A shareholder has filed a class action lawsuit alleging a diagnostic company misrepresented one of its products, causing the stock price to plummet.
Nile Boldt filed the lawsuit on Monday against Venaxis and its CEO, Stephen Lundy, and Jeffrey McGonegal, its chief financial officer, alleging violations of federal securities laws.
Colorado-based Venaxis was developing a product called the APPY1 diagnostic test, which is designed to identify patients with a low risk to develop acute appendicitis. The lawsuit said that on March 13, the company said the APPY1 test was performing well and that it expected to file a pre-market submission form with the Food and Drug Administration soon.
On March 31, Venaxis said it planned to file the 510(k) pre-market submission, which is used to demonstrate that a device is similar to other devices already on the market, and is just as safe and effective.
However, on Jan. 29, the FDA ruled the APPY1 did not meet the standards of the 501(k) submission, the lawsuit said.
“As a result of this news, shares of Venaxis fell $1.49, or more than 73 percent, on extremely heavy volume, to close at 55 cents on January 29, 2015,” the lawsuit said.
The lawsuit seeks class status for shareholders that held Venaxis stock between March 13, 2014, and Jan. 29 and asks for an unspecified amount of damages.
Boldt is represented by Kip Shuman and Rusty Glenn of the Shuman Law Firm in New York City, and Jeremy Lieberman, Francis McConville and Patrick Dahlstrom of Pomerantz, LLP, in Chicago.
United States District Court for the District of Colorado case number 1:15-cv-00222.