Of the 6,000 U.S. Federal securities class action cases filed since passage of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and tracked by ISS Securities Class Action Services, less than two dozen have gone to trial as disputes are almost always negotiated and finalized prior to any presence of a jury. However, according to attorney Adam Savett of TXT Capital, the Puma Biotechnology case is the fourteenth securities class action case to have been tried to a verdict since 1996, where the conduct at issue was alleged to have occurred after the PSLRA was enacted. (The last securities class action jury verdict involved Longtop Financial Technologies in 2014.)
Kevin LaCroix of the D&O Diary opined the following: on February 4, 2019, a jury in the Central District of California entered a verdict in the securities class action lawsuit pending against Puma Biotechnology and certain of its directors and officers. While the jury found that the plaintiffs had not proven that three of the four allegedly misleading statements at issue were “false and misleading,” the jury found against the defendants and for the plaintiff as to a fourth statement. The jury specified damages of $4.50 per share with respect to the one misleading statement, which, according to the plaintiff’s counsel’s press release, amounts to a damages award of “up to $100 million,” although the actual damages amount remains to be calculated based on trading during the class period.
In a somewhat surprising follow-up from the jury’s announcement on February 4th, both the plaintiffs and defendants immediately declared victory and took to separate press releases with their respective positions.
February 4, 2019 – A federal jury trial concluded today with a verdict finding that defendants Puma Biotechnology, Inc. and its CEO, Alan H. Auerbach, committed securities fraud and awarding shareholders up to $100 million in damages. Robbins Geller represented a class of investors at trial, including lead plaintiff and class representative, Norfolk County Council, as Administering Authority of the Norfolk Pension Fund. The jury found that Puma and Auerbach knowingly misled investors about the effectiveness of Puma’s lone product, a drug known scientifically as “neratinib” and later released commercially as Nerlynx. The case, titled Hsu v. Puma Biotechnology, No. SACV15-0865, is pending in the U.S. District Court for the Central District of California before the Honorable Andrew J. Guilford.
February 4, 2019 – The class action lawsuit, Hsu vs. Puma Biotechnology, Inc., et. al., filed in the U.S. District Court for the Central District of California against Puma and Alan H. Auerbach, Puma’s CEO and President, has concluded with a jury verdict. Plaintiffs had claimed that four statements made in connection with Defendants’ July 2014 announcement of positive top-line results from a Phase III clinical trial of its breast cancer drug, neratinib, were “false and misleading,” and led to two stock drops in 2015 when the results of the clinical trial were presented at a medical conference. The jury found in favor of Defendants entirely with respect to three of the four statements and with respect to one of the two stock drops. As to the fourth statement, the jury found liability such that certain shareholders who purchased stock between July 22, 2014 and May 13, 2015 may recover no more than $4.50 per share, which represents approximately 5% or less of the claimed damages. Defendants were represented by Andrew Clubok, Michele Johnson, Colleen Smith, and Sarah Tomkowiak of Latham & Watkins.