Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge v. MacroGenics, Inc.

Summary

The Fourth Circuit affirmed dismissal of a securities class action brought by the Employees’ Retirement System of the City of Baton Rouge and Parish of East Baton Rouge against MacroGenics, Inc. and two executives. The court held that the plaintiffs failed to adequately allege actionable misrepresentations or omissions concerning interim clinical-trial overall-survival data for margetuximab, and also failed to plead scienter. The court likewise affirmed dismissal of the derivative claims under Sections 20(a) and 15.

Holdings

1. Defendants’ pre-ASCO statements did not speak about the interim overall-survival data in a manner that made disclosure of the Kaplan-Meier curves necessary. The statements accurately described the interim data and did not contain materially false or misleading representations or omissions.
2. Statements that the overall-survival trend was positive, that defendants were excited, and that the clinical activity was promising were inactionable puffery or opinions rather than actionable misrepresentations.
3. MacroGenics’ statement that it anticipated the preliminary positive overall-survival trend to continue was a protected forward-looking statement under the PSLRA safe harbor.
4. Defendants’ cautionary statements and risk-factor disclosures were sufficiently specific and extensive to warn investors that the interim overall-survival data was incomplete and that achievement of the overall-survival endpoint was uncertain.
5. Plaintiffs failed to plead materially false or misleading statements or omissions in the offering documents, failed to plead violations of Items 303 and 105, and therefore failed to state derivative claims under section 15.
6. The district court did not abuse its discretion by denying plaintiffs’ request for leave to amend.

Questions Presented

1. Whether defendants’ statements concerning SOPHIA’s progression-free-survival results and interim overall-survival data were materially false or misleading or triggered a duty to disclose the Kaplan-Meier curves under section 10(b) and Rule 10b-5.
2. Whether defendants’ positive statements were actionable as puffery, opinions lacking a reasonable basis, or forward-looking statements outside the PSLRA safe harbor.
3. Whether defendants’ cautionary statements and risk disclosures sufficiently warned investors about the preliminary nature of the clinical-trial data and the possibility that the overall-survival endpoint would not be achieved.
4. Whether plaintiffs adequately pleaded violations of Securities Act sections 11 and 12(a), SEC Regulation S-K Items 303 and 105, and derivative section 15 claims.
5. Whether the district court abused its discretion by denying plaintiffs leave to amend.

Disposition

affirmed