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.

According to the complaint, the FDA initially rejected Antares’s New Drug Application (“NDA”) for QST based on two deficiencies relating to clinical data from the Phase 3 studies:  a meaningful increase in blood pressure and the occurrence of depression and suicidality.  The FDA ultimately approved a revised NDA with the requirement of a black box warning and risk of depression and suicide.

On a motion to dismiss, the Court rejected the plaintiff’s claim that Antares’s statements that the Phase 3 studies produced “positive safety data” and that “QST was found to be safe” were false or misleading in light of the adverse events observed in the Phase 3 studies.  Categorizing the statements on safety data as interpretations of clinical trial data and therefore opinions, the Court held that plaintiff failed to allege the defendants did not honestly believe the studies produced positive safety data or lacked a reasonable basis for the opinion, as required to state a claim.

Plaintiff also alleged that safety data reported in Antares’s public disclosures and in one press release—reporting that hypertension was among the “most common adverse reactions (incidence ≥ 5%)”—were false or misleading given the hypertension rate observed in the study was allegedly significantly higher than the other six common adverse events.  However, the Court found this disclosure sufficient to inform investors that hypertension was an adverse side effect and noted that the Company was not required to disclose the exact statistical risk of any adverse effects.

The Court also rejected the plaintiff’s broad allegations that defendants overstated QST’s approval prospects, finding that those allegations were conclusory.  The Court further found that Antares did not overstate QST’s approval prospects because the challenged statement referred to “QST’s ‘potential approval.’”  And, critically, plaintiff failed to allege that the adverse events observed in the Phase 3 studies foreclosed FDA approval of QST entirely.

Finally, the Court found that plaintiff failed to allege that Antares omitted the increased risk of hypertension and suicidality in QST as compared to other testosterone replacement therapies.  Because “[s]ilence, absent a duty to disclose, is not misleading,” Antares did not have a duty to disclose this data and the Company did not disclose “some other comparative safety data that would render this omission misleading.”

While the Court did find an Antares executive’s alleged statements that “anyone who is diagnosed with testosterone deficiency, we believe, is the perfect candidate” and “I think that there isn’t any particular patient population that has a testosterone deficiency that we’re excluding or that we think is a better candidate” were potentially misleading, the Court ultimately determined that the plaintiff failed to plead the statements were material.  The Court found these statements to be “vague and general statements of optimism” and not material because “a reasonable investor would not base decisions on such statements.”

The Antares decision underscores that while pharmaceutical executives must be carefully measured in their statements concerning available study data and FDA approval prospects, courts will not hold them liable for statements that can be construed as ones constituting nonactionable opinion or that otherwise cannot be construed as “false” within the meaning of the federal securities laws.