Pomerantz Appointed Co-Lead Counsel in Centessa Pharmaceuticals Securities Litigation
On December 12, 2022, U.S. Magistrate Judge Sarah L. Cave, of the Southern District of New York, appointed Pomerantz LLP as Co-Lead Counsel on behalf of its client, Jamia Fernandes, who serves as the Co-Lead Plaintiff, and the class, in Fernandes v. Centessa Pharmaceuticals PLC, 22-cv-8805 (S.D.N.Y.). This securities action alleges that Centessa Pharmaceuticals plc (“Centessa” or the “Company”) misled the market regarding the safety and commercial prospects for lixivaptan and ZF874, two of the drugs in its development pipeline.
Centessa is a clinical-stage biopharmaceutical company that develops and delivers medicines to patients. The Company’s development pipeline includes lixivaptan, a vasopressin V2 receptor small molecule inhibitor in Phase 3 clinical development for the treatment of autosomal dominant polycystic kidney disease (“ADPKD”); and ZF874, a small molecule pharmacological chaperone folding corrector of the Z variant of the DNA encoding protein alpha-1-antitrypsin (“A1AT”), which is in Phase 1 clinical development for the treatment of A1AT deficiency (“AATD”).
Allegations against Centessa include that the Offering Documents for its May 2021 initial public offering (“IPO”) included false or misleading statements or failed to disclose that: (i) lixivaptan was less safe than the Company had represented; (ii) the clinical and commercial prospects for lixivaptan were overstated; (iii) ZF874 was less safe than Centessa had represented; and (iv) the clinical and commercial prospects for ZF874 were overstated by the Company while it downplayed safety issues with the drug.
The truth began to emerge on November 1, 2021, when Centessa announced the results of a study evaluating ZF874 as a treatment for AATD, revealing, among other results, potential safety issues related to increases in liver enzymes alanine aminotransferase (“ALT”) and aspartate aminotransferase (“AST”) in one of the study subjects. On this news, the Company’s ADS price fell 18.5%.
On June 2, 2022, Centessa announced that it had “made the strategic decision to discontinue development of lixivaptan for [ADPKD],” citing “a recent observation of [ALT] and [AST] elevations in one subject” in a study of lixivaptan that was designed to assess liver and non-liver safety in certain subjects. On this news, the Company’s ADS price fell 27.8%.
Then, on August 10, 2022, Centessa announced its decision to “discontinue development of ZF874 following a recent report of an adverse event (AE) involving elevated liver enzymes (AST/ALT) in a ... subject dosed with 5mg/kg BID of ZF874.” The Company stated that, based on the results observed to date, it had concluded that “ZF874 was unlikely to achieve the desired target product profile.” On this news, Centessa’s ADS price fell 5.2%, representing a total decline of 76.25% from the $20 per ADS offering price in the Company’s May 2021 IPO.