Record-Breaking Recovery for Intercept Pharmaceuticals Investors
On September 8, 2016, the Honorable Naomi Reice Buchwald of the United States District Court for the Southern District of New York granted final approval of a $55 million settlement in the Intercept Pharmaceuticals securities litigation. The settlement, on behalf of investors who purchased Intercept common stock during the January 9-January 10, 2014 class period, is believed to be the largest per-day recovery in the history of securities litigation.
Originally filed by Robbins Geller in February 2014, the case alleged claims under the Securities Exchange Act of 1934 based on defendants’ improper disclosure of the results of a Phase IIb drug trial that was being conducted by the National Institute of Diabetes and Digestive and Kidney Diseases (“NIDDK”). Following an extensive investigation that included a FOIA request to the NIDDK, the complaint filed by Robbins Geller (on behalf of lead plaintiff George Burton and representative plaintiff Scot Atwood) focused on how defendants repeatedly touted good news to investors regarding the results of the Phase IIb drug trial of the company’s key drug, obeticholic acid (“OCA”), while intentionally failing to disclose significant safety concerns that had also been discovered during the trial.
The Phase IIb trial, referred to as the “FLINT Trial,” tested the safety and efficacy of OCA for the treatment of Nonalcoholic Steatohepatitis (or NASH), an increasingly common liver disease. According to written communications between the NIDDK and defendants, which were obtained by Robbins Geller from the NIDDK, defendants learned on January 6, 2014 that the FLINT Trial for OCA as a treatment for NASH was being halted because it had already met its efficacy end points. However, defendants were also told that a second reason for halting the trial was a finding of significant lipid abnormalities associated with OCA.
On January 9, 2014, defendants reported the positive efficacy news, but deliberately withheld from investors the negative news concerning lipid abnormalities. As a consequence of defendants’ misleading statements, the price of Intercept common stock skyrocketed from $72 per share on January 9, 2014, to a high of $497 per share on January 10, 2014. After the markets closed on January 10, 2014, however, the NIDDK took the unusual step of issuing a press release stating that patients taking OCA in the FLINT Trial had experienced “significant lipid abnormalities.” The Wall Street Journal and other media outlets seized on the NIDDK’s statement that evening and, in response to the news concerning the previously concealed safety issue, the company’s stock price slumped by nearly $200 per share between January 13 and January 14, 2014. This massive decline in the company’s stock price caused significant damages to institutional and individual investors.
On behalf of Intercept investors, Robbins Geller litigated the case through discovery, settling only after the Firm obtained and analyzed over 1.5 million pages of documents and deposed key witnesses at the NIDDK and Intercept. The $55 million settlement – $27.5 million for each day in the class period – is unprecedented and represents a decisive victory for investors. Robbins Geller partner Trig Smith commented, “This is an excellent result, particularly given the skepticism we encountered bringing a case with such a short class period, and the outcome demonstrates our Firm’s resolve to vindicate the rights of investors.”
In re Intercept Pharmaceuticals, Inc. Securities Litigation, No. 14 Civ. 1123 (NRB) (S.D.N.Y.).