Schubert Jonckheer & Kolbe LLP is investigating potential shareholder derivative claims on behalf of stockholders of Apyx Medical Corporation related to the company’s statements regarding its December 2018 application to the U.S. Food and Drug Administration for expanded uses of Apyx’s J-Plasma technology—the company’s key growth product.
In late 2017, Apyx began aggressively promoting its J-Plasma technology for the cosmetic surgery market.
At the time, J-Plasma only had FDA approval for skin tightening procedures, but Apyx wanted to expand its uses.
On December 21, 2018 Apyx announced that it submitted a 510(k) application to the FDA for use of J-Plasma in wrinkle reduction procedures (called dermal resurfacing), which was supported by an Apyx clinical study.
Dermal resurfacing represented an annual market opportunity of $85 million.
In its announcement, Apyx was “very pleased” with the study’s results and “optimistic” about receiving expanded FDA clearance.
Yet, Apyx later revealed on April 1, 2019 that it withdrew its J-Plasma application, citing concerns raised by the FDA. In response, the price of Apyx’s stock fell 36% on April 2, 2019.
A securities class action pending against the company in the U.S. District Court for the Middle District of Florida alleges that Apyx misled investors about its 2018 J-Plasma FDA application, causing Apyx’s stock to trade at artificially high levels.
The complaint alleges that Apyx internally knew about the flaws in the J-Plasma study, but failed to disclose them.
On March 11, 2020, U.S. District Judge Susan C. Buckles denied the defendants’ motion to dismiss the case, finding that the plaintiff met the heightened pleading standards for alleged securities fraud, including alleging facts sufficient to create a “strong inference of scienter,” or intent to defraud investors.
The Schubert Firm is investigating potential derivative claims based on harm the company has suffered as a result of potential breaches of fiduciary duty by the company’s officers and directors related to this conduct.