Court: District Court, E.D. Pennsylvania; December 9, 2018; Federal District Court
SEB Investment Management AB (SEB) has initiated a putative class action against Endo International plc and Endo Health Solutions Inc. under the Securities Exchange Act of 1934 and the Securities Act of 1933. SEB claims that the defendants minimized the risks associated with Endo's reformulated opioid pain medication, Opana ER, by misrepresenting and omitting critical safety information and surveillance data that could affect its FDA approval for abuse-deterrent labeling. These omissions allegedly resulted in a significant decrease in Endo's stock value after the FDA requested the withdrawal of the drug from the market.
In response to SEB's claims, Endo and individual defendants contend that SEB's allegations constitute 'hindsight pleading' and assert that the statements in question were merely opinions or forward-looking statements protected under the safe harbor provisions of the Exchange Act. They also argue for the dismissal of the Securities Act claims based on the existence of concurrent state court litigation.
The court has determined that SEB has adequately stated causes of action for violations of both the Exchange and Securities Acts, as SEB has presented allegations that Endo and its executives knowingly or recklessly made false representations regarding the safety and effectiveness of Opana ER, leading to the decline in share price. The motion to dismiss has been denied, except for certain individuals who did not make any misrepresentations.
Background information includes that Endo launched Opana ER in 2006, a medication prone to abuse when crushed. In 2010, Endo sought FDA approval for a reformulated version that was claimed to be less susceptible to abuse. However, despite some resistance to crushing, the FDA did not approve abuse-deterrent labeling based on the data provided. Endo's actions, including settling a patent infringement suit with Impax Laboratories, delayed competition from generic versions until 2013. The FDA approved the reformulated Opana ER in December 2011 but denied the abuse-deterrent claim, and Endo subsequently discontinued the original version for safety reasons, anticipating swift FDA action against generics.
On August 10, 2012, Endo submitted a Citizen Petition to the FDA, requesting a determination that the original Opana ER was discontinued for safety reasons, the rejection of pending ANDAs for its generic versions, and the withdrawal of any approval for these generics. A public health alert from the CDC on October 26, 2012, noted cases of thrombotic thrombocytopenic purpura (TTP) among intravenous abusers of the drug, which had been observed since February 2012. Two weeks later, Endo supplemented its petition with post-marketing data from NAVIPPRO and RADARS, asserting that the reformulated Opana ER effectively reduced abuse rates, although the data was not publicly available for independent verification. Endo compared the reformulated Opana ER to reformulated OxyContin, contending that it offered better safety due to its lower potential for abuse. On November 30, 2012, Endo filed a lawsuit against the FDA to compel a decision on its Citizen Petition by the end of December, simultaneously announcing a substantial decrease in abuse rates through a press release. The district court dismissed the lawsuit as groundless, allowing Impax's generic version of Opana ER to launch on January 1, 2013. Despite this setback, on February 15, 2013, Endo submitted a Supplemental New Drug Application seeking FDA approval for abuse-deterrent labeling for the reformulated Opana ER, relying again on the previously challenged post-marketing studies. The application failed to disclose that Endo's consultant had indicated the data did not confirm the drug's tamper resistance and noted increased abuse levels via injection. Endo executives claimed that additional data showed lower misuse rates compared to the original formulation and its generics. On March 21, 2013, in a further supplement to its Citizen Petition, Endo provided preliminary studies purportedly demonstrating reduced abuse rates of the reformulated product, continuing to reference non-public NAVIPPRO and RADARS data to support its claims.
The FDA approved abuse-deterrent labeling for reformulated OxyContin and granted Purdue's Citizen Petition regarding the withdrawal of original OxyContin for safety reasons. In response, Endo submitted a supplement to its Citizen Petition on April 23, 2013, likening reformulated Opana ER to reformulated OxyContin, despite the two having different abuse-deterrent properties. The FDA determined that reformulated Opana ER could be easily prepared for injection, unlike reformulated OxyContin, and subsequently denied Endo's petition on May 10, 2013, citing insufficient data on the drug's potential for abuse and the risks outweighing its benefits. Following the FDA's decision, Endo's stock dropped significantly. Endo's CEO, Rajiv De Silva, expressed disappointment but claimed data showed reduced abuse rates for reformulated Opana ER. Later, Endo conducted studies suggesting a deterrent effect against intranasal abuse, although there was an observed increase in intravenous abuse. The FDA concluded that the reformulation led to a shift from inhalation to injection abuse and issued a public health alert in April 2015 due to rising HIV infections linked to intravenous Opana ER abuse. Following this, Endo planned a meeting with the FDA in June 2015, while also announcing a $1.75 billion public stock offering, which was completed shortly thereafter. Endo indicated intentions to submit another request for abuse-deterrent labeling by late 2015 or early 2016.
Endo's November 9, 2015 report highlighted the crush resistance of the reformulated Opana ER but failed to disclose significant post-marketing data indicating an increase in intravenous abuse and associated serious adverse events, particularly thrombotic thrombocytopenic purpura (TTP) and thrombotic microangiopathy (TMA). During the Stifel Nicolaus Healthcare Conference on November 17, 2015, Endo's De Silva mentioned that the re-labeling submission would include results from an insufflation study and two years of epidemiological data, while expressing uncertainty about the FDA's perspective on the data's sufficiency. Endo resubmitted its supplemental New Drug Application (sNDA) on January 29, 2016, based on ongoing studies. In a February 29, 2016 earnings call, De Silva suggested the data could support an expanded label for an abuse-deterrent formulation. The FDA announced an advisory committee meeting on June 16, 2016, to review the data and abuse patterns associated with Opana ER. Following a discussion with the FDA, Endo unexpectedly withdrew its sNDA two months later, with plans to generate more data for Opana ER.
On January 10, 2017, the FDA convened a joint advisory committee to discuss the abuse of reformulated Opana ER and oxymorphone products. Endo's stock declined significantly in response to the announcement. Despite concerns, Endo's management maintained their confidence in the drug's safety when used as intended. On March 9, 2017, the FDA released briefing documents indicating a substantial increase in abuse following reformulation, which led to another drop in Endo's stock price. The Advisory Committee, meeting on March 14, 2017, ultimately concluded that the risks of reformulated Opana ER outweighed its benefits, causing further stock declines. Following this, analysts expressed doubts about the drug's future on the market. On June 8, 2017, the FDA requested Endo to voluntarily withdraw reformulated Opana ER, citing a significant rise in intravenous abuse and associated outbreaks of HIV and hepatitis C, marking a rare regulatory action against a drug based on risk-benefit analysis.
The price of Endo common stock fell 16.62% to $11.49 per share following the company's announcement on July 6, 2017, regarding the removal of reformulated Opana ER from the market. A securities fraud complaint must exceed standard complaints to survive a motion to dismiss, requiring adherence to Rule 12(b)(6) and the heightened specificity of Rule 9(b). Specifically, allegations of fraud must detail the 'who, what, when, where, and how' of the fraudulent acts. Additionally, under the Private Securities Litigation Reform Act (PSLRA), the complaint must identify each misleading statement and the reasons it is deemed misleading. If any allegations are based on information and belief, supporting facts must be provided with particularity. The standard for a Rule 12(b)(6) motion mandates that all well-pleaded allegations are accepted as true, while unsupported conclusions and unwarranted inferences are not considered. Courts may also evaluate documents referenced in the complaint and those integral to the claims without converting the motion to a summary judgment.
To successfully assert a claim under Section 10(b) of the Exchange Act and Rule 10b-5, a plaintiff must demonstrate the following elements: (1) a material misrepresentation or omission, (2) made with scienter, (3) in connection with a security transaction, (4) reliance on the misrepresentation or omission, (5) economic loss, and (6) a causal link between the misrepresentation and the loss. The complaint must present detailed facts establishing a "strong inference" of fraudulent intent, as mere plausible inferences are insufficient. The plaintiffs must adhere to the particularity requirements of Rule 9(b) and the Private Securities Litigation Reform Act (PSLRA); failure to do so warrants dismissal.
In the case at hand, SEB alleges that the Exchange Act Defendants made materially false statements regarding the abuse deterrent properties of reformulated Opana ER and its similarity to OxyContin. SEB claims that the defendants omitted vital information about the drug's potential for intravenous abuse and misrepresented the status of its Citizen Petition and labeling efforts. Specific misleading statements are identified, including claims about the drug's "crush-resistant" design and safety rationale for discontinuing the original formulation. The defendants counter that SEB's allegations consist of optimistic opinions rather than actionable misrepresentations, asserting that the statements in question were not misleading at the time they were made.
Allegations of misrepresentations or omissions in securities fraud cases cannot rely on hindsight or subsequent events. The Exchange Act Defendants assert that because charts showing abuse trends for reformulated Opana ER were created after their statements regarding abuse rates, these statements could not be deemed false at the time they were made. However, SEB contends that Endo Pharmaceuticals had prior knowledge, as early as 2010, contradicting their public representations. SEB cites studies relied upon in Endo's 2010 New Drug Application, indicating that reformulated Opana ER could be abused similarly to the original formula. The FDA denied Endo's 2011 request for abuse-deterrent labeling, citing limited resistance to abuse. In 2013, the FDA rejected Endo's Citizen Petition, highlighting that the data presented was inconclusive and suggested a potential increase in intravenous abuse compared to the original formulation. SEB claims that the defendants were aware of negative abuse data when making their statements and failed to disclose that the reformulated drug was being abused at higher rates intravenously, despite their claims of reduced intranasal abuse. The amended complaint alleges that Endo's statements in its November 2012 Citizen Petition and March 2013 supplement regarding the abuse deterrent features of reformulated Opana ER were false. Additionally, SEB accuses Endo of inaccurately claiming that reformulated Opana ER was "virtually identical" to reformulated OxyContin, despite significant differences in their abuse potential and data reliability.
Injection of a viscous hydrogel in a syringe presents challenges. SEB claims that the Exchange Act Defendants intentionally misrepresented the similarities between reformulated OxyContin and Opana ER. The defendants assert that their statements are 'forward-looking' and thus protected under the PSLRA safe harbor provision (15 U.S.C. 78u-5(c)(1)), which shields certain projections and beliefs from liability. However, not all forward-looking statements are protected; some may be misleading if they omit significant adverse facts. To qualify for PSLRA protection, a forward-looking statement must be clearly identified as such and include meaningful cautionary statements highlighting factors that could significantly alter actual outcomes. A forward-looking statement is defined broadly, encompassing projections of financial performance, management plans, and underlying assumptions. Liability for such statements requires evidence that the speaker knew the statements were false or misleading. For corporate statements, plaintiffs must prove that an executive officer made or approved the statement with such knowledge. The safe harbor does not apply automatically; it necessitates specific cautionary disclosures that are substantive and detailed, rather than merely general disclaimers.
Statements made by the issuer must include known facts that contradict forward-looking statements. Subjective expressions of motive or opinion are considered mere 'puffery' and not actionable unless they are insincere or lack a reasonable basis. Opinions about data are not considered reasonable if they ignore contradictory evidence. Affirmative claims regarding a drug's efficacy and safety can be actionable if contradicted by underlying clinical data. A failure to disclose inconsistent clinical data can also lead to liability if it relates to affirmative false statements about safety. However, there is no obligation to disclose all material information unless necessary to prevent misleading statements. Once a company discloses information, it cannot omit material facts related to that issue.
The document evaluates whether SEB has sufficiently alleged that the Exchange Act Defendants made misleading statements about anticipated FDA approval and surveillance data. SEB claims the defendants misrepresented the adequacy of surveillance data and failed to disclose adverse data, specifically increased injection abuse rates that could impact FDA approval. The defendants argue that many statements are subjective interpretations, but SEB contends that the defendants knew the true data contradicted their beliefs, which were not reasonably held given the FDA's stance on opioid abuse.
Certain Exchange Act Defendants falsely claimed that there was sufficient clinical data showing that reformulated Opana ER was safer and less prone to abuse, despite knowing that data indicated a significant increase in intravenous abuse. These defendants made affirmative misrepresentations regarding the drug's efficacy and safety, similar to cases where defendants were found liable for misleading statements about drug effectiveness and market conditions. In August 2012, Endo submitted a Citizen Petition to the FDA requesting a safety-related discontinuation of the original Opana ER formulation, asserting there was adequate data to support this claim. However, while seeking FDA approval, Endo acknowledged uncertainties about the outcome and did not reveal unfavorable data that could influence the FDA's decision.
In a November 30, 2012 press release, Endo's CEO, David Holveck, asserted there was sufficient evidence for the safety-related discontinuation but later contended that his statement reflected a subjective interpretation of data. This defense was deemed insufficient to establish material misrepresentations. Following this, executives Blaine Davis, Ivan Gergel, and Julie McHugh presented on a February 28, 2013 earnings call, describing surveillance data as encouraging and robust, which could be interpreted as subjective opinions rather than factual misstatements. However, Davis's assertion that the data indicated a significant reduction in abuse was not entirely accurate, as it misrepresented the clinical findings related to the original formulation's abuse methods.
An additional quarter of surveillance data indicated that Endo's abuse deterrent formulation of Opana ER is abused or misused at a rate 80% lower than generic extended release oxymorphone available in 2012. Gergel expressed confidence in the epidemiological surveillance supporting this expectation, emphasizing that the data was encouraging and robust. However, SEB alleged that the actual data showed an increased rate of abuse by injection, contradicting the claims of reduced overall abuse rates. The Exchange Act Defendants contended that their statements were subjective and reflective of personal belief, characterizing them as puffery or forward-looking. Nonetheless, labeling the data as "robust" and "very encouraging" misrepresented the situation by omitting the significant increase in intravenous abuse rates, rendering the statements misleading.
On March 6, 2013, Endo's CFO, Alan Levin, claimed a 59% reduction in abuse from the new formulation, suggesting it was close to 80% based on the latest data. Levin's authoritative tone indicated that this was not mere belief but an affirmative statement that omitted crucial details about rising intravenous abuse rates. In May 2013, the FDA denied Endo's requests for abuse-deterrent labeling and a Citizen Petition. Subsequently, De Silva mentioned conducting a clinical program to support a potential relabeling, and during a February 28, 2014, earnings call, he reiterated hopes for a label change application.
Endo planned to apply for a stronger label for its drug by early 2015, with De Silva expressing cautious optimism about the sufficiency of supporting data for the FDA, although he acknowledged the potential for differing views. During a May 2015 earnings call, he indicated uncertainty about the FDA's requirements for re-labeling and noted ongoing debates regarding the adequacy of epidemiological data. In January 2016, Endo re-submitted its new drug application for abuse-deterrent labeling. By August 2016, De Silva highlighted continued debate within the FDA about what constitutes abuse deterrent, suggesting speculation about the future of such drugs. His statements were cautiously optimistic but did not disclose increasing intravenous abuse rates, which could adversely affect FDA decisions, thus lacking safe harbor protection.
In an August 2016 press release, Susan Hall articulated Endo's intent to generate additional data and collaborate with the FDA to advance Opana ER, framing her comments as an accurate reflection of Endo's plans without misleading implications. A March 2017 press release quoted Matthew Davis affirming confidence in Opana ER's risk-benefit profile, qualified by conditions of intended use, and indicated a commitment to evaluate options for maintaining legitimate access. In May 2017, CEO Paul Campanelli described the status of Opana ER as "business as usual," emphasizing proactive engagement with the FDA regarding a reformulated version of the drug.
Endo was preparing to communicate with the FDA but acknowledged that such discussions were premature and had not yet occurred. SEB criticized these statements as minimizing the Advisory Committee's vote against the drug, suggesting that the benefits of reformulated Opana ER did not outweigh its risks. Despite this, Campanelli's statements were deemed non-actionable puffery, as they did not misrepresent the situation to investors, who were aware of the adverse data published by the FDA regarding increased intravenous abuse. The Exchange Act Defendants did not guarantee approval or suggest that the data was wholly sufficient for FDA consideration; they provided personal assessments and included cautionary language regarding the uncertainty of FDA views.
While the defendants' forward-looking statements about the likelihood of FDA approval were initially protected under safe harbor provisions, the failure to disclose known data about increased intravenous abuse rendered their optimism materially misleading. Specifically, statements made by Blaine Davis, Gergel, McHugh, Levin, and De Silva lacked context as they did not mention the unfavorable data that contradicted their positive assessments. This omission was significant and likely influenced the FDA's decision-making process, leading to legal precedents highlighting the necessity of disclosing adverse data when positive representations are made.
A company's failure to accurately disclose clinical trial data can be actionable, but there is no obligation to disclose if no affirmative statements about the study results were made. Statements by Holveck, Matthew Davis, Hall, and Campanelli were deemed not misleading, contrasting with others who misrepresented data regarding Opana ER's safety. The claims against these individuals under Section 10(b) and Rule 10b-5 must be dismissed as their statements were not false. For a statement or omission to be actionable, it must be material, meaning it would significantly affect a reasonable shareholder's investment decision. Materiality is assessed by its potential to alter the "total mix" of information and its impact on stock price. In efficient markets, post-disclosure stock price movements indicate materiality; a significant drop suggests the prior nondisclosure was impactful to investors. Endo's stock price dropped substantially following disclosures about Opana ER's safety issues and the FDA's concerns, confirming the materiality of the omitted information. Subsequent FDA actions, including a denial of a petition and the initiation of an Advisory Committee, further contributed to significant declines in stock value, underscoring that the misrepresentations and omissions were indeed material.
An investor's interest is piqued by surveillance data indicating a rise in injection abuse rates. To establish liability under § 10(b) and Rule 10b-5, a private plaintiff must demonstrate that the defendant acted with scienter, defined as the intent to deceive or a reckless disregard for misleading investors. This requires a showing that the defendant consciously or recklessly misled investors, with the PSLRA imposing a higher burden than Rule 9(b). Plaintiffs must allege specific facts that create a strong, compelling inference of scienter, rather than a mere reasonable one. Courts assess all allegations collectively rather than in isolation, and vague claims undermine inferences of scienter. While motive and opportunity alone do not establish scienter, they can support a broader analysis. SEB alleges that the defendants used NAVIPPRO and RADARS data in 2012 and 2013 for their Citizen Petition and sNDA, and that Endo conducted annual REMS assessments from July 2014, which included data on misuse and abuse that contradicted their public statements. To prove recklessness, plaintiffs must show that the defendant's actions constituted an extreme departure from standard care, indicating awareness of the misleading potential.
The Supreme Court's decision in Tellabs did not address when recklessness meets the scienter requirement, but the Third Circuit allows plaintiffs to establish scienter by demonstrating that a defendant acted with reckless disregard for the truth. Simply claiming that defendants "knew" or "must have known" their statements were false is insufficient. Plaintiffs must provide strong circumstantial evidence indicating that defendants either knew or recklessly disregarded the falsity of their statements. In cases of non-disclosure, actual knowledge of the information is necessary to show scienter. A recklessness theory can be supported by showing that the material fact was so obvious that the defendant must have recognized its significance.
SEB has adequately alleged facts suggesting a strong inference of scienter, asserting that the Individual Exchange Act Defendants had access to data indicating the reformulated Opana ER was unsafe and misleadingly represented. Although scienter cannot be solely imputed to defendants based on their roles, if misrepresentations concern core business matters, an inference of scienter may arise. SEB claims that the individual defendants, as executives, possessed detailed knowledge of the company's operations and the efficacy of Opana ER, as evidenced by their public statements. The executives' intention to present themselves as informed sources while withholding negative data is argued to be misleading. Opana ER was a significant revenue source for Endo, generating over one billion dollars from 2010 to 2016, indicating its critical importance to the company's business strategy.
A strong inference of scienter is established against certain executive officers due to payday loans constituting a significant portion of the defendant's revenues. These executives likely had involvement or familiarity with the drug's development and marketing processes. Allegations suggest that they were aware of adverse surveillance data contradicting their public statements, indicating reckless disregard for the truth. The representations regarding Opana ER, crucial to the company, created a substantial risk of misleading investors. The facts suggest that Blaine Davis, Gergel, McHugh, Levin, and De Silva acted with scienter by failing to disclose critical evidence of increased intravenous abuse while promoting the drug's safety.
Under Section 20(a) of the Exchange Act, liability can be imposed on "controlling persons" for violations by those they control. To attach secondary liability, SEB must demonstrate that these individuals were "controlling persons" with actual or constructive knowledge of the primary violations. Mere proof of a controlled person’s liability is insufficient; the controlling person must also have participated culpably in the fraud, which entails actual or imputed knowledge. Culpable participation can be inferred from a controlling person's inaction, provided such inaction was intended to facilitate the fraud's concealment. Corporate executives may be held liable under 20(a) if they were involved in daily management, had substantial knowledge of the business, or possessed decision-making authority.
SEB alleges that the Individual Exchange Act Defendants, high-level executives with direct involvement in Endo's management, held control person liability due to their supervisory roles, ownership interests, and access to confidential information. Specifically, SEB claims that De Silva, as president and CEO, not only made misleading statements but also controlled the actions of other executives—Levin, Gergel, McHugh, and Blaine Davis—during critical disclosures in early 2013. SEB argues that De Silva's knowledge of data indicating a rise in intravenous abuse of Opana ER, coupled with his inaction to correct misleading statements made by subordinates, constitutes participation in fraudulent activities aimed at maintaining investor confidence and stock prices. The document clarifies that controlling person liability requires the controlled person to be liable, and while De Silva faces liability for both his own and others' misleading statements, no other defendants exerted control over each other or were in positions to influence the misleading statements made during that period. Additionally, other individuals mentioned (Matthew Davis, Campanelli, Hall, and Holveck) were not employed by Endo at the relevant times, further negating the possibility of their control.
Levin, Gergel, and McHugh served as chief officers in distinct departments, with no evidence suggesting any control among them. Blaine Davis, as Senior Vice President of Corporate Affairs, was also in a separate department and similarly did not control or was controlled by any of the chief officers. Consequently, SEB has failed to establish a claim under Section 20(a) of the Exchange Act against the Individual Exchange Act Defendants.
Regarding the Securities Act claims under Section 11, the Individual Securities Act Defendants seek dismissal based on the Colorado River doctrine, citing a parallel state court complaint with similar allegations. They argue that SEB's claims lack specificity regarding false or misleading statements in the offering materials. The Colorado River doctrine allows for abstention when there is a concurrent state court case, applied narrowly in exceptional circumstances. A determination of parallelism is necessary, which requires the parties and claims to be identical or substantially similar.
The Securities Act Defendants assert that the state court action involves the same plaintiff class and allegations. However, the claims differ significantly; SEB’s case pertains to misrepresentations about the abuse of reformulated Opana ER, whereas the state court case centers on Endo's generic division and unrelated trade practices. Thus, the two actions do not share parallel claims or parties, leading to the conclusion that abstention is not warranted. The document then addresses SEB's claims related to the registration statements, affirming that purchasers can sue for material misstatements or omissions under 15 U.S.C. § 77k(a).
To establish a prima facie case under Section 11, plaintiffs must demonstrate that a registration statement included an untrue statement of material fact or omitted a necessary material fact that rendered the statement misleading. An issuer is liable for both misrepresentations and omissions. Fraud is not required to establish this prima facie case; heightened pleading standards under Rule 9(b) apply only if fraud is alleged. In the case of SEB, the claims are based solely on negligence and/or strict liability, thus exempting them from Rule 9(b) requirements. Section 11 imposes near absolute liability, requiring only the demonstration of a material misstatement or omission by a plaintiff who purchased securities based on the registration statement. The materiality standard is consistent across Sections 11 and 10(b). Opinions stated in a registration are material misrepresentations if not genuinely held or if the underlying facts are false. Opinions become actionable if they omit material facts regarding the issuer's knowledge or inquiry, which conflict with what a reasonable investor would understand from the statement.
SEB alleges that the June 2015 Offering Materials contained material misstatements regarding the crush-resistant formulation of Opana ER, failing to disclose data on the drug's manipulability. Despite assurances from Endo that studies showed reduced abuse rates, SEB contends that there was, in fact, an increase in intravenous abuse, documented in reports from NAVIPPRO and RADARS by the third quarter of 2013. Endo's own post-marketing data indicated a rise in serious adverse events related to injection use. SEB claims that despite being aware of this increase, Endo did not inform investors of the significant risk of regulatory action, including the potential removal of the drug from the market, indicating that the Offering Materials contained material misrepresentations and omissions.
SEB alleges material misrepresentations and omissions related to the safety and abuse of reformulated Opana ER, establishing a claim under Section 10(b) of the Exchange Act. Under Section 15 of the Securities Act, SEB claims that the Individual Securities Act Defendants, who were directors or officers of Endo, exercised control over the company and its misleading communications. To prove control person liability, SEB must demonstrate that the Individual Defendants controlled Endo and that Endo violated securities laws. SEB asserts that these defendants were involved in the company's management, signed offering materials, and controlled their content, thus fulfilling the control requirement as established in relevant case law.
Specifically, SEB accuses De Silva, Levin, Gergel, McHugh, and Blaine Davis of consciously or recklessly making false statements about Opana ER's safety, particularly regarding its potential for abuse, which makes them liable under both the Exchange Act and the Securities Act. SEB also claims that the June 2015 offering materials contained similar misstatements. Conversely, SEB has not provided sufficient allegations against Holveck, Matthew Davis, Hall, and Campanelli, resulting in their dismissal from the case. The Individual Exchange Act Defendants include a list of individuals associated with Endo, while a separate list identifies the Individual Securities Act Defendants. The motion to dismiss is granted for the latter group, but denied for the defendants implicated in the misrepresentations.
RADARS provides surveillance data to pharmaceutical companies, policymakers, regulatory agencies, medical and public health officials, and the public to address prescription drug abuse concerns. The proposed class period for relevant actions spans from November 30, 2012, to June 8, 2017. The Drug Safety and Risk Management Advisory Committee advises the FDA Commissioner on drug risk management and evaluation, while the Anesthetic and Analgesic Drug Products Advisory Committee focuses on the safety and effectiveness of anesthetic and surgical drugs. The FDA's Adverse Event Report System (FAERS) has been mentioned as showing a significant increase in drug abuse rates following the market introduction of reformulated Opana ER. The document references various legal motions and complaints, highlighting discussions on market efficiency based on past judicial interpretations, particularly noting the Third Circuit's stance on the efficient market hypothesis.
A court can take judicial notice of stock prices at any stage of legal proceedings, as they are deemed not subject to reasonable dispute and can be accurately verified from reliable sources. SEB claims that defendants De Silva, Holveck, Campanelli, and Levin, as CEOs and CFOs of Endo, had access to SEC filings containing misleading statements. Endo utilized revenue from Opana ER to finance new research and development. The Offering Materials consist of the Registration Statement, preliminary prospectus supplement, and final prospectus supplement, which reference the 2014 Form 10-K and 1Q15 Form 10-Q. The requirement of culpable participation for a Section 15 violation remains unclear, as the Third Circuit only specified its necessity under Section 20. Some district courts have included culpable participation as an element of a Section 15 claim, while others have not, creating conflicting case law on the matter.
