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Corban v. Sarepta Therapeutics, Inc.

United States District Court, D. Massachusetts

April 21, 2016

MARK A. CORBAN, individually and on behalf of all others similarly situated, Plaintiff,
v.
SAREPTA THERAPEUTICS, INC., CHRIS GARABEDIAN, SANDY MAHATME, and ED KAYE, Defendants.

          MEMORANDUM & ORDER

          INDIRA TALWANI, District Judge.

         Presently before the court is Lead Plaintiffs' Motion for Relief from Judgment Pursuant to Fed.R.Civ.P. 60(b)(2) [#103]. For the following reasons, Plaintiffs' motion is DENIED.

         I. Background

         This putative federal securities class action was brought under § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5. Plaintiffs' allegations centered on allegedly false or misleading statements issued July 24, 2013 through November 11, 2013 (the "Class Period"), regarding potential FDA approval of eteplirsen, Defendant Sarepta Therapeutics, Inc.'s ("Sarepta" or "the company") lead drug candidate for the treatment of Duchenne Muscular Dystrophy. Consolidated Class Action Complaint [#39] ("Complaint").

         On March 31, 2015, the court allowed Defendants' Motion to Dismiss [#42] Plaintiffs' Amended Complaint for failing to allege any actionable misstatements or omissions. See Mem. & Order [#77]. The court concluded that Plaintiffs' allegations regarding feedback the company had received from the FDA fell short because (1) Defendants' statements regarding the FDA's July 2013 feedback had been adequately qualified by disclosures that the FDA had requested additional information "related to dystrophin quantification and methodology" and that the FDA might determine that "substantial additional data" would be required for approval; (2) Plaintiffs' allegations failed to establish that, to the extent concerns were previously conveyed to the company, this occurred before the challenged statements were made or that those concerns were sufficiently strong as to require disclosure; and (3) Defendants were not under a duty to disclose all of the specific information Plaintiffs sought. Id. at 15-18. Because the court found Plaintiffs had not met their pleading burden under the Private Securities Litigation Reform Act ("PSLRA") of identifying a materially false or misleading statement or omission, the court dismissed the Complaint. The court did not reach Defendants' further argument that Plaintiffs had failed to meet their burden of alleging scienter with particularity.

         Plaintiffs thereafter moved for leave to file an amended complaint. Plaintiffs' Proposed Amended Consolidated Complaint [#81-2] ("Proposed Amended Complaint") alleged that statements contained in press releases issued by Sarepta on April 14, 2014 and October 27, 2014, and a statement issued by the FDA on October 30, 2014, demonstrated with the requisite particularity that the FDA had indeed expressed grave concerns to the company prior to the July 2013 meeting.

         The court again rejected Plaintiffs' arguments. See Order [#96]. While the court agreed that the FDA's concerns and demands were of such a nature as to require disclosure if Defendants had been aware of them, the court found the new allegations still failed to demonstrate that the FDA had formulated its concerns and demands prior to Defendants making the challenged statements and that Defendants were aware of those concerns when making the challenged statements. Id. at 2-4. Accordingly, the court denied Plaintiffs' motion for leave to amend, and again declined to reach whether Plaintiffs had adequately alleged scienter under the PSLRA.

         Plaintiffs appealed from this court's orders to the First Circuit. While that appeal was pending and before briefing had begun, the FDA released a briefing document on January 15, 2016, in preparation for its upcoming meeting with Sarepta regarding the New Drug Application ("NDA") for eteplirsen. See Pls.' Mem. Law Supp. Mot. Relief J. Ex. 3 [#104-3] [hereinafter "FDA Briefing Document"]. On January 27, 2016, Plaintiffs filed a Motion for Relief from Judgment Pursuant to Fed R. Civ. P. 60(b)(2) [#103], seeking remand of the pending appeal and leave to file a Proposed Third Amended Complaint [#104-1] that makes new allegations based on the FDA Briefing Document.

         Plaintiffs contend that the FDA Briefing Document "presents clear and previously unavailable evidence showing that, prior to the Class Period, the FDA expressed material concerns to Sarepta and made many requests for additional data about Sarepta's eteplirsen trial that were undisclosed during the Class Period." Pls.' Mem. Law Supp. Mot. Relief J 2 [#104]. Plaintiffs specifically point to six statements in the Clinical Team Leader's Memorandum to the Peripheral and Central Nervous System Drugs Advisory Committee, contained in the FDA Briefing Document, which state the following:

1. "As the duration of exposure [to eteplirsen] in Study 202 increased, the [company] proposed comparing the clinical course of treated patients to historical controls. FDA expressed strong reservations regarding the potential interpretability of [the company's] proposed comparison to historical controls and the use of [the six minute walk test] as the primary endpoint in such a historical comparison." Proposed Third Am. Compl. ¶ 39 [#104-1] (quoting FDA Briefing Document 39 [#104-3]).
2. "FDA encouraged the [company] at the March 2013 meeting to conduct an adequately powered placebo-controlled trial of eteplirsen" and that the "FDA further stated that, at that time, comparison data from Study 202 did not provide interpretable evidence of benefit given the limitations of the open-label design for protecting against bias on effort-dependent endpoints like [the six-minute walk test].'" Id . (quoting FDA Briefing Document 39 [#104-3]).
3. At the July 2013 meeting, the FDA "expressed reservations about natural history controls due to the usual difficulty in showing comparability between the study populations in natural history studies, ' and reiterated that [the six-minute walk test] was susceptible to bias in the proposed natural history comparison." Id . (quoting FDA Briefing Document 39 [#104-3]).
4. FDA explained to the company "in detail, " during a March - meeting, that the modified intend-to-treat analysis for Study 202 was unreasonable even for hypothesis generation, and why Study 201 did not provide evidence of efficacy." Id . (quoting FDA Briefing Document 38 [#104-3]).
5. FDA told Sarepta during the March 13, 2013 meeting that "while we do not believe that you have adequately characterized the quantity of truncated dystrophin produced by eteplirsen treatment (Western blot data is not available), the immunofluorescence data you presented suggest that a much lower quantity of truncated dystrophin is produced by eteplirsen treatment than is present in [Becker ...

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