AIDS Vaccine Results Draw Investor Lawsuits
VaxGen, the Brisbane, California, biotech that came under scientific fire last month when it revealed results of the first-ever real-world trial of an AIDS vaccine, is now dodging legal bullets. On 17 March, the San Diego branch of the law firm Milberg Weiss filed a class-action suit on behalf of investors against VaxGen, a publicly traded company, and two of its officials. The lawsuit charges that the company and its officials "deceived" investors with a "fraudulent scheme" that "concealed" negative results from the trial. Within days, four other law firms filed what appear to be copycat suits.
VaxGen says the lawsuits have no merit. "These are nuisance lawsuits," says company spokesperson Lance Ignon. "We'll obviously defend ourselves vigorously. We have every confidence that we'll prevail, and they'll never make it to court." Milberg Weiss attorney Mary Blasy declined to discuss the allegations. Attorneys from the other firms did not reply to requests for interviews.
VaxGen has staged two placebo- controlled efficacy tests of its AIDS vaccine in various countries. Both trials are double-blinded, meaning that no one knows whether participants received vaccine or placebo until the data are decoded at the end of the trial. On 24 February, the company revealed data from the largest trial that officials said they had decoded 1 week earlier (Science, 28 February, p. 1290). The data showed that, overall, the vaccine had failed to protect against infection. But the company reported that responses in blacks, Asians, and people of mixed race showed that the vaccine had had at least a 67% efficacy in these racial groups. VaxGen at first claimed that these results were statistically significant but later acknowledged that statistical "penalties" for breaking the data into subgroups had not been factored in (Science, 7 March, p. 1495).
The Milberg Weiss suit alleges that by 6 August 2002, VaxGen CEO Lance Gordon and president Donald Francis knew that the infection rate among those vaccinated differed little from that in the general population, leading to a "statistically irrelevant" efficacy. Yet the pair continued to make "materially false and misleading" statements about the vaccine's prospects, the complaint claims. The complaint offers no evidence to explain how Gordon and Francis could have known the results before the data were decoded, however. The complaint further alleges that VaxGen misstated the significance of the subgroup analyses in order to have a "corrective effect" on the company's stock price, which declined by more than 50% following the report of overall failure.
VaxGen's Ignon says the lawsuits are no surprise. "If you're high profile and your stock has a sudden and precipitous drop, chances are someone will file a lawsuit," he says. "It's the way of the world these days."
Issue of 28 Mar 2003,
Copyright © 2003 by The American Association for the Advancement of Science. All rights reserved.