Northwest Under the Hammer

Surprise! The lawyers are out to get Northwest Biotherapeutics—on behalf of their disgruntled shareholders—for the “materially false and misleading statements” issued in that July 9 press release.

Northwest, or their comms department, definitely messed up—we blogged the dodgy release and its subsequent clarification here, and claim no prizes for predicting that something like this would happen. This is not a case of suing McDonalds for serving hot coffee—the lawyers, for once, have a reasonable point. Northwest declared that the world’s first therapeutic cancer vaccine was available to patients. It wasn’t. The experimental substance was allowed into Switzerland—conditionally.

Acting on behalf of “defrauded investors,” law firms like Hagens Berman Sobol Shapiro can see good business in the inherently risky, volatile biotech sector. They’re slapping suits about everywhere, it seems, including recently on GPC Biotech and Dendreon, allegedly for misleading investors over their cancer candidate’s progress.

Blaming the management is not always justifiable—especially at young firms trying to get their first drug through the FDA maze. Stuff can go wrong in drug development; investors not ready for that should choose another sector.

Trouble is, the Northwest saga will mean yet more lawsuits, and probably make these actions even more part of the biotech landscape than they already are. That doesn’t seem the best way to encourage transparent communication between management and regulators, and management and their investors.