Chang v. Neumora Therapeutics Inc.

Background

Annie Chang filed a proposed class action under the Securities Act of 1933, as amended by the Private Securities Litigation Reform Act of 1995. The complaint names Neumora Therapeutics Inc., several executive officers, and underwriters of the company’s initial public offering as defendants. Chang alleged that the offering documents failed to disclose or misrepresented material events, trends, and uncertainties involving one of Neumora’s therapeutic clinical trials. She alleged that the company’s stock price fell sharply when the truth was disclosed, causing losses to Chang and other proposed class members.

The court considered competing requests for appointment as lead plaintiff. Deganit Barak and D & D SF filed one motion, while Victor Otcheretko filed another motion seeking appointment of himself as lead plaintiff and Saxena White P.A. as lead counsel. Barak and D & D SF later notified the court that they did not oppose Otcheretko’s motion because they appeared not to have the largest financial interest in the relief sought by the class.

Lead Plaintiff Analysis

The Private Securities Litigation Reform Act creates a presumption that the “most adequate plaintiff” should lead a securities class action. The presumptive lead plaintiff must have timely sought appointment, have the largest financial interest in the relief sought, and make a preliminary showing that the proposed representative satisfies the typicality and adequacy requirements of Federal Rule of Civil Procedure 23.

The court found that Otcheretko satisfied the timing requirement. Notice was published on February 6, 2025, and he moved for appointment on April 7, 2025, within the required 60-day period.

The court also found that Otcheretko made the required preliminary showing of typicality and adequacy. His claims were considered typical because he purchased the defendants’ stock at prices allegedly inflated by the misrepresentations and omissions in the offering documents and suffered losses. The court found adequacy because his selected counsel had substantial securities-litigation experience, no conflicts were alleged between Otcheretko and the other proposed class members, and Otcheretko had a sufficient financial interest to support vigorous advocacy.

The court stated that Otcheretko’s largest financial interest was undisputed. It identified his loss as $155,447.04 and stated that this exceeded Barak and D & D SF’s approximate loss of $113,687.75. Because Otcheretko’s request was unopposed, the court did not discuss whether anyone had rebutted the presumption in his favor.

Lead Counsel

The court approved Otcheretko’s selection of Saxena White P.A. as lead counsel. It found that the firm had substantial securities-litigation experience and had obtained substantial recoveries for investor classes while serving as lead counsel in securities class actions. Under the governing statute, the court must approve the lead plaintiff’s counsel selection.

Disposition

The court granted Otcheretko’s motion to be appointed lead plaintiff and granted his motion to appoint Saxena White as lead counsel. It denied Barak and D & D SF’s motion to be appointed lead plaintiff as moot. The court directed Otcheretko, as lead plaintiff, to confer with the defendants about a schedule for filing an amended complaint and responses and to submit a proposed schedule. The Clerk of Court was requested to close the two motion docket entries. The order did not decide the underlying securities claims or certify a class.