NEW YORK (Legal Newsline) - A federal judge threw out securities fraud claims against AstraZeneca over statements it made during clinical trials of its Covid-19 vaccine, saying the plaintiffs failed to identify any false information or fraudulent intent to support their case.
“Read generously, the amended complaint does not state a claim because it does not identify any statement made misleading by any alleged omission,” concluded U.S. District Judge J. Paul Oetken in New York.
The ruling was a loss for lawyers at Robbins Geller and Vanoverbeke Michaud, who hoped to assemble a class action with Monroe County, Mich., as lead plaintiff.
During Operation Warp Speed, the federal government offered AstraZeneca as much as $1.2 billion for 300 million doses of its experimental vaccine, although the company said it would manufacture the drug at no profit during the epidemic and only hope to make money on the technology later.
In a series of briefings to analysts and investors, AstraZeneca executives discussed how clinical trials were going. The first alleged price drop of about 5% occurred from Nov. 20, 2020, to Nov. 25, 2020 after AstraZeneca revealed on Nov. 23 that “for unexplained reasons,” trials involving about 2,700 people in the U.K. and Brazil used two different doses.
The second price drop came on Dec. 14, 2020, after the dosing mixup was reported again by the British medical journal The Lancet and AstraZeneca Executive Vice President Menelas Pangalos was quoted in the newspaper saying “we would have run the study little differently if we had been doing it from scratch.” The shares fell 8%.
The third drop came after a German financial paper reported sources in the German government as saying the vaccine was less than 10% effective in people over 65 and French President Emmanual Macron said it was “quasi ineffective” for older people. The shares fell 7%.
The plaintiffs argued that AstraZeneca’s updates, while literally truthful, created the “misleading impression the trials were proceeding as expected” and producing “positive results.” But companies don’t have an obligation to disclose negative facts, the court said, because otherwise “every omission would be actionable.”
Finally, the plaintiffs argued that once they began discussing the U.K. trials, they were required to reveal all the facts about them. There is a legal principle that companies “have a duty to tell the whole truth” when they speak on a topic, the court said.
“But the statements that plaintiffs have identified are at such a high level of generality, and the alleged omitted facts so granular, that there is no violation of that principle here,” the court concluded.
The plaintiffs also failed to produce any evidence of fraudulent intent, the court said. The closest they came was an allegation they wanted to inflate AstraZeneca’s stock to buy Alexion Pharmaceuticals in December 2020, but these motives are common to most corporate officers and are insufficient, the court said. The defendants disclosed all the facts to the Food and Drug Administration, further undermining fraudulent intent.