United States District Court, D. Massachusetts
IN RE AVEO PHARMACEUTICALS, INC. SECURITIES LITIGATION
MEMORANDUM AND ORDER
J. Casper United States District Judge
a putative class action in which the lead class action
plaintiffs Robert Levine and William Windham
(“Plaintiffs”) allege that Defendants AVEO
Pharmaceuticals, Inc. (“Aveo”), 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
“Defendants”), violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder, 15 U.S.C.
§ 78j(b) (“Count I”), and Section 20 of the
Exchange Act, 15 U.S.C. § 78t (“Count II”).
Plaintiffs have moved for class certification. D. 145.
Defendants do not dispute class certification, D. 154 at 5,
but do dispute the class period proposed by Plaintiffs. For
the reasons set forth below, the Court ALLOWS Plaintiffs'
motion for class certification under Fed.R.Civ.P. 23(b)(3)
and accepts the class period as proposed by Plaintiffs.
otherwise noted, the facts recited here are as alleged in the
operative, third amended complaint (“TAC”).
Plaintiffs are shareholders of Aveo, a
“biopharmaceutical company focused on discovering,
developing, and commercializing cancer therapies.” D.
117, ¶¶ 1-2. Plaintiffs have brought this class
action suit on behalf of “all persons other than
defendants who purchased AVEO common stock between May 16,
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.
completing a Phase 2 trial for tivozanib and having
End-of-Phase 2 meetings with the FDA about a Phase 3 trial,
D. 117, ¶ 63, Aveo began the Phase 3 trial for tivozanib
(“TIVO-1”) in February 2010. Plaintiffs allege
that Defendants included a number of defects in the design of
TIVO-1, all of which contributed to unreliable results. D.
117, ¶ 68. In May 2012, Aveo, as alleged, had sufficient
data from TIVO-1 to be aware of a trend of higher death rates
(“overall survival”) among tivozanib patients
than control patients. D. 117, ¶ 80. On May 11, 2012,
Aveo had a meeting with the FDA prior to filing its new drug
application (“NDA”). D. 117, ¶ 81. At that
meeting, the FDA expressed concern about the negative overall
survival trend in TIVO-1 and further that TIVO-1's design
made it unclear whether the results were because tivozanib
was in fact toxic and recommended that Aveo conduct a second
study prior to filing an NDA. D. 117, ¶ 83.
16, 2012, Aveo issued a press release announcing positive
findings from TIVO-1, including the trial's overall
survival results, without referring to the FDA's prior
concerns, and encouraging the market to view the data as
“preliminary” and/or caused by distorting
effects. D. 117, ¶ 88. Similar communication of
preliminary TIVO-1 results was repeated by Aveo, Ha-Ngoc and
Slichenmyer at a presentation at the American Society of
Clinical Oncology on June 4, 2012, including an expression by
Slichenmyer that the FDA would not be concerned by the
geographic mix of patient sites, which had ultimately been
concentrated in Central and Eastern Europe to reduce cost,
contrary to prior Aveo disclosures that stressed the
importance of “geographically dispersed” test
sites to TIVO-1's success. D. 117, ¶¶ 68, 92.
around July 2012, Aveo decided to pursue a second clinical
trial and informed the FDA of its decision. D. 117,
¶¶ 95-96. Aveo's public filings during the
class period did not disclose the FDA's preference for a
second trial, when prior to the class period it had
speculated that a single trial would be sufficient. D. 117,
¶ 100. On August 2, 2012, Aveo issued a press release
announcing its second quarter 2012 results, and disclosed
that the FDA had expressed concern about overall survival
trends in TIVO-1, but that Aveo was conducting
“additional analyses” that would better
contextualize the data in support of its NDA. D. 117, ¶
97. Johnston shared similar information in multiple
conferences, stating that while the FDA had expressed concern
about the overall survival trend, analysis was being done to
address the FDA's concerns. D. 117, ¶¶ 106,
111, 114, 120. In December 2012, Aveo received a letter from
the FDA reiterating its concern that the overall survival
trend was “a significant safety concern.” D. 117,
¶ 123. At other conferences during the class period,
Defendants described the overall survival results in TIVO-1
as superior to other competitive treatments, and described
the four percent gap in overall survival between tivozanib
and the control as not statistically significant. D. 117,
¶¶ 124, 140. On January 23, 2013, Aveo raised about
$53.6 million in a public offering. D. 117, ¶ 127.
February 13, 2013, Slichenmyer disclosed the additional
analyses and final overall survival data on an investor
conference call, stating Aveo's expectation that this
data would be “a subject of discussion” at the
ODAC panel meeting. D. 117, ¶ 128. Slichenmyer further
stated that while he could not discuss details of Aveo's
discussions with the FDA, they were working to “address
lots of questions they're sending to us” and
expressed his own optimism at their chances of approval. D.
117, ¶ 130. The same final overall survival data was
again disclosed as a part of Aveo's Form 10-K annual
report for 2012. D. 117, ¶ 135.
end of August 2012, the FDA sent Aveo a response to its
proposed study protocol for a second trial, disagreeing with
the design. D. 117, ¶ 109. Aveo informed the FDA that it
would cancel the meeting that had been scheduled to discuss
this proposed study. D. 117, ¶ 110. On September 28,
2012, Aveo issued a press release announcing that it had
filed an NDA, which it did without completing a second study.
D. 117, ¶¶ 87, 117.
April 30, 2013, before the market opened, the FDA released
the briefing materials it had shared with the Oncologic Drugs
Advisory Committee (“ODAC”). D. 117, ¶ 144.
The briefing materials stated that at the May 2012 pre-NDA
meeting between Aveo and the FDA, the FDA had expressed
concern about the overall survival trend and that it had
recommended Aveo conduct a second trial in a population
comparable to that of the United States. D. 117, ¶ 144.
The briefing materials stated that TIVO-1 had concentrated
its study sites in Eastern Europe and that this might mean
trial patients had different standards of care and practice
patterns than they would have in the United States. D. 117,
¶ 145. The briefing document also cast doubt on
Defendants' explanation for the overall survival data,
which sought to discount the long-term risks of tivozanib
use, and that competitor treatments for renal cell carcinoma
had overall survival data that favored approval. D. 117,
¶ 146. That day, Aveo's shares fell 31.31%. D. 117,
2, 2013, the ODAC panel held its hearing, which was focused
on addressing the FDA's concerns about the TIVO-1 overall
survival data. D. 117, ¶ 148. A panel member pointed
out, and Slichenmyer confirmed in response, that the negative
trend in overall survival should have been apparent within
six months of treatment. D. 117, ¶ 149. Other ODAC panel
members criticized the TIVO-1 design because it prevented the
FDA and the panel from relying on the data to conclude
whether the overall survival data was innocuous or, for
example, due to tivozanib's toxicity. D. 117,
¶¶ 158-59. Slichenmyer stated at the ODAC hearing
that that Aveo had not initially included treatment crossover
in its design of TIVO-1 as presented to the FDA and that it
was added later without consulting the FDA. D. 117, ¶
160. All but one of the ODAC panel members voted against
recommending tivozanib's approval, concluding that the
possibility an overall survival rate lower than the control
would not be defensible to potential patients, and that
TIVO-1's design was “inadequate.” D. 117,
¶ 164. That day, Aveo's shares fell almost fifty
percent. D. 117, ¶ 165.
Paul Sanders filed a class action complaint on May 9, 2013.
D. 1. Plaintiffs subsequently filed the first amended
complaint, D. 49, but the Court allowed Defendants'
motion to dismiss that pleading without prejudice on March
20, 2015. D. 75. Plaintiffs filed a second amended complaint
on April 17, 2015, D. 76-1. On November 18, 2015, the Court
allowed Defendants' motion to dismiss the second amended
complaint and judgment was entered for Defendants. D. 91; 92.
Plaintiffs later moved to set aside that judgment, relying
upon newly discovered evidence from a complaint filed by the
SEC. D. 96. The Court allowed the motion and vacated the
judgment. D. 110. Plaintiffs filed the third amended
complaint (“TAC”), the operative complaint, on
February 2, 2017. D. 117.