Rigel Pharms., Inc. Sec. Litig. v. Deleage
| Decision Date | 06 September 2012 |
| Docket Number | No. 10–17619.,10–17619. |
| Citation | 697 F.3d 869 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | In re RIGEL PHARMACEUTICALS, INC. SECURITIES LITIGATION, Inter–Local Pension Fund GCC/IBT, on behalf of itself and all others similarly situated, Plaintiff–Appellant, v. Andre Deleage, Executor, Estate of Jean Deleage, Appellee, Rigel Pharmaceuticals, Inc.; James M. Gower; Ryan D. Maynard; Donald G. Payan; Raul R. Rodriguez; Elliott B. Grossbard; Bradford S. Goodwin; Gary A. Lyons; Walter H. Moos; Hollings C. Renton; Peter S. Ringrose; Stephen A. Sherwin; Credit Suisse Securities (USA) LLC; Oppenheimer & Co. Inc.; Thomas Weisel Partners LLC; Jefferies & Company, Inc., Defendants–Appellees. |
OPINION TEXT STARTS HERE
Sanford Svetcov, Robbins Geller Rudman & Dowd LLP, San Francisco, CA, for the appellant.
John C. Dwyer, Cooley LLP, Palo Alto, CA, for the appellees.
Appeal from the United States District Court for the Northern District of California, Jeffrey S. White, District Judge, Presiding. D.C. No. 3:09–cv–00546–JSW.
Before: PROCTER HUG, JR., BETTY B. FLETCHER, and RICHARD A. PAEZ, Circuit Judges.
I. INTRODUCTION
Plaintiff Inter–Local Pension Fund GCC/IBT (“Plaintiff”) brought a securities fraud action 1 individually and on behalf 2 of all other persons who purchased or otherwise acquired the common stock of Rigel Pharmaceuticals, Inc. (“Rigel”) between December 13, 2007 and February 3, 2009, pursuant to sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a), and the rules and regulations promulgated thereunder, including Securities and Exchange Commission Rule 10b–5, 17 C.F.R. § 240.10b–5. Plaintiff also brought claims on behalf of itself and persons who purchased Rigel stock traceable to the registration statement and prospectus issued in connection with Rigel's February 2008 stock offering, pursuant to sections 11, 12, and 15 of the Securities Exchange Act of 1934, 15 U.S.C. §§ 77k, 771, and 77 o.
The complaint focuses on alleged statements by Rigel and other individuals concerning the results of a clinical drug trial and alleged statements about partnership prospects for Rigel. Named defendants include Rigel, James M. Gower, Ryan D. Maynard, Donald G. Payan, Raul R. Rodriguez, Elliott B. Grossbard, Jean Deleage, Bradford S. Goodwin, Gary A. Lyons, Walter H. Moos, Hollings C. Renton, Peter S. Ringrose and Stephen A. Sherwin (“Defendants”).
Plaintiff timely appealed the district court's August 24, 2010 order granting defendants' motion to dismiss the complaint.3 We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
II. BACKGROUND
Rigel is a clinical-stage drug development company that discovers and develops novel, small-molecule drugs for the treatment of inflammatory and autoimmune diseases, certain cancers, and other diseases. One of those drugs is R788, which Rigel is developing to treat and stop the progression of rheumatoid arthritis.
Rigel conducted a Phase IIa clinical trial to evaluate the safety and preliminary clinical efficacy of R788 in patients who were suffering from active rheumatoid arthritis despite therapy with methotrexate. The clinical trial was a multi-center, randomized, double-blind, placebo-controlled, ascending dose study involving 189 patients in the United States and Mexico. Rigel placed patients into one of three cohorts receiving either 50, 100, or 150 mgs of R788 orally twice daily over a twelve week period. Based upon a three to one ratio, Rigel assigned patients within each cohort to receive R788 or a placebo respectively.
Rigel measured efficacy for each participant based on the American College of Rheumatology (“ACR”) criteria, which denote at least a twenty percent improvement (ACR20), at least a fifty percent improvement (ACR50), or at least a seventy percent improvement (ACR70). For scientific and ethical reasons, people conducting clinical trials generally select their trial methodology, including primary efficacy endpoints and statistical methodology, before the clinical trial begins. Rigel's chosen primary efficacy endpoint for the trial was the percentage of patients who were ACR20 responders by the end of the 12–week trial. ACR50 and ACR70 were secondary endpoints.
The complaint alleges that, on December 13, 2007, Rigel issued a press release concerning its Phase 2 clinical study for R788.4 Among other things, the press release stated:
Rigel Pharmaceuticals, Inc.... today announced that its oral syk kinase inhibitor, R788 (tamatinib fosdium), has demonstrated statistically significant results in treating Rheumatoid Arthritis (RA) patients in a recently completed Phase 2 clinical trial. Groups treated with R788 at 100mg and 150mg po bid (orally, twice daily), showed higher ACR20, ACR50, ACR70 and DAS28 response rates than the placebo group. The efficacy results for the 100mg and 150mg dose groups were fairly comparable. Dramatically, the onset of the effect in these dose groups occurred as early as one week after initiation of therapy. We believe that the significant ACR scores and good tolerability observed in this clinical trial, and the further benefit of oral delivery may make R788 a favorable alternative to the currently marketed biological agents.
The press release included the following chart, entitled “Efficacy Results”:
+--------------------------------------------------------------------------+
¦Treatment Assigned ¦Number ¦ACR20 ¦ACR50 ¦ACR70 ¦DAS28–CRP 2.6 ¦
+-------------------+--------+--------+--------+--------+------------------¦
¦po bid ¦(N) ¦% (N) ¦% (N) ¦% (N) ¦% (N) ¦
+-------------------+--------+--------+--------+--------+------------------¦
¦Placebo ¦47 ¦38% (18)¦19% (9) ¦4% (2) ¦17% (8) ¦
+-------------------+--------+--------+--------+--------+------------------¦
¦50 mg ¦46 ¦32% (15)¦17% (8) ¦2% (1) ¦20% (9) ¦
+-------------------+--------+--------+--------+--------+------------------¦
¦100 mg ¦49 ¦65% (32)¦49% (24)¦33% (16)¦3517) ¦
+-------------------+--------+--------+--------+--------+------------------¦
¦ ¦ ¦(p=.008)¦(p=.002)¦(p<.001> The press release also included information concerning side effects, stating:
The most common clinically meaningful adverse events noted in the clinical trial were dose-related neutropenia, mild elevations of liver function tests, and gastrointestinal (GI) side effects. Dose reduction (to one half the assigned dose, by taking the drug once per day) was pre-specified in the protocol, contingent on neutrophil counts and/or liver function tests. Notably, a vast majority of the patients (19 out of 21) who had their dose reduced, successfully completed the clinical trial with minimal safety issues.
In addition, the press release also provided:
The key safety results are shown in the table below:
+------------------------------------------------------------------------------+
¦ ¦Placebo ¦50mg ¦100mg ¦150mg ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦po BID ¦po BID ¦po BID ¦po BID ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦N=47 ¦N=46 ¦N=49 ¦N=47 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Completed Study at Reduced Dose (N) ¦1 ¦0 ¦5 ¦13 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Dropouts (N): ¦11 ¦6 ¦6 ¦8 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Withdrew Consent ¦6 ¦3 ¦2 ¦1 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Adverse Event ¦2 ¦1 ¦3 ¦6 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Other ¦3 ¦2 ¦1 ¦1 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Neutropenia (N) Requiring dose ¦0 ¦0 ¦5 ¦10 ¦
¦reduction ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ALT>3XULN (N) ¦2 ¦0 ¦0 ¦3 ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦Diarrhea (N) (severity moderate or ¦0 ¦3 ¦2 ¦10 ¦
¦greater) ¦ ¦ ¦ ¦ ¦
+--------------------------------------+---------+---------+---------+---------¦
¦ ¦ ¦ ¦ ¦ ¦
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