Justia Securities Law Opinion Summaries

Plaintiffs filed suit against Pfizer and others, alleging violations of federal securities laws because Pfizer made fraudulent misrepresentations and fraudulently omitted to disclose information regarding the safety of two of its drugs, Celebrex (celecoxib) and Bextra (valdecoxib). On appeal, plaintiffs argued that the district court abused its discretion in excluding the testimony of plaintiffs' expert regarding loss causation and damages. The court concluded that the district court abused its discretion by excluding the expert's testimony in its entirety; the district court erred in concluding that the expert needed to disaggregate the effects of Pfizer’s allegedly fraudulent conduct from Searle’s or Pharmacia’s, regardless of whether Pfizer is ultimately found liable for the latters’ statements; the testimony could have been helpful to the jury even without such disaggregation; as to the expert's adjustment to the price increases, the district court did not abuse its discretion in concluding that this change was not sufficiently reliable to be presented to a jury; the expert's error did not render the remainder of his testimony unreliable and the district court should have prevented him from testifying about the adjustment, but otherwise allowed him to present his findings on loss causation and damages; the district court erred in concluding, as a matter of law, that Pfizer had insufficient authority over certain Searle and Pharmacia statements as to have “made” them; but, however, the court's finding that the district court abused its discretion in excluding the expert's testimony does not turn on the question of Pfizer’s ultimate liability for these statements. Accordingly, the court vacated the district court's grant of summary judgment for Pfizer and remanded. View "In re Pfizer Inc. Securities Litigation" on Justia Law

Plaintiffs filed suit under federal securities laws and state blue sky laws, alleging that Sanofi made materially false or misleading statements regarding its breakthrough drug, Lemtrada, designed to treat multiple sclerosis. The district court granted defendants' motion to dismiss for failure to state a claim. The court agreed with the district court's reasoning and holding. The court writes principally to examine the impact of the Supreme Court’s decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund, decided after the district court rendered its decision. Given the sophistication of the investors here, the FDA’s public preference for double‐blind studies, and the absence of a conflict between defendants’ statements and the FDA’s comments, the court concluded that no reasonable investor would have been misled by defendants’ optimistic statements regarding the approval and launch of Lemtrada. Issuers must be forthright with their investors, but securities law does not impose on them an obligation to disclose every piece of information in their possession. As Omnicare instructs, issuers need not disclose a piece of information merely because it cuts against their projections. Accordingly, the court affirmed the judgment. View "In re Sanofi Sec. Litig." on Justia Law

Plaintiffs acquired shares of K-V Pharmaceutical stock during the period in which the company launched and marketed Makena, its new prescription drug, designed to reduce the risk of pre-term labor for at-risk pregnant women. It had acquired rights to the drug from the FDA, under the Orphan Drug Act, 21 U.S.C. 360. In a putative class action, the plaintiffs alleged that K-V and three of its officers made materially false or misleading statements or omissions related to the product launch. The district court dismissed, holding the challenged statements were protected by the safe-harbor provision of the Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. 78u-4(b), and that the plaintiffs failed to adequately plead scienter under the PSLRA. The district court also denied the plaintiffs the opportunity to amend the complaint as it related to allegations from confidential witnesses. The Eighth Circuit affirmed. K-V’s statements fell within the PSLRA’s safe-harbor provision as forward-looking statements accompanied by meaningful cautionary language and are not actionable as a basis for a securities fraud action. View "Anderson v. K-V Pharma. Co." on Justia Law

Institutional investors brought a private securities fraud class action under the Private Securities Litigation Reform Act of 1995 (PSLRA), claiming that Wyeth, a pharmaceutical company and its executives made materially false and misleading statements in violation of the Securities Exchange Act of 1934, 15 U.S.C. 78j(b), and Securities and Exchange Commission (SEC) Rule 10b-5, regarding interim clinical trial data related to the development of an experimental Alzheimer’s drug. The district court dismissed for failure to state a claim. The Third Circuit affirmed, concluding that, in context, the defendants’ statements were not false or misleading. The court noted that this is not the first case in which the federal courts have adjudicated securities fraud allegations arising out the development of the drug bapineuzumab and concluding that the plaintiffs failed to adequately allege defendants did not honestly believe their interpretation of the interim results or that it lacked a reasonable basis. View "City of Edinburgh Council v. Pfizer Inc." on Justia Law

Investors filed a securities fraud action, claiming that BioMimetic misled them about Augment Bone Graft’s prospects for FDA approval. The product is designed to encourage bone growth in patients that undergo foot and ankle surgeries without the need to harvest and transplant tissue. They claim that the FDA privately communicated to BioMimetic that the FDA expected the device’s clinical trials to prove that Augment was effective based on an analysis of all study participants. The clinical trials did not achieve those results. But if BioMimetic removed from the analysis study participants that did not actually receive treatment, the data did indicate that the device was effective. Based on these two analyses, BioMimetic expressed optimism about Augment’s chances for approval to investors. The investors claim that those statements were misleading because BioMimetic did not tell them everything it knew about the FDA’s expectations, particularly the FDA’s desire for the trials to show that the device was effective based on an analysis of the entire study population. The district court dismissed, The Sixth Circuit affirmed. The complaint did not plead a strong enough inference of scienter. BioMimetic could legitimately have believed that the statistically significant results it achieved based on an analysis of the population would be sufficient to obtain approval. View "Kuyat v. BioMimetic Therapeutics, Inc." on Justia Law

Plaintiffs are holders of Savient’s 4.75% convertible senior notes due in 2018, which are unsecured and subject to the terms of an indenture. Collectively, Plaintiffs own a face value of $48,709,000, approximately 40% of the outstanding Notes. Defendants are members of Savient’s board of directors USBNA serves as trustee for the Indenture governing the Notes. Following dismal sales of its new drug, KRYSTEXXA, Savient’s Board approved a financing transaction to exchange some existing unsecured Notes for new senior secured notes with a later maturity date. Through the Exchange, Savient exchanged around $108 million in Notes, raised around $44 million in new capital, and issued additional SSDNs with a face value of approximately $63 million. Like the Notes, the SSDNs are subject to an indenture for which USBNA serves as trustee. Plaintiffs sought a declaration that Savient was insolvent and brought derivative claims alleging waste and breach of fiduciary duty in connection with the Exchange Transaction; alleged breach of fiduciary duty and waste claims in connection with the Board’s approval of retention awards for certain Savient executives. The chancellor dismissed the receivership claim for lack of standing and granted a declaration that an Event of Default has not occurred.View "Tang Capital Partners LP, v. Norton" on Justia Law

Plaintiff brought a putative class action against defendants, alleging that defendants violated Section 10(b) and Section 20(a) of the Securities and Exchange Act of 1934, 15 U.S.C. 78u-4(b)(2)(A), by issuing a misleading press release concerning the results of a clinical trial for a drug called bapineuzumab. Plaintiff appealed from the district court's dismissal of his amended complaint with prejudice for failure to state a cause of action under Rule 12(b)(6) and denying leave to amend. The court concluded that, in the context of the full presentation of the details surrounding the study of the drug, nothing omitted from the press release rendered it false or misleading to a reasonable investor. Moreover, the court held that plaintiff offered insufficient additional allegations to cure this deficiency. Accordingly, the court affirmed the judgment of the district court. View "Kleinman v. Elan Corp., PLC" on Justia Law

Plaintiffs, groups of investors who purchased the securities of KV, brought this class action lawsuit alleging that KV and some of its individual officers committed securities fraud. Plaintiffs alleged that KV made false or misleading statements about its compliance with Food and Drug Administration (FDA) regulations governing the manufacture of pharmaceutical products, and made false or misleading statements about earnings resulting from pharmaceutical products allegedly manufactured in violation of FDA regulations. The court concluded plaintiffs' complaint adequately set forth the reasons why KV's statements about is compliance were false, or at least misleading, at the time they were made; the district court did not err when it determined the investors' complaint did not sufficiently plead that KV made false or misleading statements about earnings tied to the manufacture of generic Metoprolol; the district court correctly dismissed the scheme liability claims against the two individual KV officers; but the district court erred in denying the motion to amend the complaint. Accordingly the court affirmed in part, reversed in part, and remanded for further proceedings. View "Public Pension Fund Group, et al. v. KV Pharmaceutical Co., et al." on Justia Law

Zimmer manufactures orthopaedic reconstructive devices. One product, a replacement hip socket, was subject to a report of high failure rates. Zimmer announced preliminary findings in 2008, attributed the failures to improper surgical technique, stopped selling the product in the U.S. while preparing new instructions for implantation, and returned the item to the market. Owners of Zimmer stock sued, claiming that the problem was poor design or quality control, that Zimmer pretended otherwise to avoid hurting the price of its stock, and that Zimmer delayed revealing quality-control problems at its plant until after its 2008 quarterly report and earnings call. Zimmer had projected 10% to 11% revenue growth for the year and net earnings of $4.20 to $4.25 per share; months later it cut this projection to 8.5% to 9% growth and net earnings of $4.05 to $4.10 per share. The district court dismissed under the pleading standards of the Private Securities Litigation Reform Act of 1995, 15 U.S.C. 78u-4. The Seventh Circuit affirmed, holding that plaintiffs failed to establish scienter. The FDA has never concluded that the product was defectively designed or made and never issued a warning or caution; quality control issues at pharmaceutical and medical-device producers are endemic. View "Plumbers & Pipefitters Local Union 719 Pension Fund v. Zimmer Holdings Inc." on Justia Law

Plaintiff brought this securities fraud action against defendant, a biotechnology company and several of its officers, alleging that, by misstating and failing to disclose safety information about two of the company's products used to treat anemia, they violated the Securities and Exchange Act of 1934, 15 U.S.C. 78j(b), 78t(a), and Rule 10b-5, 17 C.F.R. 240.10b-5. At issue was what a plaintiff must do to invoke a fraud-on-the-market presumption in aid of class certification. The court joined the Third and Seventh Circuits in holding that plaintiff must (1) show that the security in question was traded in an efficient market, and (2) show that the alleged misrepresentation were public. As for the element of materiality, plaintiff must plausibly allege that the claimed misrepresentations were material. In this case, plaintiff plausibly alleged that several of defendants' public statements about its pharmaceutical products were false and material. Coupled with the concession that the company's stock traded in an efficient market, this was sufficient to invoke the fraud-on-the-market presumption of reliance. Therefore, the district court did not abuse its discretion in certifying the class. View "Connecticut Retirement Plans and Trust Funds v. Amgen Inc., et al." on Justia Law