Audrey Dang, Et Al. V. GPC Biotech AG, Et Al. Dang-Class Action Complaint
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK AUDREY DANG, Individually and On Behalf of ) All Others Similarly Situated, ) CIVIL ACTION NO. Plaintiff, ) vs. CLASS ACTION COMPLAINT GPC BIOTECH AG, BERND SEIZINGER, M.D., PH.D., MARTINE GEORGE, M.D., and MARCEL JURY TRIAL DEMANDED ROZENCWEIG, M.D., Defendants. ) Plaintiff, Audrey Dang, ("Plaintiff'), alleges the following based upon the investigation by Plaintiffs counsel, which included, among other things, a review of the defendants' public documents, conference calls and announcements made by defendants, United States Securities and Exchange Commission ("SEC") filings, wire and press releases published by and regarding GPC Biotech AG ("GPC" or the "Company"), securities analysts' reports and advisories about the Company, and information readily available on the Internet, and Plaintiff believes that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION AND OVERVIEW 1. This is a federal class action on behalf of purchasers of GPC's securities between December 5, 2005 and July 24, 2007, inclusive (the "Class Period"), seeking to pursue remedies under the Securities Exchange Act of 1934 (the "Exchange Act") 1 2. GPC is a biopharmaceutical company engaged in the discovery, development and commercialization of new drugs to treat cancer. During the Class Period, the Company's lead product candidate was satraplatin, an orally administered platinum-based compound intended for use as a chemotherapy treatment. 3. Prior to, and throughout the Class Period, GPC reported positive test results in the evaluation of satraplatin. Further, the Company repeatedly stated that satraplatin showed promising safety and efficacy as demonstrated by "significant improvement" in progression-free survival ("PFS") in a randomized study of first-line treatment of patients with hormone- refractory prostate cancer ("HRPC"). Throughout the Class Period, satraplatin was evaluated in a Phase 3 trial entitled SPARC (Satraplatin and Prednisone Against Refractory Cancer), a second-line chemotherapy treatment for patients with HRPC. The Company reported positive results from the Phase 3 SPARC trial, and indicated that data from the trial would form the Company's New Drug Application ("NDA") with the U.S. Food & Drug Administration ("FDA"). The Company reported a 40 percent reduction in risk of disease progression for study participants who received satraplatin, and reported that the study data showed that the results for PFS were highly statistically significant. Subsequently, the PFS measure would serve as a primary endpoint in the Company's NDA submission to the FDA for satraplatin. 4. The Company's investors were shocked on July 20, 2007, when the FDA released its "Briefing Document" in advance of the FDA's Oncology Drugs Advisory Committee's meeting to consider the satraplatin NDA. Therein, the FDA cited five "issues " that it had with the Company's satraplatin NDA. One issue included the fact that the FDA had no prior experience with the Company's use of PFS, a primary endpoint in the NDA application, which was "clearly communicated to the Applicant during the development phase." Among other 2 additional issues, two independent radiology readers disagreed on the progression status of tumors in 39 percent of the patients, which raised questions about whether the primary endpoint could be reliably assessed in the clinical trial. 5. On this news, the Company's shares declined $7.80 per share, or over 24.5 percent, to close on July 20, 2007 at $24.00 per share, on unusually heavy trading volume. On the following trading day, the Company' s shares declined an additional $3.05 per share, to close on July 23, 2007 at $20.95 per share. 6. Then on July 24, 2007, the FDA's advisory panel voted 12-0 to recommend delaying a decision on satraplatin until the Company gathered additional data. The advisory committee stated that interim data from the clinical test submitted by GPC didn't prove that the drug actually helped prostate cancer patients live longer, and questioned how the Company analyzed disease progression and pain reduction in the study. As a result, the FDA panel recommended delaying a decision on satraplatin until additional data was made available by the Company to determine whether satraplatin actually helped men with prostate cancer live longer. In response , the Company disclosed that it did not expect to have the necessary survival analysis for another year. On this news, the Company' s shares declined an additional $7.19 per share, or 35.36 percent, to close on July 25, 2007 at $13.16 per share, on unusually heavy trading volume. 7. The Complaint alleges that, throughout the Class Period, defendants failed to disclose or indicate the following material adverse facts: (1) that the FDA had previously expressed disapproval regarding the Company's choice of methodology and a primary endpoint in the satraplatin studies; (2) that the Company continued to evaluate satraplatin using the disputed endpoint; (3) that the Company disregarded the FDA's previously expressed concerns about the disputed primary endpoint, and submitted the satraplatin study results to the FDA with 3 the disputed primary endpoint supporting its satraplatin NDA; (4) that the FDA's evaluators would be unable to determine disease progression from the Company's NDA submission; and (5) that the interim data submitted with the NDA would not allow the FDA to conclude that satraplatin was more effective than placebo in terms of overall survival. 8. As a result of defendants' wrongful acts and omissions, and the precipitous decline in the market value of the Company's securities, Plaintiff and other Class Members have suffered significant losses and damages. JURISDICTION AND VENUE 9. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of the Exchange Act, (15 U.S.C. §§ 78j(b) and 78t(a)), and Rule lOb-5 promulgated thereunder (17 C.F.R. § 240.1Ob-5). 10. This Court has jurisdiction over the subject matter of this action pursuant to Section 27 of the Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1331. 11. Venue is proper in this Judicial District pursuant to Section 27 of the Exchange Act, 15 U.S.C. § 78aa and 28 U.S.C. § 1391(b). Many of the acts and transactions alleged herein, including the preparation and dissemination of materially false and misleading information, occurred in substantial part in this Judicial District. Additionally, GPC's securities are actively traded on the NASDAQ in this Judicial District. 12. In connection with the acts, conduct and other wrongs alleged in this Complaint, defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including but not limited to, the United States mails, interstate telephone communications and the facilities of the national securities exchange. 4 PARTIES 13. Plaintiff, Audrey Dang, as set forth in the accompanying certification, incorporated by reference herein, purchased GPC's securities at artificially inflated prices during the Class Period and has been damaged thereby. 14. Defendant GPC is a German corporation with its principal place of business located at Fraunhoferstrasse 20, D-82152 Martinsried/Munich, Germany. 15. Defendant Bernd Seizinger, M.D., Ph.D. ("Seizinger") was, at all relevant times, the Company's President, Chief Executive Officer ("CEO"). 16. Defendant Martine George, M.D. ("George") was, at all relevant times, the Company's Senior Vice President of Clinical Development. 17. Defendant Marcel Rozencweig, M.D. ("Rozencweig") was, at all relevant times, the Company's Chief Medical Officer. 18. Defendants Seizinger, George, and Rozencweig are collectively referred to hereinafter as the "Individual Defendants." The Individual Defendants, because of their positions with the Company, possessed the power and authority to control the contents of GPC's reports to the SEC, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company' s reports and press releases alleged herein to be misleading prior to, or shortly after, their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected. Because of their positions and access to material non-public information available to them, each of these defendants knew that the adverse facts specified herein had not been disclosed to, and were being concealed from, the public, and that the positive representations which were being made were then materially false and misleading. The Individual Defendants 5 are liable for the false statements pleaded herein, as those statements were each "group- published" information, the result of the collective actions of the Individual Defendants. SUBSTANTIVE ALLEGATIONS Background 19. GPC is a biopharmaceutical company engaged in the discovery, development and commercialization of new drugs to treat cancer. During the Class Period, the Company's lead product candidate was satraplatin, an orally administered platinum-based compound intended for use as a chemotherapy treatment . Prior to, and throughout the Class Period, GPC reported positive test results in the evaluation of satraplatin. Further, the Company repeatedly stated that satraplatin showed promising safety and efficacy as demonstrated by "significant improvement" in PFS in a randomized study of