In the investment world, sophisticated investors often talk about “due diligence”—the painstaking process of researching a company before investing. Prospective investors pore over financial statements, consider market trends, review securities analyst reports and listen to earnings calls. But what happens when the most critical information is locked away, accessible only to a select few?

This is the central challenge of information asymmetry. In simple terms, it’s the idea that one party in a transaction (in this case, a public company and its executives) has more and better information than the other party (the investors). While this dynamic exists in every market segment, it’s particularly acute—and dangerous—in the high-stakes world of biotech investing.

A nascent biotech company’s value isn’t based on a factory, a product line, or quarterly sales. It’s built on a promise: the promise of a drug in development. This promise is contingent on the success of a clinical trial and, ultimately, approval by the U.S. Food and Drug Administration (FDA).[1] As an investor, the entire thesis is based on what the company tells you about its trial data, its interactions with regulators, and its timeline to market. Investors are, in essence, buying a story.

And sometimes, that story proves to be misleading.

The Replimune Securities Class Action

A recent securities class action lawsuit against Replimune Group, Inc. (NASDAQ: REPL) is a stark, real-world example of what happens when that information gap is allegedly exploited.

Based in Woburn, Massachusetts, Replimune is a clinical-stage biotechnology company focused on a unique approach to cancer treatment: oncolytic immunotherapies. These therapies, which are genetically engineered viruses, are designed to selectively infect and destroy cancer cells while also activating the body's immune system to fight the tumor. Under the leadership of CEO Dr. Sushil Patel, the company had positioned its lead product candidate, RP1, as a potential game-changer for patients with advanced melanoma.

As alleged in the complaint, Replimune had painted a picture of immense promise for its lead cancer drug candidate, RP1. The company and its executives spoke with optimism about the IGNYTE clinical trial, which was investigating RP1 for the treatment of advanced melanoma. Investors, hearing of a potentially groundbreaking new therapy and the promise of a fast-track to market, poured their capital into the company. The stock price rose, reflecting this collective hope and confidence.

But on July 22, 2025, the story suddenly changed.

Replimune announced that it had received a "Complete Response Letter" (CRL) from the FDA – a formal declaration that the FDA cannot approve the drug in its current form. The FDA stated that the IGNYTE trial was not “an adequate and well-controlled clinical investigation” that could provide sufficient evidence of the drug's effectiveness.

The news hit the market like a meteor. In a single day, Replimune’s stock plummeted by over 77%, wiping out millions in market value and leaving investors with catastrophic losses.

The suit brings the information asymmetry into sharp focus. The lawsuit alleges that Replimune had been "recklessly overstating" the trial's prospects and that the company and its executives knew, or should have known, of the material issues that would lead to the FDA's rejection.

The suit alleges that while investors were buying into a positive narrative, it contends that the FDA's letter suggests a different reality: that the trial had fundamental design flaws, including a "heterogeneous patient population" that made it difficult to interpret the results, and issues with the planned confirmatory trial. These are not small details; they are core, technical issues that the suit alleges would have been known to the company’s insiders long before the public announcement.

The lawsuit seeks to represent anyone who purchased or acquired Replimune's publicly traded securities between November 22, 2024, and July 21, 2025, known as the "Class Period." The central claim is that the company's alleged misrepresentations and omissions during this specific time frame artificially inflated the stock's value. If the lawsuit is successful, the company may be required to pay damages, which would then be distributed among the members of the class based on their individual losses.

The drama at Replimune, however, did not end with the FDA’s initial rejection. In the wake of the CRL, CEO Sushil Patel expressed the company’s commitment to finding a path to approval. On September 16, Replimune held a critical "Type A" meeting with the FDA to push for a reconsideration of the drug's approval.

The results of that meeting, announced today, Thursday, September 18, 2025, have sent another shockwave through the market. While the company stated it is "evaluating the feedback" from the FDA to determine its "next steps," it also noted that a path forward under the accelerated approval pathway has "not yet been determined." The perceived lack of a clear, positive outcome sent Replimune's shares plummeting another 40%.

This latest drop raises a critical question for the ongoing lawsuit: should the Class Period be extended? The new information provided by the company today could be seen as a continuation of the same alleged misrepresentations or a new set of misleading statements. For investors who purchased shares after the initial July crash but before today's announcement, the second drop may provide a basis for an extension of the current class action to include more investors.

Hagens Berman’s Investigation

Hagens Berman is actively investigating whether the company misled investors about the regulatory risks and trial limitations. The firm is now urging investors with significant losses to contact them to learn more about their options.

It is important for affected investors to be aware of the process and deadlines, as they have until September 22, 2025, to file a motion to serve as the lead plaintiff, though doing so is not a requirement to participate in any potential future recovery.