and biotechnology company that holds a majority controlling interest in Avenue Therapeutics, Inc. (“Avenue”), the developer of IV Tramadol (a pain management medication).

Allegations include that: (i) IV Tramadol was not safe for the intended patient population; and (ii) as a result, it was foreseeable that the U.S. Food and Drug Administration (the “FDA”) would not approve the New Drug Application (“NDA”) for IV Tramadol.

On December 11, 2019, Avenue issued a press release, also published on Fortress’s website, announcing the submission of an NDA to the FDA  for IV Tramadol, touting that the submission “is based on positive results from two pivotal Phase 3 clinical efficacy and safety trials in patients following bunionectomy [bunion removal] and abdominoplasty [removal of excess skin and fat from the abdomen] surgeries, as well as an open-label safety study with a total of more than 500 patients who received the IV Tramadol 50 mg dosing regimen.”

On March 16, 2020, Fortress filed an annual report with the U.S. Securities and Exchange Commission (the “SEC”) in which it touted that both the first and second “pivotal Phase 3” studies met their “primary endpoint and all key secondary endpoints.”

Then, on April 23, 2020, Avenue issued a press release, also published on Fortress’s website, in which they touted that IV Tramadol’s Phase 3 safety study “enrolled patients undergoing a range of surgical procedures including both orthopedic and soft tissue surgeries,” and that “IV Tramadol 50 mg was well tolerated in this real-world trial, with only 4% of patients discontinuing for adverse events.”

The truth emerged on October 12, 2020, when Avenue disclosed receipt of a Complete Response Letter (“CRL”) from the FDA. Specifically, the FDA advised Avenue that “it cannot approve the application in its present form” because “IV Tramadol, intended to treat patients in acute pain who require an opioid, is not safe for the intended patient population.” Specifically, the CRL stated: “[I]f a patient requires an analgesic between the first dose of IV tramadol and the onset of analgesia [loss of sensation of pain], a rescue analgesic would be needed. The likely choice would be another opioid, which would result in opioid ‘stacking’ and increase the likelihood of opioid-related adverse effects.” On this news, Fortress’s share price fell $1 per share, or 23.98%, to close at $3.17 per share on October 12, 2020.