Robbins Geller Defeats Intercept Pharmaceutical, Inc.’s Motion to Dismiss Securities Fraud Claims
On March 4, 2015, Judge Naomi Reice Buchwald denied defendants’ motion to dismiss the complaint in a securities fraud class action against Intercept Pharmaceuticals, Inc., its Chief Executive Officer, Mark Pruzanski, and Chief Medical Officer, David Shapiro. The complaint alleges that, between January 9 and January 10, 2014, defendants repeatedly touted good news concerning a Phase IIb drug trial of Intercept’s key drug, but deliberately withheld from investors significant safety issues experienced by patients taking the drug during the trial. As a result of defendants’ conduct, Intercept’s common stock skyrocketed from $72.39 to $445.83 per share by the close of trading on January 10, 2014. After the markets closed on January 10, 2014, the National Institute of Diabetes and Digestive and Kidney Diseases (“NIDDK”) provided a statement to The Wall Street Journal, which stated that patients taking the drug in the Phase IIb trial had experienced “significant lipid abnormalities.” The Wall Street Journal publicly disclosed the NIDDK’s safety findings that evening. In response to the news concerning the previously concealed safety issues, Intercept’s stock price dropped by approximately $200.00 per share between January 13 and January 14, 2014.
In denying the motion to dismiss in its entirety, the court held that defendants chose “only to report the positive development” concerning the Phase IIb study and engaged “in the sort of selective disclosure that creates a real possibility of misleading investors.” The court further upheld the complaint’s control person claims against each of the defendants.
Robbins Geller is serving as lead counsel in this case. A copy of the order can be viewed here.