A recently-published report from NERA Economic Consulting provides a look back at securities class action litigation in 2020 and demonstrates the continued focus by the plaintiffs’ bar on life science firms, particularly those centered on the development and commercialization of drugs and devices.

The report found that excluding merger objections, the Health Technology and Services sector accounted for 22% of all securities class action filings for the year, nearly the most of any sector.  The report also showed that defendants in that sector faced the largest percentage of COVID-19-related securities class actions suits.  Those suits include cases against developers of COVID-19 vaccines and diagnostics.

NERA further reported that the average settlement value in securities class actions in 2020 for non-merger objection cases increased more than 50% over 2019, with the average settlement value coming in at $44 million.

NERA’s report makes clear that life sciences firms continue to face disproportionate rates of securities class action claims, including filings related to the COVID-19 pandemic, and that the cost to settle securities litigation has been on the rise.

Read the entire report.

George Lehmann, Insured Benefit Plans, Inc. v. Ohr Pharmaceutical, Inc., 2020 WL 5988517 (2nd Cir. Oct. 9, 2020)

On October 9, 2020, the Second Circuit affirmed the dismissal of an action brought against Ohr Pharmaceutical, Inc. and certain of its executives.  Plaintiffs alleged that the defendants made misleading statements concerning the efficacy of Ohr’s core product, a Squalamine-based treatment for wet age-related macular degeneration (WetAMD), a condition that can cause vision loss.

The complaint pleaded that in January 2018, Ohr announced the results of a phase III clinical trial of its WetAMD treatment, that the results of this trial showed that the treatment arm actually performed worse than the control arm, and that the Company’s stock price fell by over 80% as a result.

Continue Reading Second Circuit Affirms Dismissal of Action Regarding Clinical Trial Of Macular Degeneration Treatment

Skiadas v. Acer Therapeutics Inc., 2020 WL 3268495 (S.D.N.Y. June 16, 2020)

On June 16, 2020, Judge Gregory Woods of the Southern District of New York granted in part and denied in part a motion to dismiss an action against Acer Therapeutics Inc. and certain of its executives regarding disclosures made in offering documents prior to the Company’s submission of a New Drug Application (“NDA”) for EDSIVO, a drug that treats Vascular Ehlers-Danlos Syndrome (“vEDS”).  Plaintiff allege that when the FDA declined to approve the drug, Acer’s stock dropped.

Continue Reading S.D.N.Y. Partially Dismisses Claims Against Pharmaceutical Company, But Allows Claim Regarding Misleading Statements About Upcoming NDA for Rare Tissue Disorder To Proceed

Nguyen v. Endologix, Inc., 2020 WL 3069776 (9th Cir. June 10, 2020)

On June 10, 2020, the Ninth Circuit affirmed the dismissal of a putative securities fraud class action brought against a medical device corporation, Endologix, Inc., and certain of its officers, regarding statements concerning the FDA’s likelihood of premarket approval of the Company’s aneurysm sealing product, Nellix. The Court held that plaintiff failed to allege facts giving rise to a strong inference of scienter (i.e., fraudulent intent) and thus failed to adequately plead a claim for securities fraud.

Continue Reading Ninth Circuit Affirms Dismissal of Action Regarding Statements Concerning Likelihood of FDA Premarket Approval of Aneurysm Sealing Device

Hou Liu v. Intercept Pharmaceuticals, Inc., 2020 WL 5441345 (S.D.N.Y. Sept. 9, 2020)

On September 9, 2020, Judge Lewis A. Kaplan of the Southern District of New York denied a motion to amend judgment and a request for leave to file a second amended complaint following the Court’s dismissal of an action against Intercept Pharmaceuticals, Inc. and certain of its executives.  The Court ruled that plaintiffs failed to identify any facts the Court overlooked in dismissing the action on March 26, 2020, and had not offered any newly-discovered evidence justifying leave to amend the complaint.

Continue Reading S.D.N.Y. Rejects Proposed Amended Complaint Alleging Manufacturer Of Liver Disease Drug Intended To Commit Fraud By Not Disclosing Serious Adverse Events

A recently-published report from NERA Economic Consulting provides a mid-year look back at securities class actions and demonstrates the continued focus by the plaintiffs’ securities litigation bar on health care and life science firms, particularly those focused on the development and commercialization of drugs and devices.

The report found that approximately half of all COVID-19-related securities class action suits filed between March and June of 2020 were filed against defendants in the Health Technology and Services and in the Electronic Technology and Technology Services sectors. Looking more broadly, the report found that excluding merger objections, the Health Technology and Services sector accounted for 18% of all filings for the first half of the year.

The report makes clear that pharmaceutical, healthcare, and biotechnology firms will likely continue to face disproportionate rates of securities litigation filings, including filings related to the COVID-19 pandemic.

The entire report is available at:  https://www.nera.com/publications/archive/2020/recent-trends-in-securities-class-action-litigation–h1-2020-upd.html.

Shanawaz v. Intellipharmaceutics Int’l Inc., No. 17-CV-5761 (JPO) (S.D.N.Y. July 30, 2020)

On July 30, 2020, Judge J. Paul Oetken of the Southern District of New York preliminarily approved a settlement in a putative shareholder class action concerning development of an OxyContin alternative, Rexista.  The parties agreed to a settlement amount of $1.6 million.

As discussed in a previous post, in December 2018, Judge Oetken granted defendants’ motion to dismiss allegations with respect to statements regarding Rexista’s bioequivalence to OxyCotin and statements regarding Rexista’s abuse-deterrent features as disputes over the interpretation of data.  However, the Court found that plaintiffs adequately alleged a claim that defendants misrepresented the contents of Rexista’s New Drug Application as including studies it did not include.

The settlement fairness hearing is currently scheduled for December 4, 2020.

Smith v. Antares Pharma, Inc., 2020 WL 2041752 (D.N.J. Apr. 28, 2020)

Judge Michael A. Shipp of the District of New Jersey dismissed a putative class action complaint filed against Antares Pharma, Inc., and certain of its officers, holding that the plaintiff failed to adequately allege an actionable misrepresentation or omission concerning certain adverse events observed in two Phase 3 clinical studies of Antares’s lead product, QuickShot Testosterone (“QST”), an auto injector product for testosterone replacement therapy.  Plaintiff alleged that Antares made eight materially false or misleading statements concerning the safety of the product and likelihood of FDA approval.

Continue Reading District of New Jersey Dismisses Action Regarding Company’s Statements Concerning Drug Delivery System’s Safety

Mehta v. Ocular Therapeutix, Inc., 955 F.3d 194 (1st Cir. 2020)

On April 9, 2020, the First Circuit affirmed the dismissal of an action brought against a biopharmaceutical company, Ocular Therapeutix, Inc., and certain of its officers, regarding statements concerning the Company’s manufacturing processes.  The Court held that plaintiffs failed to allege facts giving rise to a strong inference of scienter (i.e., fraudulent intent) and thus failed to adequately plead a securities law violation.

Continue Reading First Circuit Affirms Dismissal of Action Regarding Statements Concerning Manufacturing of Eye Drug

Hou Liu v. Intercept Pharm., Inc., 2020 WL 1489831 (S.D.N.Y. Mar. 26, 2020)

On March 26, 2020, Judge Lewis A. Kaplan of the Southern District of New York granted a motion to dismiss an action against Intercept Pharmaceuticals, Inc. and certain of its executives regarding twenty-one statements made about safety, dosing, and effects of Ocaliva, a drug approved to treat patients with primary biliary cholangitis (“PBC”), a rare liver disease.  The complaint alleged that Intercept’s stock dropped after it issued a Dear Healthcare Provider Letter (the “HCP Letter”) and again after the FDA issued a drug safety communication and a corresponding safety alert on Ocaliva.

Continue Reading S.D.N.Y. Dismisses Action due to Plaintiffs’ Failure to Link Occurrences of Serious Adverse Events to Liver Disease Drug