A class action lawsuit filed against InMode Ltd. accuses the company along with certain executives of violating the Securities Exchange Act and is asking for investors to join as plaintiffs.
Give me a refresh on this company.
Founded in 2008 with U.S. headquarters in Irvine, California, the Israel-based InMode develops, manufactures, and markets platforms utilizing novel radio frequency (RF)-based technology to launch advanced minimally-invasive procedures and support current surgical procedures.
Its areas of surgical specialty include ophthalmology as well as:
- Plastic surgery
- Gynecology
- Dermatology
- Ear, neck, and throat (ENT)
Let’s zero in on eyecare
In 2023, InMode launched Envision, its ophthalmic platform in the United States.
The system is an in-office, nonsurgical device that features multiple programmable modalities for delivering precision treatments, including:
- Forma-I: bipolar radiofrequency (RF)
- Treatment of dry eye disease (DED) associated with meibomian gland dysfunction (MGD)
- Lumecca-I: intense pulsed light (IPL)
- Treatment of ocular rosacea, MGD, and inflammatory dry eye
Note: While both devices are Health Canada certified (see here, for example), there are currently no clinical studies to support a regulatory approval in the United States.
Meaning: they're available for off-label use but are not FDA approved.
Gotcha. So who filed this lawsuit?
Robbins Geller Rudman & Dowd LLP (Robbins Geller), a San Diego, California-based law firm specializing in complex securities litigation on behalf of investors, filed in the California Central District Court.
Note: In this case, the investors are those who purchased common stock from InMode between June 4, 2021, and October 12, 2023.
Now explain the allegations.
Filed on Feb. 14, 2024, the lawsuit—titled Cement Masons and Plasterers Local No. 502 Pension Fund v. InMode Ltd. et al—alleges that, during the nearly 1.5-year time frame, InMode and certain executives made false and/or misleading statements and/or failed to disclose that the following::
- InMode heavily discounted nearly every device it sold
- Demand for the company’s products was driven by its willingness to discount its products
- The company violated FDA regulations by:
- Participating in off-label marketing
- Promoting its products for treatments or indications for which they had no FDA approval
- Failing to timely report injuries caused by its devices
What else?
Oh, there’s plenty more …
On Feb. 17, 2023, the lawsuit alleges that an investigative publication reported that the company’s customers were threatened with legal action after they filed complaints about InMode’s devices and sales tactics.
The resulting effect (per the lawsuit): Company common stock prices crashed.
What happened on Oct. 12, 2023?
The company lowered its full-year revenue guidance, which it allegedly blamed on three factors:
- Higher interest rates
- Tighter leasing approval standards
- Bottlenecks in loan processing
On that same day, the lawsuit alleges that “an investigative publication released a story reporting that InMode significantly discounted the prices of its devices on a routine basis throughout the Class Period (ie: June 4, 2021, through October 12, 2023).
And as a result, this allegedly led to the company’s common stock price dropped precipitously nearly 26% over two trading sessions.
Note: In the U.S. for both the DOW and NASDAQ exchanges, a trading session is defined as 9:30 am to 4 pm EST.
Gotcha. So what is the law firm seeking right now?
Robbins Geller has noted that—based on the Private Securities Litigation Reform Act of 1995—any InMode investor who purchased common stock during the Class Period (see above if you need a refresher) is allowed to become the lead plaintiff in the class action lawsuit against the company.
Essentially, this individual would file the lawsuit and represent the entire group of investors (plaintiffs) who chose to participate in the lawsuit against InMode
And how long do investors have to come forward?
Per Robbins Geller, as of Feb. 19, 2024, investors have 57 days.
Attorney J.C. Sanchez has been named as the point contact, reachable at 800-449-4900 or via e-mail at jsanchez@rgrdlaw.com.
Lead plaintiff motions must be filed with the court by April 15, 2024.
*Disclaimer: The information provided in this article does not and is not intended to constitute legal advice; instead, all information, content, materials available herein are for general information purposes only.