Leung v. bluebird bio, Inc.

• Decision Date: 21 April 2022
• Docket Number: Case No. 21-cv-10335-DJC
• Parties: Peter LEUNG, individually and on behalf of all others similarly situated, Plaintiff, v. BLUEBIRD BIO, INC., Nick Leschly, and Chip Baird, Defendants.
• Court: U.S. District Court — District of Massachusetts

599 F.Supp.3d 49

Peter LEUNG, individually and on behalf of all others similarly situated, Plaintiff,

v.BLUEBIRD BIO, INC., Nick Leschly, and Chip Baird, Defendants.

Case No. 21-cv-10335-DJC

United States District Court, D. Massachusetts.

Signed April 21, 2022

J. Alexander Hood, James Michael LoPiano, Jeremy Alan Lieberman, Pomerantz LLP, New York, NY, for Plaintiff.

Deborah Sager Birnbach, Deborah S. Birnbach, Jennifer B. Luz, Goodwin Procter LLP, Boston, MA, for Defendants.

MEMORANDUM AND ORDER

CASPER, United States District Judge

I. Introduction

Lead plaintiff Jerry Hannah ("Plaintiff")¹ has filed this class action lawsuit against bluebird bio, Inc. ("bluebird" or the "Company"), Nick Leschly ("Leschly") and Chip Baird ("Baird"), bluebird's chief executive officer and chief financial officer, respectively, (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") between May 11, 2020 and November 4, 2020 (the "Class Period"). D. 26. Defendants have moved to dismiss the amended complaint. D. 30. For the reasons stated below, the Court ALLOWS the motion.

II. Standard of Review

For allegations of securities fraud under Sections 10(b) and 20(a) of the Exchange Act, a plaintiff "must plead the circumstances of the fraud with particularity, pursuant to Rule 9(b)," Hill v. Gozani, 638 F.3d 40, 55 (1st Cir. 2011), and, pursuant to the Private Securities Litigation Reform Act ("PSLRA"), must also "specify each statement alleged to have been misleading [and] the reason or reasons why the statement is misleading," id. (alteration in original) (citation and internal quotation marks omitted).

As part of the inquiry under Tellabs v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322–23, 127 S.Ct. 2499, 168 L.Ed.2d 179 (2007), courts engage in a particularized scrutiny of private securities complaints. See, e.g., Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 996 (9th Cir. 2009). Nevertheless, the PSLRA's pleading standard is not an insurmountable bar. As required by Tellabs, the Court considers the allegations collectively to determine whether they give rise to a strong inference of scienter. Id. at 991–92 (citing Tellabs, 551 U.S. at 323, 127 S.Ct. 2499 ).

As with any Rule 12(b)(6) motion, the Court must "accept well-pleaded factual allegations in the complaint as true and view all reasonable inferences in the plaintiffs’ favor." ACA Fin. Guar. Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008).

III. Factual Background

A. Materials Outside the Pleadings

As a preliminary matter, Plaintiff argues that the Court may not consider, or may consider only in a limited capacity, eighteen exhibits marked A through R submitted by Defendants in connection with their motion to dismiss. D. 34 at 17–22; see D. 32. According to Plaintiff, the Court may consider Exhibits B, G, H, I, J, N, P and Q, which reference documents cited or quoted in the amended complaint, only for the purpose of assessing "the existence of warning language for purported forward-looking statements." D. 34 at 20–21. Further, Plaintiff contends that the Court may not consider Exhibits C through F, K through M, or O through R since they are neither referenced in the amended complaint nor submitted for any allowable purpose. Id. at 21–22.

At the motion to dismiss stage, the Court ordinarily "may not consider any documents that are outside of the complaint, or not expressly incorporated therein, unless the motion is converted into one for summary judgment." Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001). "There is, however, a narrow exception ‘for documents the authenticity of which are not disputed by the parties; for official public records; for documents central to plaintiffs’ claim; or for documents sufficiently referred to in the complaint.’ " Id. (quoting Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993) ).

Exhibits B, G, H, I, J, N, P and Q—Securities and Exchange Commission ("SEC") filings, analyst conference call transcripts and a Food and Drug Administration ("FDA") guidance document—constitute documents "sufficiently referred to in the complaint" for consideration at the motion to dismiss stage. See Alt. Energy, 267 F.3d at 33 ; D. 32. Plaintiff argues that, while the Court may note these exhibits’ existence, it may not consider them for the truth of any matter asserted therein. D. 34 at 19, 21. These exhibits, however, are "relevant not for the truth of anything asserted in [them]." See Torrens v. Lockheed Martin Servs. Grp., Inc., 396 F.3d 468, 473 (1st Cir. 2005). Rather, they address bluebird's representations to its investors and what, if any, FDA guidance was available to bluebird when it made those representations. Cf. id. (considering document "relevant ... simply as a legally significant event, like a treaty or a will"); Kader v. Sarepta Therapeutics, Inc., No. 1:14-CV-14318-ADB, 2016 WL 1337256, at *11 (D. Mass. Apr. 5, 2016) (considering FDA statements relevant to, among other things, "the total mix of information available to the market during the Class Period"). Accordingly, the Court may consider these exhibits without the restriction argued by Plaintiff.

The Court also may consider Exhibits C, D, E, F, G, K and R as official public records. See D. 32. While not referenced in the amended complaint, these exhibits contain excerpts from SEC filings and FDA documents proper for consideration at the motion to dismiss stage. See Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 59–60 (2d Cir. 2016) (considering FDA guidance at motion to dismiss stage because it "is publicly available and its accuracy cannot reasonably be questioned"); Leavitt v. Alnylam Pharms., Inc., 525 F. Supp. 3d 259, 266 n.1 (D. Mass. 2021) (stating that the court "may, in its discretion, take judicial notice of FDA documents"); In re Vertex Pharms. Inc., Sec. Litig., 357 F. Supp. 2d 343, 352 n.4 (D. Mass. 2005) (taking judicial notice of FDA policy "as a matter of public record"); In re Stone & Webster, Inc., Sec. Litig., 253 F. Supp. 2d 102, 128 n.11 (D. Mass. 2003) (explaining that a district court may "consider documents required to be filed, and actually filed, with the SEC on a motion to dismiss").

By contrast, Exhibits L, M and O do not fall within any of the exceptions for consideration at this stage. Exhibit L purports to be an academic journal article. D. 32-12. Exhibits M and O purport to be conference presentation transcripts neither referenced in the amended complaint nor included in any public SEC filing. D. 32-13; D. 32-15. These documents "are not properly before the Court, nor are they essential to evaluating the sufficiency of the [c]omplaint." See Kader, 2016 WL 1337256, at *10 (granting motion to strike exhibits attached to declaration in support of defendants’ motion to dismiss). Accordingly, the Court has not considered these three exhibits in the resolution of the motion to dismiss.

B. Factual Allegations

The following facts are drawn from Plaintiff's amended complaint, D. 26, and from the exhibits Defendants filed in support of their motion, except Exhibits L, M and O, as discussed above, see D. 32.

1. Bluebird plans to apply for FDA approval of LentiGlobin

Bluebird is a biotechnology company that develops gene therapies for severe genetic diseases and cancer

. D. 26 ¶ 6. The Company uses lentiviral vectors to introduce a functional copy of a gene to a patient's own stem cells ex vivo (i.e., outside the patient) and then the modified stem cells with the functional gene are reinserted into the patient. Id. ¶¶ 29, 32. Bluebird's gene therapy programs in development include LentiGlobin for the treatment of sickle cell disease ("LentiGlobin"). Id. ¶¶ 6, 30. Sickle cell disease ("SCD") is a hereditary blood disorder with significant negative health effects caused by a mutation in the beta-globin gene that results in polymerized hemoglobin and abnormal red blood cell function. Id. ¶ 30. Currently, treatments for the disease are limited to chronic blood transfusions and hydroxyurea, a generic drug. Id. ¶ 31. LentiGlobin is designed to be a one-time treatment that would use bluebird's lentiviral vector platform to replace damaged cells’ mutated beta-globin genes, enabling SCD patients to form normally functioning hemoglobin and normal red blood cells. Id. ¶¶ 32–33.

Bluebird announced plans to apply for FDA approval to market LentiGlobin. See id. ¶¶ 7, 53. If approved, LentiGlobin could be a "blockbuster therapy" for bluebird, with analysts projecting peak global sales at $2.1 billion, nearly as much as all of bluebird's other four products in development combined. Id. ¶ 34.

The process for obtaining FDA approval to market a biological product generally involves: (1) completion of nonclinical laboratory tests and animal studies; (2) submission of an application for an investigational new drug; (3) performance of adequate and well-controlled human clinical studies to establish the safety and efficacy of the product for its intended use; (4) submission of a Biologics License Application ("BLA") for marketing approval that includes evidence of safety, purity and potency from results of nonclinical testing and clinical studies; (5) inspections of the manufacturing facilities; (6) potential audit of nonclinical and clinical study sites; and (7) FDA review and approval of the BLA. Id. ¶ 50.

To submit a viable BLA, an applicant must demonstrate both adequate clinical results and the adequacy of its chemistry, manufacturing and controls ("CMC") for production to the FDA. Id. ¶ 9. Clinical studies of biological products are typically conducted in three sequential phases, which may overlap or be combined. Id. ¶ 48. In Phase 1, the product is introduced into healthy subjects and tested for safety. Id. In Phase 2, the product is evaluated in a limited patient population...