37 F. Supp. 3d 499
D. Mass.2014Background
- Abiomed, Inc. develops and sells Impella devices; Impella 2.5 revenue is central to the case.
- Class period: August 4, 2011–October 31, 2012; lead plaintiffs CAPRS and FPPA sue Abiomed, its CEO Minogue, and CFO Bowen.
- Plaintiffs allege off-label marketing of Impella 2.5 in violation of FDA rules, boosting revenues and stock price.
- FDA actions: Untitled Letter (2010), Warning Letter (2011), follow-up and February 2012 meeting; company took corrective actions.
- Company disclosures acknowledged FDA concerns in 10-Qs and 10-Ks; August 2012–November 2012 actions included recalls and internal audits.
- Insider trading: Minogue and Bowen sold substantial Abiomed stock during the period; trades largely under Rule 10b5-1 plans.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether off-label marketing plausibly existed | Plaintiffs allege a pervasive off-label scheme at Abiomed. | Defendants claim complaints show only isolated issues, not a company-wide scheme. | Plausible off-label marketing policy alleged overall. |
| Whether off-label marketing affected the stock price | Off-label marketing plausibly drove revenue growth and inflated price. | No specific revenue impact or causation tied to off-label sales; hypotheticals insufficient. | Sufficient pleadings of material impact to survive PSLRA standard. |
| Whether misrepresentations about off-label marketing and FDA inquiries are actionable | Defendants falsely claimed policy to refrain from off-label promotion while engaging in it. | Disclosures about FDA inquiries and corrective actions were not misleading. | Misrepresentation claims adequately pleaded; disclosures analyzed as potentially misleading in context. |
| Whether statements re: Protect II study and safety were misrepresented | Defendants emphasized favorable Protect II data to promote off-label use. | Disclosures of study results and safety discussions were not uniformly misleading. | Some statements may be actionable; overall sufficiency depends on context of promotional use. |
| Whether scienter is adequately pleaded | Insider stock sales indicate knowledge of off-label marketing and its illegality. | Insider sales are insufficient to show a cogent, compelling inference of scienter; no direct admissions. | Court finds scienter not cogent and compelling; PSLRA burden not met. |
Key Cases Cited
- Amgen Inc. Sec. Litig., 544 F.Supp.2d 1009 (C.D. Cal. 2008) (off-label marketing evidence supports securities fraud claims)
- Gilead Sciences Sec. Litig., 536 F.3d 1049 (9th Cir. 2008) (insufficient disclosure; strong inference of scienter required)
- In re UnumProvident Corp. Sec. Litig., 396 F.Supp.2d 858 (E.D. Tenn. 2005) (unethical practices may support securities claims when tied to misstatements)
- Mississippi Pub. Employees’ Ret. Sys. v. Boston Scientific Corp., 649 F.3d 5 (1st Cir. 2011) (scienter and loss causation considerations in PSLRA pleading)
- New Jersey Carpenters Pension & Annuity Funds v. Biogen IDEC Inc., 537 F.3d 35 (1st Cir. 2008) (circumstantial evidence supporting scienter analysis)