Apyx Medical (NYSE:APYX) said today that it, and its CEO Charles Goodwin, are facing a suit from investors claiming it made misleading statements related to its attempt to gain a dermal resurfacing indication from the FDA for its Renuvion/J-Plasma systems.
The J-Plasma device is a plasma-based cutter and coagulator that uses helium ionization to produce a focused beam of ionized gas over a blade, used for cutting or coagulating during surgeries, Apyx Medical said.
The suit, filed in the U.S. District Court for the Middle District of Florida by plaintiff Kyle Pritchard, seeks class status on behalf of investors that purchased shares of the company between August 1 last year and April 1.
Apyx Medical closed enrollment for a dermal resurfacing study of the J-Plasma/Reunvion device last May, saying it was seeking a cosmetic indication for the Renuvion/J-Plasma device
Last August, the company posted a press release stating that “results from the dermal resurfacing U.S. IDE clinical study will support our 510(k) submission to the FDA for a new indication to market and sell Renuvion for dermal resurfacing procedures,” according to court documents.
The company also released third quarter earnings in November that did not mention any results from the trial, court documents read.
A month later in December, the company said that it submitted its application for clearance, saying that it was “supported by data from our multi-center, single arm, evaluator-blind prospective study evaluating the safety and efficacy of our Reunion technology for the reduction of facial wrinkles and rhytides. […] We were very pleased with the clinical results of this study and we are optimistic in receiving regulatory clearance for this differentiated technology in 2019.”
The plaintiff in the case claims that in a preliminary financial results release posted January 7, the company failed to disclose that the trial of the device had failed to meet its primary efficacy endpoint, and continued to imply that the trial would support its application for clearance despite having that knowledge.
On February 9, White Diamond Research released a report alleging that the clinical study exploring the use of the J-Plasma device for use in dermal resurfacing “may have missed its endpoints,” according to court documents.
The news sent the company’s shares down nearly 25%, dropping $2.10 to close at $6.40 on February 21 with “unusually heavy trading volume,” according to the documents.
On April 1, Apyx Medical said that it voluntarily withdrew the FDA 510(k) clearance application for its J-Plasma/Renuvion device seeking a dermal resurfacing indication.
That news sent the company’s shares down another $2.49, or approximately 36%, closing at $4.46 per share on April 2, according to court documents.
The plaintiff goes on to claim that Apyx made materially false and misleading statements and failed to disclose material adverse facts about its business.
“Specifically, Defendants failed to disclose to investors: (1) that the clinical study on the use of J-Plasma for dermal resurfacing had not met its primary efficacy endpoint; (2) that, as a result, the clinical study did not support the Company’s application for regulatory clearance; (3) that, as a result, the Company was unlikely to receive regulatory approval of J-Plasma for dermal resurfacing; and (4) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially false and/or misleading and/or lacked a reasonable basis,” court documents read.
As a result of the company’s actions, the plaintiff claims that they, and other investors, suffered “significant losses and damages.”
In an SEC filing, Apyx Medical said that it “believes that the allegations stated in the complaint are entirely without merit,” and that it intends to vigorously defend themselves in the suit.
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