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Maker of Alzheimer’s drug takes on securities squabble at 1st Circuit

The U.S. Court of Appeals will weigh whether Biogen hoodwinked investors over the effectiveness of one of its trial drugs.

BOSTON (CN) — Biogen shareholders urged the First Circuit on Monday morning to revive their securities case over clinical reports about a treatment for Alzheimer’s disease that the pharmaceutical company was marketing.

Led by Nadia Shash and Amjad Khan, the investors brought the putative class action in 2020, accusing the Cambridge, Mass.-based Biogen of having omitted conflicting facts from failed tests when it disclosed clinical trial results for its Alzheimer’s drug Aduhelm.

Medicare refused to cover the drug after Congress opened an investigation, and Biogen discontinued all commercial marketing of Aduhelm and replaced its CEO.

Though a federal judge dismissed the suit, finding that statements interpreting clinical trial data are not actionable, attorney Robert Kelsey Kry represents the shareholders as they seek a federal appeals court reversal.

“The district court dismissed this suit because it said Biogen statements were just opinions about clinical data, but the law is clear that whether a statement is a fact or an opinion, you cannot say one thing but then conceal facts that thoroughly refute that statement and render the statement misleading,” Kry told the Boston-based panel of judges on Monday. “That’s exactly what Biogen did here.”

Kry sparred with the judges on whether the FDA’s expedited approval of the drug qualified as an “intervening event,” which breaks the chain of causation.

Biogen was represented in court on Monday by Audra J. Soloway, a partner at New York law firm Paul Weiss. The company argued in appeal brief that shareholders failed to allege materially misleading statements or omissions because the statements concerning the efficacy of high-dose aducanumab were not misleading.

The appeals panel and Soloway focused on the statement from Biogen’s then-head of research and development suggested that “all data” was supportive of Aduhelm’s efficacy at higher doses. The exact words from Dr. Alfred Sandrock were: “You really need to get to the higher dose. And I think our data are all consistent with that."

“So what he’s saying in that sentence is that in his view, his belief — ‘ I think’ — the data are consistent with the idea that if you don’t get people the higher dose, you don’t see a treatment impact,” Biogen’s attorney said. “He is not saying, taken in context, that there is no possible interpretation of the data that wouldn’t support Biogen’s interpretation.”

Soloway argued that the company’s statements at issue in the case, couched with the words “I think” and “I believe,” should be interpreted as Biogen offering its own opinions on how to properly read the data from its clinical studies.

“But I think the fundamental problem here is — and the plaintiffs have conceded this — none of the facts in that sentence that your honor just read are actually alleged to be false. This entire case is premised on the purported omission of other information, competing analyses based on in some cases sub-sub-sub-group data that [FDA statistician] Dr. Massey thought were informative but that other reviewers within were the FDA did not think were informative, and that is not securities fraud.”

The three-judge panel adjourned Monday afternoon without ruling on the appeal.

The panel was composed of David Barron, an Obama appointee; Jeffrey Howard, a George H.W. Bush appointee; and Gustavo Gelpí, a Biden appointee.

U.S District Judge Indira Talwani threw out the case was last year for failure to plead a material misstatement or omission, scienter, or loss causation.

In 2021, the Food and Drug Administration’s overruled its own independent scientific advisers when it approved Aduhelm, even though research studies failed to prove it really helped patients.

An 18-month congressional probe found the agency’s approval process for the treatment was “rife with irregularities,” including a number of meetings with drug company staffers that went undocumented.

“The criticism surrounding Aduhelm’s approval may have been avoided had FDA adhered to its own guidance and internal practices, the Committee on Oversight and Reform and Committee on Energy and Commerce jointly concluded in a December 2022 report. “FDA must take swift action to ensure that its processes for reviewing future Alzheimer’s disease treatments do not lead to the same doubts about the integrity of FDA’s review.

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Categories / Appeals, Business, Health, Securities

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