Kevin Kendall, Et Al. V. Odonate Therapeutics, Inc., Et Al. 20-CV
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Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.1 Page 1 of 32 1 POMERANTZ LLP 2 Jennifer Pafiti (SBN 282790) 1100 Glendon Avenue, 15th Floor 3 Los Angeles, California 90024 4 Telephone: (310) 405-7190 [email protected] 5 6 Attorney for Plaintiff 7 [Additional Counsel on Signature Page] 8 9 UNITED STATES DISTRICT COURT 10 SOUTHERN DISTRICT OF CALIFORNIA 11 12 KEVIN KENDALL, Individually Case No. '20CV1828 H LL 13 and On Behalf of All Others Similarly Situated, CLASS ACTION 14 15 Plaintiff, COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES 16 v. LAWS 17 ODONATE THERAPEUTICS, INC., DEMAND FOR JURY TRIAL 18 KEVIN C. TANG, MICHAEL 19 HEARNE, and JOHN G. LEMKEY, 20 Defendants. 21 22 23 24 25 26 27 28 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.2 Page 2 of 32 1 Plaintiff Kevin Kendall (“Plaintiff”), individually and on behalf of all other 2 persons similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s 3 4 complaint against Defendants, alleges the following based upon personal knowledge 5 as to Plaintiff and Plaintiff’s own acts, and information and belief as to all other 6 matters, based upon, inter alia, the investigation conducted by and through 7 8 Plaintiff’s attorneys, which included, among other things, a review of the 9 Defendants’ public documents, conference calls and announcements made by 10 Defendants, United States (“U.S.”) Securities and Exchange Commission (“SEC”) 11 12 filings, wire and press releases published by and regarding Odonate Therapeutics, 13 Inc. (“Odonate” or the “Company”), analysts’ reports and advisories about the 14 Company, and information readily obtainable on the Internet. Plaintiff believes that 15 16 substantial additional evidentiary support will exist for the allegations set forth 17 herein after a reasonable opportunity for discovery. 18 NATURE OF THE ACTION 19 20 1. This is a federal securities class action on behalf of a class consisting 21 of all persons other than Defendants who purchased or otherwise acquired Odonate 22 securities between December 7, 2017, and August 21, 2020, both dates inclusive (the 23 24 “Class Period”), seeking to recover damages caused by Defendants’ violations of the 25 federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the 26 27 28 1 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.3 Page 3 of 32 1 Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated 2 thereunder, against the Company and certain of its top officials. 3 4 2. Odonate was founded in 2013 and is based in San Diego, California. 5 Odonate is a pharmaceutical company that develops therapeutics for the treatment 6 of cancer. The Company is focused on developing tesetaxel, an orally administered 7 8 chemotherapy agent. 9 3. Tesetaxel is in a Phase 3 clinical study for patients with locally 10 advanced or metastatic breast cancer (“MBC”), called the CONTESSA trial, which 11 12 is evaluating tesetaxel in combination with capecitabine in patients with MBC. 13 4. Throughout the Class Period, Defendants made materially false and 14 misleading statements regarding the Company’s business, operational and 15 16 compliance policies. Specifically, Defendants made false and/or misleading 17 statements and/or failed to disclose that: (i) tesetaxel was not as safe or well-tolerated 18 as the Company had led investors to believe; (ii) consequently, tesetaxel’s 19 20 commercial viability as a cancer treatment was overstated; and (iii) as a result, the 21 Company’s public statements were materially false and misleading at all relevant 22 times. 23 24 5. On August 24, 2020, during pre-market hours, Odonate issued a press 25 release announcing top-line results from the CONTESSA trial. Although the study 26 met its primary endpoint, tesetaxel plus capecitabine was associated with Grade 3 or 27 28 2 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.4 Page 4 of 32 1 higher neutropenia (low levels of white blood cells), which occurred in 71.2% of 2 patients with the combination treatment versus 8.3% for capecitabine alone. Various 3 4 other Grade 3 or higher treatment-emergent adverse events (“AEs”) were also 5 associated with tesetaxel plus capecitabine versus capecitabine alone. Further, 6 discontinuation rates were 4.2% from neutropenia and 3.6% from neuropathy, and 7 8 the overall discontinuation rate was 23.1% in the treatment group compared to 9 11.9% in the capecitabine alone group. 10 6. On this news, Odonate’s stock price fell $15.21 per share, or 45.35%, 11 12 to close at $18.33 per share on August 24, 2020. 13 7. As a result of Defendants’ wrongful acts and omissions, and the 14 precipitous decline in the market value of the Company’s securities, Plaintiff and 15 16 other Class members have suffered significant losses and damages. 17 JURISDICTION AND VENUE 18 8. The claims asserted herein arise under and pursuant to Sections 10(b) 19 20 and 20(a) of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 21 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 22 9. This Court has jurisdiction over the subject matter of this action 23 24 pursuant to 28 U.S.C. § 1331 and Section 27 of the Exchange Act. 25 10. Venue is proper in this Judicial District pursuant to Section 27 of the 26 Exchange Act (15 U.S.C. § 78aa) and 28 U.S.C. § 1391(b). Odonate is 27 28 3 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.5 Page 5 of 32 1 headquartered in this Judicial District, Defendants conduct business in this Judicial 2 District, and a significant portion of Defendants’ activities took place within this 3 4 Judicial District. 5 11. In connection with the acts alleged in this complaint, Defendants, 6 directly or indirectly, used the means and instrumentalities of interstate commerce, 7 8 including, but not limited to, the mails, interstate telephone communications, and the 9 facilities of the national securities markets. 10 PARTIES 11 12 12. Plaintiff, as set forth in the attached Certification, acquired Odonate 13 securities at artificially inflated prices during the Class Period and was damaged 14 upon the revelation of the alleged corrective disclosures. 15 16 13. Defendant Odonate is a Delaware corporation with principal executive 17 offices located at 4747 Executive Drive, Suite 210, San Diego, California 92121. 18 Odonate common stock trades in an efficient market on the Nasdaq Global Select 19 20 Market (“NASDAQ”) under the symbol “ODT.” 21 14. Defendant Kevin C. Tang (“Tang”) has served as Odonate’s Chairman 22 and Chief Executive Officer at all relevant times. 23 24 15. Defendant Michael Hearne (“Hearne”) has served as Odonate’s Chief 25 Financial Officer (“CFO”) since November 2018. 26 27 28 4 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.6 Page 6 of 32 1 16. Defendant John G. Lemkey (“Lemkey”) served as Odonate’s CFO from 2 before the start of the Class Period until November 2018, when he was promoted to 3 4 the position of Chief Operating Officer. 5 17. Defendants Tang, Hearne, and Lemkey are sometimes referred to 6 herein as the “Individual Defendants.” 7 8 18. The Individual Defendants possessed the power and authority to control 9 the contents of Odonate’s SEC filings, press releases, and other market 10 communications. The Individual Defendants were provided with copies of 11 12 Odonate’s SEC filings and press releases alleged herein to be misleading prior to or 13 shortly after their issuance and had the ability and opportunity to prevent their 14 issuance or to cause them to be corrected. Because of their positions with Odonate, 15 16 and their access to material information available to them but not to the public, the 17 Individual Defendants knew that the adverse facts specified herein had not been 18 disclosed to and were being concealed from the public, and that the positive 19 20 representations being made were then materially false and misleading. The 21 Individual Defendants are liable for the false statements and omissions pleaded 22 herein. 23 24 19. Odonate and the Individual Defendants are sometimes collectively 25 referred to herein as “Defendants.” 26 27 28 5 CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS Case 3:20-cv-01828-H-LL Document 1 Filed 09/16/20 PageID.7 Page 7 of 32 1 SUBSTANTIVE ALLEGATIONS 2 Background 3 4 20. Odonate was founded in 2013 and is based in San Diego, California. 5 Odonate is a pharmaceutical company that develops therapeutics for the treatment 6 of cancer. The Company is focused on developing tesetaxel, an orally administered 7 8 chemotherapy agent. 9 21. Tesetaxel is currently in a Phase 3 clinical study for patients with 10 locally advanced or metastatic breast cancer, called the CONTESSA trial, which is 11 12 evaluating tesetaxel in combination with capecitabine in patients with MBC. 13 22. On November 13, 2017, Odonate filed a registration statement on Form 14 S-1 with the SEC in connection with its initial public offering, which, after 15 16 amendment, was declared effective by the SEC on December 6, 2017 (the 17 “Registration Statement”).