Ariad Pharmaceuticals Inc fka ARIA

[glass_half_full]

Asking for the court to dismiss the case is a standard first response. Ariad's lawyers would be idiots not to ask.

What the court decides to do is another matter.

Here is some of the text from that article:

Law360, New York (May 22, 2014, 8:37 PM ET) -- Ariad Pharmaceuticals Inc. shareholders urged a Massachusetts federal judge to not toss a consolidated class action over alleged false statements about Ariad's failed leukemia drug Iclusig, saying Wednesday that prior to a $310 million insider stock sale, the oncology company's directors concealed evidence that the drug would fail.

The investors allege Ariad concealed the outcome of clinical trials in which at least 14 people died from blood clots caused by Iclusig, which received fast-track approval from the U.S. Food and Drug Administration to treat two rare types of leukemia. Iclusig’s troubles pushed Ariad to the brink of financial ruin, with shares plummeting in value when news of the problems emerged, leading company insiders to dump their personal holdings as part of the $310 million stock sale while concealing the issues with the drug, the investors claim.

Ariad “not only failed to disclose that the FDA did not agree with their self-serving interpretation of [clinical trial] data, they continued to actively mislead the market,” the investors' opposition to dismissal said.

The investors slammed Ariad's argument that the complaint failed to state an actionable claim, saying that Ariad's executives withheld data from the same report that caused the FDA in December 2013 to allow the sale of the drug to last-resort patients only if it included a “black box” warning — the strongest warning that can appear on the packaging of prescription medication under FDA guidelines.

Ariad allegedly told investors that the clinical trial data showed clear evidence of a favorable safety and tolerability profile for the drug, statements which allegedly led to a significant spike in the company's stock value, prior to a $310 million stock offering in January 2013 and months before the clinical trial data came to light, according to court documents.

Once Ariad disclosed the negative trial data, however, its stock tumbled, and company executives — while publicly downplaying the FDA's conclusions — engaged in a massive sell-off of their personal Ariad stock holdings, the investors said.

“The complaint is replete with allegations demonstrating that [Ariad] knew but concealed a 'significant risk' that [the drug's] safety issues would limit its commercial prospects,” the investors said. “This pleads a classic claim for securities fraud.”

Additionally, the investors slammed Ariad's argument that the suit failed to plead scienter, arguing that the company's insiders “had a clear-cut and concrete financial motive for their alleged fraud — an enormous personal profit realized from highly unusual and massive insider sales of Ariad stock.”

“The Ariad defendants knew or at the very least recklessly disregarded that their statements were false and/or misleading,” the investors said.

In an April motion seeking dismissal, Ariad and several company executives said that investors' claims that they violated the Securities Exchange Act of 1934 through its January 2013 stock offering must be dismissed for lack of standing and failure by the investors to allege any false statements.

The consolidated suits, the first of which was filed on Oct. 10, 2013, also name as defendants numerous Ariad executives, including CEO Harvey J. Berger, Chief Financial Officer Edward M. Fitzgerald, Chief Medical Officer Frank G. Haluska and President of Research and Development Timothy P. Clackson.

According to the investors, the success of the drug was vital to Ariad because the company was reporting tens of millions of dollars in losses every quarter and had virtually no other marketable products.

Attorneys for the plaintiffs denied a request for comment Thursday.

Counsel for the defendants were not immediately available for comment.

The plaintiffs are represented by Glen DeValerio of Berman DeValerio; Jonathan Gardner and Matthew C. Moehlman of Labaton Sucharow LLP; Ariana J. Tadler, Arvind Khurana and Melissa R. Clark of Milberg LLP; and John C. Browne and Kristin Ann Meister of Bernstein Litowitz Berger & Grossmann LLP.

The defendants are represented by John F. Sylvia, Andrew N. Nathanson, Matthew D. Levitt and Rebecca L. Zeidel of Mintz Levin Cohn Ferris Glovsky and Popeo PC.

The case is In re: Ariad Pharmaceuticals Inc. Securities Litigation, case number 1:13-cv-12544, in the U.S. District Court for the District of Massachusetts.

--Editing by Edrienne Su.