Court Appoints Lead Plaintiff, Denies Appointment of Lead Counsel in Biogen Securities Suit

On Tuesday, a District of Massachusetts court approved Nadia Shash’s request to serve as lead plaintiff, but denied her request to appoint the Rosen Law Firm, P.A. as lead counsel in a securities case filed against Biogen Inc. and several of its employees. The January-filed complaint alleges that the company violated federal securities laws by making false or misleading statements in relation to the development of the Alzheimer’s drug, aducanumab.

The complaint describes the events giving rise to the shareholder’s legal action, beginning in 2015 when Biogen launched advanced phase trials of aducanumab to determine its efficacy. In 2019, Biogen announced their termination after a futility analysis showed that the drug trials were unlikely to reach their “primary efficacy.” 

The complaint contends that because Biogen “was not ready to part with its vision of reaping enormous financial benefits stemming from the introduction of a breakthrough therapy for the treatment of Alzheimer’s disease,” the company announced that it was reviving the previous trials based on a refreshed data analysis. Company leaders then allegedly embarked on a campaign to convince the U.S. Food and Drug Administration (FDA), the scientific community, and the investing public that the after-the-fact data analysis backed up the conclusion that aducanumab was more effective than originally thought.

However, the complaint claims, the FDA’s independent Advisory Panel reviewed Biogen’s submission, and on Nov. 6, 2020, voted that it could not reasonably consider Biogen’s research as primary evidence of the drug’s efficacy. The panel also delivered negative commentary about the purported data, which in concert with its vote, was enough to diminish the drug’s chances of regulatory approval. On this news, Biogen common shares reportedly dropped $92.64 per share, or 28%, to close at $236.26 per share, clearing away more than $14 billion in investor wealth.

This week’s order granted shareholder Shash’s unopposed motion for appointment as lead plaintiff, in part because she has the largest financial interest in the relief sought, the opinion stated. The court took issue with Shash’s request to appoint the Rosen Law Firm, P.A. as lead counsel, however, because she asked that the court appoint a law firm, rather than individual attorneys. According to the order, this raised the question of whether a law firm may serve as counsel where it may not enter appearances, or file pleadings pursuant to Federal Rule of Civil Procedure 11.

In addition, the court held that it could not evaluate the qualifications of firm attorneys without an understanding as to who in the firm would be responsible for handling the case. In turn, the court denied the motion without prejudice, instructing the plaintiff to either renew her motion by identifying the individual attorneys she seeks to have appointed, or citing authority under applicable law as to the propriety of the appointment of law firms, as opposed to individual attorneys, as lead counsel.