IN RE: AMARIN CORPORATION PLC SECURITIES LITIGATION
No. 16-2640
United States Court of Appeals, Third Circuit.
May 23, 2017
689 Fed. Appx. 124
James L. Reiss, Lead Plaintiff on behalf of all plaintiffs, Appellants. Argued on April 25, 2017.
III. Conclusion
For the foregoing reasons, we will reverse the District Court‘s denial of Bauer‘s
Robert C. Finkel [ARGUED], Lester L. Levy, Sean M. Zaroogian, Wolf Popper, 845 Third Avenue, 12th Floor, New York, NY 10022, Jeffrey W. Herrmann, Cohn Lifland Pearlman Herrmann & Knopf, Park 80 West-Plaza One, 250 Pehle Avenue, Suite 401, Saddle Brook, NJ 07663, Counsel for Appellants
Christina L. Costley, Bruce G. Vanyo, Katten Muchin Rosenman, 2029 Century Park East, Suite 2600, Los Angeles, CA 90067, Howard R. Rubin [ARGUED], Robert T. Smith, Katten Muchin Rosenman, 2900 K Street, N.W., Suite 200, North Tower, Washington, DC 20007, Jason C. Vigna, Katten Muchin Rosenman, 575 Madison Avenue, 11th Floor, New York, NY 10022, Counsel for Appellees
Before: SMITH, Chief Judge, MCKEE and RENDELL, Circuit Judges
OPINION *
*RENDELL, Circuit Judge:
Appellant-Plaintiff James Reiss (the “Plaintiff“) appeals an Order of the District Court dismissing his putative securities fraud class action complaint (the “Second Consolidated and Amended Class Action Complaint” or “SAC“) against the Appellee-Defendant Amarin PLC., a biopharmaceutical corporation, and certain of its individual officers (the “Defendants“). The District Court held that the Plaintiff failed to state a claim because none of the eighty-seven statements made by the Defendants and recounted in the SAC were false or misleading. For the reasons that
I. BACKGROUND
A. Factual Background
Amarin‘s primary drug is Vascepa, an ultra-pure omega-3 fatty acid product designed to reduce triglycerides in the blood stream. Triglycerides (“TGs“) are a common form of fat molecule. During the Class Period (November 29, 2010 through October 16, 2013), the Defendants sought FDA approval of Vascepa for treatment of patients with elevated TGs who are already taking a statin drug like Lipitor (the “ANCHOR Indication“). The Defendants theorized that administering Vascepa in this regime would result in a statistically significant reduction of major adverse cardiac events like heart attacks. They have vigorously pursued ANCHOR because the potential treatment population is thirty-six million people.1
To support its application for the ANCHOR Indication, Amarin proposed conducting a 12-week trial (the “ANCHOR Study“) to demonstrate the efficacy of the drug. Given its short duration, the ANCHOR Study could not measure cardiovascular outcomes directly as the clinical endpoint of the study. Such a measurement would require an expensive and time-consuming long-term outcomes study. Rather, Amarin proposed to rely on the reduction of TGs as a “surrogate endpoint,” on the assumption that a significant reduction of TGs would lead to reduced major adverse cardiac events.
On July 14, 2008, senior Amarin officials met with the FDA to determine
Amarin later entered a Special Protocol Assessment (“SPA“) Agreement with the FDA memorializing some of this feedback in July 2009 (the “2009 SPA“). An SPA Agreement binds the FDA as to design, methodological, and approval criteria for a given drug application, although the FDA may rescind an SPA if it identifies “a substantial scientific issue essential to determining the safety or effectiveness of [a] drug . . . after the testing has begun.”
In April 2011, Amarin announced that the results of the ANCHOR Study showed statistically significant reduction of TGs in the ANCHOR population. However, around this time, two of the three outcomes studies mentioned by the FDA in 2008 (ACCORD and AIM-HIGH) failed to achieve their endpoints.2 On a conference call between Amarin and the FDA on April 14, 2011, the FDA told Amarin that an advisory committee “was likely before the indication could possibly be granted.”3 SAC ¶ 247.
Four months later, the FDA and Amarin entered into a second SPA agreement (the “2011 SPA“) covering the design and endpoints of the long-term outcomes study mentioned as a “minimum” requirement in 2008 (the “REDUCE-IT Study“). The FDA agreed with Amarin‘s design of the REDUCE-IT Study, but again declined to commit to approval criteria. See SAC ¶ 278 (noting that “approvability of the indication will be a review issue“).
By February 2013, the REDUCE-IT Study was substantially underway, so Amarin submitted a supplemental New Drug Application for ANCHOR. On October 16, 2013, however, the FDA convened
The Defendants appealed the FDA‘s decision to rescind the 2009 SPA, but the appeal was denied. Reviewers, such as Drs. Rosebraugh and Jenkins, rejected Amarin‘s arguments and made clear that the 2008 Minutes “indicate[d] the fragile nature of the evidence supporting TG‘s hold onto surrogate status,” SAC ¶ 134, and “that there were still concerns regarding [TG lowering],” SAC ¶ 137. Dr. Ketchum, one of the individual defendants, acknowledged understanding as much from these minutes in post-Class Period correspondence. The appeal decisions emphasized, however, that at the time of the 2008 Minutes and 2009 SPA, the FDA believed the scientific data supported TG lowering and thus that the FDA was justified in entering the 2009 SPA. The decision to rescind, Dr. Jenkins added, “was based on the accumulation and totality of scientific data and information, including reevaluation and improved understanding of the relevant scientific knowledge, that have become available since the ANCHOR trial began . . . .” JA.685.
B. Alleged Material Misrepresentations
Lead Plaintiff James Reiss then brought this securities fraud action, claiming violations of
The Plaintiff organizes the Statements into eight categories,4 but focuses on the first in this appeal. In that category, he identifies fourteen statements wherein the Defendants represented that a long-term outcome trial (REDUCE-IT) was “not required” to be completed or that the Defendants “[did] not believe” one “[would] be required” to be completed before the FDA approved the ANCHOR Indication. SAC ¶¶ 235; 353. The Plaintiff alleges that these statements are false and misleading because the FDA had indicated approval would be a “review issue,” and that an outcomes trial, “given the failure of the ACCORD and AIM-HIGH trials, [was] almost certainly going to be required by the FDA prior to approval of ANCHOR.” SAC ¶ 209(i) (emphasis added). The Plaintiff also alleges that various statements to the effect that Amarin was optimistic that the FDA would approve ANCHOR based on
C. The District Court Opinion
The District Court, in two comprehensive and thoughtful opinions, separately analyzed each category of statement and held that the Plaintiff failed to allege any false or misleading statements. See In re Amarin Corp. PLC Sec. Litig., No. CV-13-6663 (FLW) (TJB), 2016 WL 1644623, at *1 (D.N.J. Apr. 26, 2016); In re Amarin Corp. PLC., No. 13-CV-6663 (FLW) (TJB), 2015 WL 3954190, at *1 (D.N.J. June 29, 2015).
It reasoned, inter alia, that had the FDA wished to condition approval of ANCHOR on completion of an outcomes trial, it would have explicitly said so. When viewed in context, the “use of the language ‘review issue’ impl[ied] that it [was] possible, although not guaranteed, that [the ANCHOR Study] would be an adequate basis for approval.” In re Amarin, 2016 WL 1644623, at *10. Therefore, the Defendants’ statements that completion of an outcomes trial was not required before approval were not misleading because “[t]hese statements merely accurately reflected the agreed terms of the 2008 Meeting and the 2009 SPA.” Id. Similarly, any statements allegedly implying that TG lowering was an accepted surrogate endpoint were not misleading because “[u]nder the facts alleged, it is clear that at the time the 2009 SPA and the 2011 SPA were executed, the reduction of TGs was still an accepted surrogate for the reduction of [major adverse cardiac events].” Id. at *17. For similar reasons, the District Court concluded that none of the other Statements were misleading as to the FDA‘s feedback in 2008 or 2009.
The Plaintiff appeals and argues that the District Court erred by “applying a heightened pleading standard,” “weighing competing evidence,” and “not considering the [S]tatements in the aggregate.” Reiss Br. 20. He maintains that a reasonable investor would have been misled by the totality of the Defendants’ Statements into believing that there was a “clear path to approval” for the ANCHOR Indication, when, in fact, there was not.5
After independently reviewing the record, we perceive no reason to disturb the District Court‘s reasoning and rulings.
II. DISCUSSION 6
The District Court dismissed the SAC under the first element, concluding that the Defendants’ Statements contained no material misrepresentations or omissions because they were not materially misleading. A statement or omission is materially misleading if “there is ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the “total mix” of information available’ ” to that investor. Matrixx Initiatives, Inc. v. Siracusano, 563 U.S. 27, 38 (2011) (quoting Basic Inc. v. Levinson, 485 U.S. 224, 231-32 (1988)).
We keep in mind, however, that Rule 10b-5 “do[es] not create an affirmative duty to disclose any and all material information.” Id. at 44; accord Oran v. Stafford, 226 F.3d 275, 285 (3d Cir. 2000) (“Silence, absent a duty to disclose, is not misleading under Rule 10b-5.” (quoting Basic Inc., 485 U.S. at 239 n.17)). Rather, disclosure of material information is required “only when necessary ‘to make . . . statements made, in the light of the circumstances under which they were made, not misleading.’ ” Matrixx Initiatives, 563 U.S. at 44 (alteration in original) (quoting
Here, we agree with the District Court that none of the Statements, in context, were misleading as to the FDA‘s feedback; consequently, we hold that the Defendants were not obligated to disclose the 2008 Minutes or 2009 SPA.
The lynchpin of the Plaintiff‘s omission theory of liability is his allegation that as the AIM-HIGH and ACCORD studies failed, it became increasingly likely, if not certain, that the FDA would reject TG lowering as a validated surrogate endpoint. Given this, he contends, the FDA was “certain” to require an outcomes trial to be completed prior to approval, rendering the Defendants’ representations misleading.
But, in so arguing, we think the Plaintiff mischaracterizes the FDA‘s position on TG lowering during the Class Period. Viewed in their entirety, the SAC and documents incorporated by reference reveal that TG lowering, despite the open nature of the scientific question, remained a viable surrogate endpoint until 2013. In view of this, the Statements, even taken together with the Defendants’ optimism, are not actionable.
We begin with the 2008 Minutes. At oral argument, the Plaintiff‘s counsel urged us to read the FDA‘s statement that it was “not aware” of any long-term studies to reflect its position that there was “no asso-
Nonetheless, the Plaintiff urges us to focus on the failure of the ACCORD and AIM-HIGH studies. He insists the Defendants’ application was doomed as a result of their failure because the FDA commented in 2008 that these studies would provide “important information.” SAC ¶ 116. But the full text of that quote reads that ACCORD and AIM-HIGH, while important, were “not designed to address this specific gap in knowledge.” JA.483. The FDA, thus, did not opine that AIM-HIGH and ACCORD would decide the issue conclusively. The post-Class Period documents show that in reaching its decision to rescind, the FDA was swayed not only by ACCORD and AIM-HIGH, but also by a third study not mentioned in the 2008 Minutes, HPS2-THRIVE. See JA.947 (noting in a December 16, 2013 meeting that three studies, ACCORD, AIM-HIGH, and HPS2-THRIVE, “reduced the [FDA‘s] level of confidence“). We cannot say then, as the Plaintiff insists, that the FDA viewed the outcome of the AIM-HIGH or ACCORD as definitively deciding the TG question in 2008 or in 2011 after those studies failed.
The Plaintiff next points to the 2009 SPA, particularly that approval was a “review issue.” SAC ¶ 127. But we do not see how this advances his argument. In the 2009 SPA, the FDA actually “agreed” with the design of the ANCHOR Study, meaning that it agreed with its selected surrogate endpoint. JA.508. As the District Court aptly noted, the FDA‘s use of the phrase “review issue” meant only that “it [was] possible, although not guaranteed” that a twelve-week efficacy would suffice. In re Amarin, 2016 WL 1644623, at *10. The FDA‘s entering into the 2011 SPA for REDUCE-IT after the ACCORD and AIM-HIGH studies failed further confirms that the FDA had yet to decide the issue, but was still willing to consider the application on this theory.
We think it clear from the 2008 Minutes, 2009 SPA, and 2011 SPA that the FDA never explicitly or even implicitly indicated that a long-term outcome trial would be required to be completed for approval. The FDA only wished to see that a long-term study was “well under way,” JA.484, or “approximately 50% percent enroll[ed],” JA.406. While quantification of that requirement, in terms of enrollment figures, appears to have been a matter of negotiation throughout the Class Period, there is no dispute, based on these documents, that completion of such a trial was not required for approval.
Finally, we note that documents incorporated by reference make it abundantly clear that the FDA did not conclusively reformulate its thinking on the state of the scientific literature supporting the TG lowering hypothesis until after it considered
In sum, far from being “extremely likely (if not certain)” to reject TG lowering as a validated surrogate endpoint and require a completed outcomes study before granting the ANCHOR Indication, Reiss Br. 22, the FDA remained open to Amarin‘s strategy of demonstrating efficacy; no well-pled allegation supports the claim that the FDA reformulated its thinking prior to the advisory committee meeting.9 We therefore decline to accept as true the allegation that the FDA was “certain” to require an outcomes study at the time of the Defendants’ Statements, even in light of ACCORD‘s and AIM-HIGH‘s failure to produce supportive results.
Accordingly, we agree with the District Court that none of the Statements were false or misleading given the FDA‘s position on TG lowering. The Defendants never expressly stated or implied that the 2009 SPA guaranteed approval,10 or that the FDA had conclusively accepted TG lowering as a validated surrogate during the Class Period.11 As the District Court correctly noted, the Defendants are merely alleged to have stated, accurately, the minimum requirements for consideration as laid out in the 2008 Minutes.
We also find the Plaintiff‘s argument that a reasonable investor would have interpreted the Defendants’ Statements as presenting a “clear path to approval” to be unpersuasive given Amarin‘s contemporaneous disclosures. The Defendants’ publically-filed Form 10-Ks repeatedly warned investors that the FDA may rescind an SPA if it identifies a “substantial scientific issue.” See JA.496, 521, 529, 536. The Defendants’ 2011 Form 10-K, in particular, acknowledges that: “no outcomes study has been conducted evaluating [Vascepa for the ANCHOR Indication];” “Outcomes studies of certain other lipid modifying therapies have failed to achieve the endpoints of such studies;” “[t]here can be no assurance as to the final indication approved by the FDA,” JA.196-97; and “the
As other courts have recognized, a reasonable investor understands that a “[c]ontinuous dialogue between the FDA and the proponent of a new drug is the essence of the product license application process.” Tongue v. Sanofi, 816 F.3d 199, 211 (2d Cir. 2016) (alteration in original) (quoting In re Sanofi Sec. Litig., 87 F.Supp.3d 510, 542 (S.D.N.Y. 2015)). Here, a reasonable investor would not have been misled by the Defendants’ Statements unless the FDA had foreclosed (or provided conditions that obtained during the class period under which it would foreclose) reliance on TG lowering as a surrogate endpoint. Because neither the 2008 Minutes nor the 2009 SPA, fairly characterized, bear out the Plaintiff‘s characterizations of the FDA‘s position, we agree that the Defendants did not have a duty to disclose them under the securities laws.
The Plaintiff also emphasizes to us the Defendants’ optimistic projections of approval. But just because the Defendants were aware of the TG issue and optimistic that it would be decided in their favor does not necessarily mean their omissions are actionable. See OFI Asset Mgmt. v. Cooper Tire & Rubber, 834 F.3d 481, 496-97 (3d Cir. 2016) (holding that statement to that there was “no pending or . . . threatened . . . labor strike” was not misleading when all the plaintiff pled with particularity was a risk of a labor dispute and that the defendant “was aware of and was preparing for that risk” (first alteration in original)); City of Edinburgh Council, 754 F.3d at 170 (noting that opinions are not actionable unless they are (1) not honestly believed and (2) lack a reasonable basis); accord In re Merck & Co., Inc. Sec., Derivative & “ERISA” Litig., 543 F.3d 150, 166 (3d Cir. 2008).12 The Plaintiff fails to allege that the Defendants did not honestly believe their projections (or their assessments of the scientific literature underlying those projections); nor are there allegations that the Defendants lacked a reasonable basis for so believing. To the contrary, the 2008 Minutes, taken in context, show that they did have a reasonable basis for believing the FDA would approve the ANCHOR Indication. The Plaintiff‘s reliance on the fact the FDA ultimately rejected TG lowering after a review of “new” scientific data would amount to pleading “fraud by hindsight, something our Court has long rejected.” OFI, 834 F.3d at 497.
Finally, we disagree that Zak v. Chelsea Therapeutics Int‘l, Ltd., 780 F.3d 597 (4th Cir. 2015), “compel[s]” reversal. Reiss Br. 26. In Zak, the FDA explicitly told the Defendants in an SPA that it “expected two successful efficacy studies before it would grant regulatory approval of the new drug” and later “warned . . . that a single successful study typically was not sufficient to support approval of a new drug.” Zak, 780 F.3d at 602. Here, the FDA never required an outcomes study be completed prior to submission, or even, like in Zak, indicated that one would typically be required in this situation. Rather, the FDA declined to adopt criteria for approval one way or the other, and waited to see how the scientific literature developed. See SAC ¶ 126 (noting ultimate ap-
We have considered the remainder of the Plaintiff‘s arguments as to why the Statements were false and misleading, but find them unavailing.
III. Conclusion
For the foregoing reasons, we will affirm the Order of the District Court.
Karen TUCKER, Appellant v. (HP) HEWLETT PACKARD, INC.
No. 16-2898
United States Court of Appeals, Third Circuit.
Submitted Pursuant to Third Circuit LAR 34.1(a) May 1, 2017. (Opinion filed: May 17, 2017)
689 Fed. Appx. 133
Nicholas A. Cummins, Esq., Nicholas C. Needle, Esq., Warren F. Sperling, Esq., Bennett Bricklin & Saltzburg, Philadelphia, PA, for Defendant-Appellee
Before: AMBRO, KRAUSE and NYGAARD, Circuit Judges
OPINION *
*PER CURIAM
Pro se appellant Karen Tucker appeals from an order of the United States District Court for the District of New Jersey dismissing her complaint for failure to comply with