A federal judge sitting in Trenton, New Jersey, ruled on multiple motions pending in a shareholders’ securities lawsuit on Monday, including pharmaceutical company Amarin Corporation PLC and several of its executives’ motion to dismiss for failure to state a claim. In resolving all motions in Amarin’s favor, the court found that the shareholder plaintiffs did not sufficiently allege that the company made false or misleading statements about the efficacy of the heart disease drug it was testing.
Judge Brian R. Martinotti of the District of New Jersey explained that publicly traded Amarin has focused solely on the development and marketing of its drug Vascepa since 2008. Three trials were reportedly conducted to test the drug.
The third trial, which concluded in the summer of 2018, showed positive results, but the underlying data was plagued with a pair of issues, the court wrote. The filing explained that “the placebo used did not appear to be acting as an inert placebo and … the trial data could not explain how the drug was actually reducing negative cardiac events.”
Reportedly, Amarin then decided to publish the trial’s ostensibly positive results, while keeping both issues a secret. As a result of its announcement, Amarin’s share price rose 433% over the course of two days, and subsequently, the company’s top officers sold off an unprecedented number of shares, the court recounted.
Once knowledge of the trial’s flaws came to light in November 2018, Amarin’s share price plummeted 27%. The plaintiffs and putative shareholder class filed suit in February 2019, seeking to recover the damages they suffered as a consequence of the defendants’ allegedly fraudulent acts and omissions.
More recently, the plaintiffs sought to strike 22 exhibits presented by Amarin in its defense, like Amarin’s Securities Exchange Commission filings, documents relating to its executives’ stock sales, the transcripts of conference calls, and U.S. Food and Drug Administration documents relating to Vascepa. The court dedicated nearly half of its 42-page opinion to these motions, which it ultimately resolved in favor of Amarin.
As for the defendants’ motion to dismiss, the court reasoned that the plaintiffs did not point to any misstatements regarding “Vascepa’s mechanism of action” and did not “explain how failure to identify a specific mechanism of action rendered Defendants’ top-line results misleading.” To the contrary, Judge Martinotti noted that the defendants warned of the exact risk the shareholders argued they failed to disclose.
Similarly, the court held that the shareholders’ amended complaint failed to adequately allege scienter. The opinion explained that the plaintiffs’ presentation of both direct and circumstantial evidence did not prove that the defendants acted with the requisite state of mind. Judge Martinotti permitted the shareholders to amend their complaint by Apr. 29.
The shareholders are represented by Faruqi & Faruqi LLP, Gibbs Law Group LLP, and Lite DePalma Greenberg LLC, and Amarin by Katten Muchin Rosenman LLP.
