Drug co. news: Inspire lawsuit dismissed

Remember when the FDA said no to Diquafosol for the third time and shareholders got unhappy...?

Inspire have now been vindicated with a Federal court dismissal of the class-action suit.

Federal court dismisses class-action suit against Inspire Pharmaceuticals

Management at Inspire Pharmaceuticals could have one less issue on its plate now that a federal court of appeals has moved to dismiss a class-action suit against the company.

The main claim in the class-action suit against Inspire Pharmaceuticals (Nasdaq: ISPH) is that executives at the Durham company committed securities fraud by overstating the prospects for an experimental dry-eye drug known as diquafosol tetrasodium. That drug failed a late-stage human trial, causing Inspire’s stock to drop more than 40 percent.

But on Dec. 12, the U.S. Court of Appeals for the Fourth Circuit, based in Richmond, Va., ruled that the suit should be dismissed. The plaintiffs didn’t offer enough evidence that Inspire’s executives willfully misled investors about studies of diquafosol tetrasodium, the court says. Rather, the court says, it seems clear that Inspire withheld the information for competitive purposes – a legitimate business purpose.