Homyk v. ChemoCentryx, Inc.

Background

Indiana Public Retirement System brought the securities-fraud action individually and for people who purchased or otherwise acquired ChemoCentryx common stock during the stated class period. The claims allege violations of Sections 10(b), 20(a), and 20A of the Securities Exchange Act of 1934 based on alleged misleading statements and omissions about avacopan, the ADVOCATE clinical trial, and ChemoCentryx’s communications with the Food and Drug Administration. Dr. Thomas J. Schall is alleged to have had additional liability for insider trading.

The parties filed motions to exclude expert testimony under Rule 702 of the Federal Rules of Evidence and the Supreme Court’s decision in Daubert. The court explained that expert testimony must be relevant and based on sufficient facts, reliable methods, and specialized knowledge that will help the jury. Challenges affecting the weight or credibility of testimony generally may be addressed through cross-examination rather than exclusion.

Post-Class-Period Evidence

The court did not exclude testimony about what the FDA’s approval of avacopan as TAVNEOS indicated about the drug’s overall safety or risk-benefit profile based on the ADVOCATE trial. But it excluded expert testimony about TAVNEOS’s later label, effectiveness, and use by physicians because those subjects were not relevant to whether the defendants’ statements during the class period were misleading and could confuse the jury.

Rulings on Individual Experts

David Madigan

The court allowed Dr. David Madigan to testify about the function of the data-monitoring committee and to interpret that committee’s letter concerning the New England Journal of Medicine article, including to rebut the defendants’ characterization of the article if the defendants placed it at issue. He could not testify that the article was scientifically misleading or that ChemoCentryx should have disclosed a liver-safety signal in the article. The court also declined to exclude opinions merely because the defendants disputed the factual basis or narrative nature of the testimony.

Lindsay Lally

The court granted Plaintiff’s motion to exclude Dr. Lindsay Lally’s opinions that TAVNEOS was useful for treating AAV or that its label was expansive rather than restrictive. The court found those opinions irrelevant to whether the defendants made misleading statements during the class period and potentially confusing to the jury.

Anisha Dua

The court excluded Dr. Anisha Dua’s opinions about TAVNEOS’s net benefit, the scope and effect of its label, clinicians’ prescribing practices, and what the regulatory or medical community believed. The court stated that Dua could testify about her personal experience and understanding of avacopan, but she could not reliably offer opinions about what other physicians or the medical community generally believed.

Simon Helfgott

The court limited Dr. Simon Helfgott’s testimony about post-class-period TAVNEOS use and its FDA label. He could testify about his own clinical understanding of avacopan, the ADVOCATE data, and clinical considerations from a physician’s perspective. He could not speculate about how the medical community or other clinicians viewed avacopan. He could testify about the scientific accuracy of statements made to investors concerning avacopan and the trial, including parts of the New England Journal of Medicine article, but not about what clinicians expected a sponsor to disclose. The court denied the motion to exclude his testimony based on its allegedly improper narrative or argument.

Naga Chalasani

The court allowed Dr. Naga Chalasani to testify about avacopan’s FDA approval and the drug’s liver-safety risk. He could address the safety side of the risk-benefit question without conducting an overall risk-benefit analysis. He could also testify that three patients in the prednisone group were suspected of having drug-induced liver injury from Bactrim, an antibiotic. He could not testify about approval by foreign regulatory agencies or about what the TAVNEOS label indicated concerning avacopan’s liver-toxicity risk.

Alan Bonder

The court allowed Dr. Alan Bonder to offer an independent analysis of liver-safety data from the ADVOCATE trial and to explain the medical significance of FDA observations and discussions. Because he was a medical doctor rather than an FDA regulatory expert, he could not testify about the regulatory context or implications of the FDA’s actions. He was excluded from offering statistical analyses that he had not independently performed. He could testify about how a physician would interpret the safety data and warnings, but not about how the scientific or medical communities, or other physicians generally, would react. He could explain the meaning of safety information available to ChemoCentryx, but could not testify about what ChemoCentryx or its employees actually knew. He also could not rely on post-class-period TAVNEOS data to testify about avacopan’s safety.

Steven Weisman

The court allowed Dr. Steven Weisman to testify about FDA practices, regulatory options, what the FDA did in this case, and the meaning of specific FDA documents and communications. He could not speculate about the FDA’s or another regulator’s reasons for taking particular actions, or about ChemoCentryx’s intent or beliefs. He could explain the meaning of specific meeting materials but could not generally characterize ChemoCentryx’s FDA meetings as “positive.” He could discuss how the standard of care can affect drug development and the regulatory process, but could not testify about what the medical standard of care for AAV was during the class period. The court also declined to exclude his opinion that FDA approval of the ADVOCATE trial design created a presumption that the trial was sufficient in objective and design for approval of avacopan.

Robert Gibbons

The court found that Plaintiff’s objections to Dr. Robert Gibbons’s opinions generally went to their weight rather than admissibility. But Gibbons could not offer a multivariate regression analysis first disclosed during his deposition, because the analysis was not timely disclosed. He also could not testify about the standard of care for AAV during the ADVOCATE trial. The court ordered the parties to meet and confer about producing Cornerstone Research’s compensation arrangement as reasonably necessary to determine the full extent of Gibbons’s compensation in the case.

Anupam Jena

The court granted Plaintiff’s motion to exclude Dr. Anupam Jena’s challenged opinions. Those opinions concerned post-class-period TAVNEOS issues, including its commercial value, possible label expansion, expected off-label use, and likely prescribing by health-care providers. The court excluded them for the same relevance and jury-confusion reasons applicable to other testimony about later TAVNEOS developments.

Carl Seiden

The court allowed Carl Seiden to testify, based on contemporaneous documents, about what analysts or the market understood and about industry practices concerning information that biopharmaceutical companies typically share with investors during Phase 3 trials and FDA review. He could not testify that the defendants’ disclosures were consistent with those practices, because that factual question was for the jury. He also could not testify about analyst reports concerning post-class-period TAVNEOS approval or its label.

Matthew Cain

The court denied Defendants’ motion to exclude Dr. Matthew Cain’s testimony about loss causation and damages. Cain used an event study and a constant-percentage inflation method to analyze the alleged connection between the corrective disclosures and ChemoCentryx’s stock-price declines. The court found his methodology sufficiently reliable for admissibility. Defendants could challenge his assumptions, treatment of possible confounding information, and the weight of his conclusions through cross-examination and contrary evidence.

Disposition

The court granted Plaintiffs’ motions to exclude the testimony of Anupam Jena and Lindsay Lally. It denied Defendants’ motion to exclude the testimony of Matthew Cain. It granted in part and denied in part Defendants’ motions concerning David Madigan, Simon Helfgott, and Alan Bonder, and Plaintiff’s motions concerning Anisha Dua, Naga Chalasani, Steven Weisman, Robert Gibbons, and Carl Seiden.