United States District Court, D. Massachusetts
PAUL SANDERS, on behalf of himself and others similarly situated, Plaintiffs,
AVEO PHARM., INC. et al., Defendants. (IN RE AVEO PHARM., INC. SECURITIES LITIGATION)
MEMORANDUM AND ORDER
DENISE J. CASPER, District Judge.
Lead class action Plaintiffs Robert Levine and William Windham ("Plaintiffs") have filed this lawsuit against AVEO Pharmaceuticals, Inc. ("Aveo") and its former President, Chief Executive Officer and Director Tuan Ha-Ngoc ("Ha-Ngoc"), Chief Financial Officer David N. Johnston ("Johnston"), Chief Medical Officer William Slichenmyer ("Slichenmyer") and co-Founder and Director Ronald DePinho ("DePinho") (collectively, "Defendants"), alleging securities fraud in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act") and Securities and Exchange Commission Rule 10b-5 ("Rule 10b-5"), promulgated thereunder, between January 3, 2012 and May 1, 2013 ("the Class Period"). D. 49; see 15 U.S.C. § 78j(b); 15 U.S.C. § 78t(a), 17 C.F.R. § 240.10b-5. Defendants have moved to dismiss the Consolidated Amended Complaint. D. 55. For the reasons discussed below, the Court ALLOWS the motion to dismiss.
II. Factual Background
The Court acknowledges that there is a related case before this Court. Van Ingen v. Ha-Ngoc et al., 14-cv-11672-DJC (the "Derivative Litigation"). Although the facts alleged in the Derivative Litigation are substantially similar to those in the instant case, the Court must evaluate Plaintiffs' claims based upon the facts alleged in their complaint in this case and the applicable legal standards that apply in this direct action. The facts recited are as alleged in the Consolidated Amended Complaint, D. 49.
Plaintiffs are shareholders of Aveo, a "biopharmaceutical company focused on discovering, developing, and commercializing cancer therapies." D. 49 ¶¶ 1-2. Plaintiffs have brought this class action suit on behalf of "all persons other than defendants who purchased AVEO common stock between January 3, 2012 and May 1, 2013." Id . ¶ 1.
Aveo's lead product is tivozanib, an oral inhibitor of the vascular endothelial growth factor receptors. Id . ¶ 2. Aveo's goal was to commercialize tivozanib as a treatment for a prevalent form of kidney cancer called advanced renal cell carcinoma, to compete with established therapies such as chemotherapy. Id . ¶¶ 2, 51.
A. FDA Clinical Trial Protocol
The Food, Drug and Cosmetic Act ("FDCA") requires the Food and Drug Administration ("FDA"), which regulates pharmaceutical development and marketing, to refuse any drug application that does not meet specific safety standards. Id . ¶¶ 38-40. Those safety standards include "well-controlled clinical investigations, " which are generally "double-blinded, " such that study participants and investigators do not know whether a participant was given the study drug or a placebo (or another recognized drug for comparison). Id . ¶ 40.
Companies that wish to market a pharmaceutical product, called "sponsors, " are responsible for designing the clinical trials and their protocols, enrolling patients in the trials and demonstrating a benefit to the patient population for which approval of the drug is sought. Id . ¶¶ 38, 41-42. Trials for drugs intended to treat cancer generally measure both overall survival, the length of time the patient remains alive after starting treatment, and progression-free survival, the length of time the patient remains alive and the disease has not worsened, as assessed by the study researchers. Id . ¶ 3. According to the complaint, progression-free survival is often the favored endpoint by drug companies because the trials require fewer patients and are less expensive. Id . ¶ 5. Overall survival, an objective clinical endpoint, however, is the "gold standard" for clinical trials. Id . ¶ 4.
Federal law allows for sponsors to request from the FDA a "Special Protocol Assessment, " whereby the FDA and the sponsor meet to discuss the sponsor's proposed protocols for the clinical trial and make any agreements in writing. Id . ¶ 41. Once a sponsor believes its clinical trials demonstrate sufficient efficacy and safety of the drug, the sponsor may file with the FDA a New Drug Application ("NDA") seeking approval to market the drug with a specific indication. Id . ¶ 44. Upon submission of an NDA, the FDA may choose to convene an advisory committee to provide it advice on the drug's approvability. Id . ¶ 48. The advisory committee is "the only forum in which the public can legally be advised by the FDA of the FDA's position and the FDA's interactions with the sponsor regarding the drug candidate." Id . ¶ 49.
B. Tivo-1 Clinical Trial Design and Implementation
In December 2008 and May 2009, Aveo met with the FDA regarding the design of a clinical trial for tivozanib. Id . ¶ 53. In those meetings, the FDA "expressly requested" that Aveo analyze the overall survival and progression-free survival of study participants. Id.
After the May 2009 meeting, Aveo specified a protocol for a Phase III clinical trial referred to as TIVO-1 ("Tivo"). Id . ¶ 54. Phase III clinical studies are "expanded studies performed after preliminary evidence suggesting effectiveness of the drug has been obtained, and are intended to gather the additional information about effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling. Phase [III] studies usually include several hundred to several thousand subjects.'" Id . ¶ 43 (quoting 21 C.F.R. § 312.21).
The primary endpoint for Tivo, according to the protocol, was a statistically-significant improvement in progression-free survival, with a secondary endpoint of overall survival. Id . ¶ 54. The FDA explained in the advisory committee panel, however, that the overall survival comparison was to be the most important secondary endpoint and that the other secondary endpoints should not be analyzed unless an overall survival benefit was achieved. Id.
The Tivo protocol provided that study participants would be enrolled in 90 to 100 sites worldwide, in three major geographic groups: North America/Western Europe, Central/Eastern Europe and "the Rest of the World." Id . ¶ 55. Patients were randomized into one of two groups (or "arms"). Id . ¶ 9. The "control arm" received sorafenib, a drug approved by the FDA in 2005 for treatment of renal cell carcinoma. Id.
Aveo began enrolling patients for the trial in or around February 2010, completing enrollment in or around August 2010. Id . ¶ 57. Plaintiffs assert that the trial was faulty in three primary ways. Id . ¶¶ 10, 13, 57.
First, contrary to the Tivo protocol, which called for a "broad worldwide trial stratified across geographies, AVEO enrolled approximately 88% of TIVO-1 participants in Central and Eastern Europe, where enrollment and testing were cheaper." Id . ¶ 57.
Second, Plaintiffs assert that Defendants "confounded the study results by offering a crossover, or subsequent therapy, to one study arm without offering the same to the other study arm." Id . ¶ 10. Plaintiffs assert that when "a patient is crossed over to a subsequent therapy it is difficult and often impossible to determine whether that patient's survival benefit was attributable to the randomized therapy or the subsequent treatment." Id . ¶ 11. Under the Tivo crossover, patients assigned to the control arm were given the chance to switch (or "cross over") to tivozanib as a subsequent treatment, without cost. Id . ¶ 10. The tivozanib patients, however, were not offered a subsidized subsequent treatment. Id . Plaintiffs allege that the crossover was not included on the preliminary or final Tivo protocols or discussed with the FDA. Id.
Third, Plaintiffs allege that Defendants arranged for the dosages given to patients to be reduced at "materially different rates" for patients experiencing adverse reactions. Id . ¶ 13. Sorafenib dosages were reduced by fifty percent, while tivozanib rates were reduced by thirtythree percent. Id . Thus, Plaintiffs allege, "it was unclear whether patients in the sorafenib (control) arm who experienced disease progression after dose reduction did so because of the exaggerated dose reduction, or because there was a difference in the therapeutic effects of the compared drugs." Id.
Plaintiffs allege that by early January 2012, Aveo had gathered nearly sixteen months of data in the Tivo trial and was aware that "what initially began as an adverse trend in overall survival had... worsened." Id . ¶ 59. Plaintiffs also allege that "[i]t was clear by this time that that patients randomized to the tivozanib arm ...