Class Told to Amend Suit Targeting Libido Product
CHICAGO (CN) - Shareholders must amend their complaint against a drugmaker that allegedly exaggerated the performance of its drug to improve womens' sex drive.
BioSante is a pharmaceutical company focused on developing products for female sexual health and oncology. Over the past decade, BioSante has been developing LibiGel, a drug designed to improve the sex drive of women suffering from female sexual dysfunction, specifically hypoactive sexual desire disorder ('HSDD').
LibiGel is a gel formulation of testosterone designed to be absorbed through the skin.
Shareholders claim BioSante "consistently misled investors about the commercial viability, effectiveness, and market potential for LibiGel. Defendants boasted about LibiGel's efficacy over placebo, and provided supposedly concrete 'data' regarding the drug's 'statistically significant' effect on increasing the 'number of satisfying sexual events' for women suffering from HSDD.
"These purportedly positive clinical trial results furthered defendants' claims of LibiGel being 'the most clinically advanced pharmaceutical product in the U.S.' Defendants raised investors' expectations by analogizing the female market for LibiGel to such blockbuster drugs as 'Viagra, Levitra, and Cialis,'" according to complaint.
BioSante's share price reached a high of $3.81 in July 2011, before it revealed the drug was no more effective than a placebo, and shares fell to a low of $0.38 per share.
But U.S. District Judge Joan Gottschall dismissed the complaint without prejudice last week, finding that plaintiffs' practice of italicizing or bolding phrases or sentences of large quoted blocks of text from defendant's public filings and press releases did not clearly indicate which statements were allegedly false or misleading.
"It appears that the plaintiffs intend the court and the defendants to parse through their complaint in an attempt to: (1) locate reasons why the plaintiffs believe that the italicized/bolded statements are misleading; and (2) find specific facts corresponding to those statements that 'giv[e] rise to a strong inference that the defendant acted with the required state of mind.' ...
"The salient point is that the court cannot ascertain which allegations are meant to match up with the italicized/bolded portions of the complaint," the judge said.
The effect of this method leaves the reader guessing as to which statements are challenged, and which are merely context or background, the court found.
"The complaint is deficient as the court - and BioSante - should not have to speculate about the contours of the plaintiffs' fraud claims," Gottschall concluded. The shareholders were given 28 days to amend their complaint.