NAVIGATING SECURITIES LITIGATION IN THE LIFE SCIENCES INDUSTRY
CD: How would you characterise the level of securities litigation cases being filed against life sciences companies? Are there any common themes behind these claims?
Bell: The number of life sciences-related securities class action cases involving biotech, pharmaceutical and healthcare companies has fallen since 2019, following the overall trend in decreasing cases, including section 10b5 and 11 cases. But I think it would be a mistake to attribute the recent trend to anything other than usual cyclicality, perhaps exacerbated by the coronavirus (COVID-19) pandemic and its lingering effects on the development and commercialisation pipeline. Many life sciences cases involve the development, regulatory approval or commercialisation of new therapies and products. Negative results, delays in clinical trials, adverse or delayed Food and Drug Administration (FDA) feedback, adverse events and manufacturing challenges may all spur disputes, based on what was anticipated, what was disclosed, and what else the company was doing that might have affected overall performance. Of course, the potential markets for new therapies are also changing based on practice patterns, reimbursement regimes and therapeutic innovation. When both the product development and the commercialisation market represent moving targets, there is ample ground for disputes about product performance, company performance and disclosures.
Jan-Mar 2024 issue
Charles River Associates