Salinger v. Sarepta Therapeutics, Inc.

Background

Andrew Salinger filed a securities-fraud class action against Sarepta Therapeutics, Inc., Douglas S. Ingram, and Sandesh Mahatme. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act and Securities and Exchange Commission Rule 10b-5. It alleges that, from September 6, 2017, through August 19, 2019, the defendants made materially false or misleading statements, or failed to disclose information, about Sarepta’s drug candidate golodirsen, including alleged safety risks and the likelihood that its application for accelerated approval would receive approval from the Food and Drug Administration.

The Private Securities Litigation Reform Act requires a court to select the class member most capable of adequately representing the class as lead plaintiff. The court generally presumes that the most adequate plaintiff is the timely applicant with the largest financial interest who preliminarily satisfies the typicality and adequacy requirements of Federal Rule of Civil Procedure 23. Typicality asks whether the proposed lead plaintiff’s claims arise from the same conduct as the other class members’ claims. Adequacy asks whether the plaintiff has no conflicting interests, has a sufficient interest in the case, and has qualified counsel.

Motions for Lead Plaintiff

Five class members moved for appointment as lead plaintiff and for approval of their selected lead counsel: the Mills Family, Dorian S. Vergos, Michael Mountain, Bernard Portnoy, and TJC Services Limited. The Mills Family, Vergos, and TJC Services later withdrew their motions. Mountain filed a notice stating that he did not oppose Portnoy’s motion because Mountain did not have the largest individual financial interest.

The court found that all five motions had been timely filed, but determined that Portnoy was the presumptive lead plaintiff. Portnoy represented that he purchased 235,303 Sarepta shares, spent $29,581,806 on those purchases, retained 136,350 shares at the end of the class period, and suffered losses of $2,975,349 calculated using one accounting method and $4,377,346 using another. The movants agreed that Portnoy had the greatest financial loss, spent the most net funds, and purchased the greatest number of total and net shares.

The court also found that Portnoy satisfied the preliminary Rule 23 requirements. As a Sarepta securities purchaser during the class period, his claims arose from the same alleged conduct as the other class members’ claims. The court found no indication of a conflict with the class, found that he had sufficient interest in the outcome because of his alleged significant damages, and found that his proposed counsel, Pomerantz, was experienced and qualified to conduct the litigation. No other movant provided evidence rebutting the statutory presumption in Portnoy’s favor.

Lead Counsel and Disposition

The court approved Portnoy’s selection of Pomerantz LLP as lead counsel, finding that the firm could adequately and effectively represent the class and had substantial experience in securities class-action litigation.

Bernard Portnoy’s motion for appointment as lead plaintiff and for approval of lead counsel was granted. The remaining motions by the Mills Family, Vergos, Mountain, and TJC Services for appointment as lead plaintiff were denied. The court directed Portnoy to file a second amended complaint within 60 days after the opinion’s issuance. The defendants were directed to answer or otherwise respond within 60 days after Portnoy served that complaint. The Clerk of Court was directed to terminate the five pending motions.