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City of Edinburgh Council v. Pfizer, Inc.

United States Court of Appeals for the Third Circuit

January 8, 2014, Argued; June 6, 2014, Filed

No. 13-2314

Opinion

 [*162]  OPINION OF THE COURT

SCIRICA, Circuit Judge

In this private securities fraud class action under the Private Securities Litigation Reform Act of 1995 ("PSLRA"), two institutional investors allege a pharmaceutical company and its executives made materially false and misleading statements in violation of the Securities Exchange Act of 1934 (the "Exchange Act") regarding interim clinical trial data related to the development of an experimental Alzheimer's drug. The District Court granted defendants'  [**2] motion to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. We will affirm.1

Plaintiffs-appellants City of Edinburgh Council as Administering Authority for the Lothian Pension Fund and Arca S.G.R. S.p.A. (the "Funds")2 bring suit on behalf of a class of investors who purchased Wyeth, Inc. common stock between May 21, 2007, and July 29, 2008 (the "Class Period"). The Funds allege Wyeth and four former Wyeth executives—defendants  [*163]  Robert Essner, Bernard Poussot, Jr., Kenneth J. Martin, and Robert R. Ruffolo, Jr.—made materially false and misleading statements regarding the development of the experimental Alzheimer's drug bapineuzumab. Defendant Pfizer Inc. is the successor-in-interest to Wyeth, which it acquired in 2009.

The Funds bring three claims: (1) securities fraud under section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Securities and Exchange Commission ("SEC") Rule 10b-5; (2) control  [**3] person liability under section 20(a) of the Exchange Act, 15 U.S.C. § 78t; and (3) insider trading under section 20A of the Exchange Act, 15 U.S.C. § 78t-1(a).3

Approximately 5 million Americans and 26 million people worldwide suffer from Alzheimer's disease. Wyeth and Elan Corporation, plc ("Elan"),4 an Ireland-based pharmaceutical company, embarked on a joint venture to develop an Alzheimer's treatment that, unlike other drugs then on the market, would target the underlying causes of the disease. This joint venture produced bapineuzumab, which is designed to treat mild to moderate Alzheimer's. As required by Food and Drug Administration ("FDA") regulations, Wyeth and Elan launched clinical trials to assess the efficacy and safety of bapineuzumab  [**4] in treating Alzheimer's.5 In 2006, Wyeth and Elan completed Phase 1 trials of bapineuzumab and received Fast Track status from the FDA.6 Before announcing Phase 1 results, Wyeth and Elan began the Phase 2 trial, a controlled, double-blind study designed to measure the efficacy of bapineuzumab compared to a placebo. The companies measured bapineuzumab's efficacy using two tests, the Alzheimer's Disease Assessment Scale-Cognitive ("ADAS-cog") and the Disability Assessment Scale for Dementia ("DAD").

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754 F.3d 159 *; 2014 U.S. App. LEXIS 10550 **; 2014 WL 2535383

CITY OF EDINBURGH COUNCIL AS ADMINISTERING AUTHORITY FOR THE LOTHIAN PENSION FUND; ARCA S.G.R.S.P.A, Appellant v. PFIZER, INC., as successor in interest to WYETH, a Delaware Corporation; ROBERT ESSNER; BERNARD POUSSOT; KENNETH J. MARTIN; ROBERT R. RUFFOLO; WYETH

Prior History:  [**1] On Appeal from the United States District Court for the District of New Jersey. D.C. Civil Action No. 2-10-cv-03105. (Honorable Susan D. Wigenton).

Sec. Police & Fire Professionals of Am. Ret. Fund v. Pfizer, Inc., 2013 U.S. Dist. LEXIS 57669 (D.N.J., Apr. 22, 2013)

CORE TERMS

Phase, interim, initiate, misleading, bapineuzumab, spectacular, district court, investors, defendants', efficacy, Exchange Act, disclose, allegations, insider trading, confidential, patients, duty to disclose, no duty, subgroup, omission, disease, falsity, misleading statement, false statement, clinical trial, disclosure, predicate, p-values, tests, dose

Civil Procedure, Defenses, Demurrers & Objections, Motions to Dismiss, Failure to State Claim, Evidence, Judicial Notice, Adjudicative Facts, Public Records, Pleading & Practice, Motion Practice, General Overview, Appeals, Standards of Review, De Novo Review, Securities Law, Civil Liability Considerations, Securities Litigation Reform & Standards, Postoffering & Secondary Distributions, Securities Exchange Act of 1934 Actions, Heightened Pleading Requirements, Implied Private Rights of Action, Deceptive & Manipulative Devices, Elements of Proof, Materiality, Statements of Opinion, Puffery, Duty to Disclose, Insider Trading, Duty to Abstain & Disclose, Inferences & Presumptions, Inferences, Scienter, Express Liabilities, Misleading Statements, Secondary Liability, Controlling Persons, Elements of Proof