Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 1 of 34
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`UNITED STATES DISTRICT COURT
`DISTRICT OF MASSACHUSETTS
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`Plaintiff,
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`v.
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`Civil Action:
`No. 22-10200-WGY
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`LEAVE TO FILE
`GRANTED JULY 25, 2022
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`OKLAHOMA FIREFIGHTERS PENSION
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`AND RETIREMENT SYSTEM,
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`BIOGEN INC., MICHEL VOUNATSOS,
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`ALFRED SANDROCK, AND ALISHA
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`ALAIMO,
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`Defendants.
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`CONSOLIDATED MEMORANDUM
`OF LAW IN SUPPORT OF DEFENDANTS’
`MOTION TO DISMISS THE AMENDED COMPLAINT
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`
`James R. Carroll
`Michael S. Hines
`Yaw A. Anim
`SKADDEN, ARPS, SLATE,
` MEAGHER & FLOM LLP
`500 Boylston Street
`Boston, Massachusetts 02116
`(617) 573-4800
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`Counsel for Defendants
`Biogen Inc., Michel Vounatsos,
`Alfred Sandrock, and Alisha Alaimo
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`Dated: July 27, 2022
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 2 of 34
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`TABLE OF CONTENTS
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`PRELIMINARY STATEMENT .....................................................................................................1
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`BACKGROUND .............................................................................................................................3
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`A.
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`B.
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`C.
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`D.
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`E.
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`Biogen And The FDA Evaluate
`The ADUHELM Phase 3 Clinical Trial Data ..........................................................3
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`After Examining The Clinical Trial Data The FDA
`Approves ADUHELM For The Treatment Of Alzheimer’s Disease ......................4
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`Biogen Evaluates Healthcare Sites To Determine
`Their Capability, Infrastructure, Education And Willingness
`To Treat A Patient With A Potential New Alzheimer’s Therapy ............................5
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`ADUHELM’s Commercial Launch .........................................................................6
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`Plaintiff’s Allegations ..............................................................................................7
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`ARGUMENT ...................................................................................................................................8
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`I.
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`THE COMPLAINT SHOULD BE DISMISSED
`IN ITS ENTIRETY BECAUSE IT DOES NOT ADEQUATELY
`ALLEGE THAT ANY STATEMENT WAS FALSE OR MISLEADING ........................8
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`A.
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`B.
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`C.
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`D.
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`E.
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`F.
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`Statements Regarding The Number Of
`Healthcare Sites Ready To Implement ADUHELM ...............................................9
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`Statements Regarding Diagnosing Patients With Alzheimer’s Disease ................10
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`Statements Regarding Medicare Coverage ............................................................11
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`Statements Regarding Third-Party
`Payors’ “Approval” Of ADUHELM’s Pricing ......................................................13
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`Statements Regarding Agreement
`With The Veteran’s Health Administration ...........................................................13
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`Statement In Dr. Sandrock’s Open
`Letter To The Alzheimer’s Disease Community ...................................................14
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 3 of 34
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`II.
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`THE COMPLAINT SHOULD BE DISMISSED IN ITS ENTIRETY
`FOR THE INDEPENDENT REASON THAT IT DOES NOT ALLEGE
`SPECIFIC FACTS SUPPORTING A “STRONG INFERENCE” OF SCIENTER ..........16
`
`A.
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`The Complaint Fails To Allege
`A Strong Inference Of Scienter With
`Respect To Statements Concerning (i) Healthcare
`Site Readiness, (ii) Diagnosing Patients With Alzheimer’s Disease,
`(iii) Third-Party Payor Discussions, And (iv) An Agreement With The VA ........18
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`1.
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`2.
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`3.
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`4.
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`5.
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`Dismissal Is Warranted Because The Former Employees
`Were Not Senior Management, And Are Not Alleged To
`Have Had Any Contact With Any Individual Defendant ..........................18
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`Former Employee Statements About Site
`Readiness Do Not Give Rise To A Strong Inference Of Scienter .............21
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`Former Employee Statements About
`Diagnosing Patients With Alzheimer’s
`Disease Do Not Give Rise To A Strong Inference Of Scienter .................24
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`Former Employee Statements About Third-Party
`Payors Do Not Give Rise To A Strong Inference Of Scienter ..................25
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`Former Employee Statements About The VA’s
`Capacity To Cover And Administer ADUHELM
`Do Not Give Rise To A Strong Inference Of Scienter ..............................26
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`The Complaint Fails To Allege A Strong Inference
`Of Scienter With Respect To Statements About Medicare Coverage ...................27
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`The Complaint Fails To Allege A Strong
`Inference Of Scienter With Respect To The Statement
`In Dr. Sandrock’s Open Letter To The Alzheimer’s Disease Community ............27
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`A Nonculpable Inference
`Under Tellabs Is More Compelling Than Scienter ................................................28
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`B.
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`C.
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`D.
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`III.
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`COUNT II SHOULD BE DISMISSED BECAUSE
`THERE IS NO PREDICATE EXCHANGE ACT VIOLATION .....................................28
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`CONCLUSION ..............................................................................................................................29
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`ii
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 4 of 34
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`TABLE OF AUTHORITIES
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`CASES
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` Pages
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`ACA Financial Guaranty Corp. v. Advest, Inc.,
`512 F.3d 46 (1st Cir. 2008) ................................................................................8, 16, 28, 29
`
`Born v. Quad/Graphics, Inc.,
`521 F. Supp. 3d 469 (S.D.N.Y. 2021)................................................................................13
`
`Chun v. Fluor Corp.,
`No. 3:18-CV-01338-X, 2021 WL 1788626 (N.D. Tex. May 5, 2021) ..............................13
`
`Greebel v. FTP Software, Inc.,
`194 F.3d 185 (1st Cir. 1999) ................................................................................................8
`
`In re Ariad Pharmaceuticals, Inc. Securities Litigation,
`842 F.3d 744 (1st Cir. 2016) ..............................................................................................17
`
`In re Boston Science Corp. Securities Litigation,
`686 F.3d 21 (1st Cir. 2012) ................................................................................................17
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`In re Biogen Inc. Securities Litigation,
`193 F. Supp. 3d 5 (D. Mass. 2016),
`aff’d, 857 F.3d 34 (1st Cir. 2017) ......................................................................................17
`
`In re Biogen Inc. Securities Litigation,
`857 F.3d 34 (1st Cir. 2017) ......................................................................................9, 19, 21
`
`In re Garrett Motion Inc. Sec. Litig.,
`No. 20 Civ. 7992 (JPC), 2022 WL 976269 (S.D.N.Y. Mar. 31, 2022) ...............................7
`
`In re Genzyme Corp.,
`No. 09-11267-GAO, 2012 WL 1076124 (D. Mass. Mar. 30, 2012),
`aff’d, 754 F.3d 31 (1st Cir. 2014) ......................................................................................28
`
`In re iRobot Corp. Securities Litigation,
`No. 19-cv-12536, 2021 WL 950675 (D. Mass. Mar. 12, 2021) ........................................20
`
`In re Karyopharm Therapeutics Inc., Securities Litigation,
`552 F. Supp. 3d 77 (D. Mass. 2021) ............................................................................12, 13
`
`In re Peritus Software Services, Inc. Securities Litigation,
`52 F. Supp. 2d 211 (D. Mass. 1999) ..................................................................................24
`
`In re Zyprexa Products Liability Litigation,
`549 F. Supp. 2d 496 (E.D.N.Y. 2008) ...............................................................................12
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 5 of 34
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`Local No. 8 IBEW Retirement Plan v. Vertex Pharmaceuticals Inc.,
`140 F. Supp. 3d 120 (D. Mass. 2015),
`aff’d, 838 F.3d 76 (1st Cir. 2016) ................................................................................18, 29
`
`LSI Design & Integration Corp. v. Tesaro, Inc.,
`No. 18-cv-12352-LTS, 2019 WL 5967994 (D. Mass. Nov. 13, 2019) ..............................17
`
`Mahoney v. Foundation Medicine, Inc.,
`342 F. Supp. 3d 206 (D. Mass. 2018) ................................................................................17
`
`Metzler Asset Management GmbH v. Kingsley,
`928 F.3d 151 (1st Cir. 2019) ..............................................................................8, 22, 23, 25
`
`N.J. Carpenters Pension & Annuity Funds v. Biogen IDEC Inc.,
`537 F.3d 35 (1st Cir. 2008) ................................................................................................18
`
`Shaw v. Digital Equipment Corp.,
`82 F.3d 1194 (1st Cir. 1996) ................................................................................................8
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`Special Situations Fund III QP, L.P. v. Deloitte Touche Tohmatsu CPA, Ltd.,
`96 F. Supp. 3d 325 (S.D.N.Y. 2015)..................................................................................22
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`Tellabs, Inc. v. Makor Issues & Rights, Ltd.,
`551 U.S. 308 (2007) .......................................................................................................3, 28
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`Whitehead v. Inotek Pharmaceuticals Corp.,
`No. 17-cv-10025-LTS, 2018 WL 4732774 (D. Mass. Jun. 27, 2018) ...............................17
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`STATUTES, RULES & REGULATIONS
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`15 U.S.C. § 78a ................................................................................................................................1
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`15 U.S.C. § 78t ...............................................................................................................................29
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`15 U.S.C. § 78u-4 ................................................................................................................8, 17, 20
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`17 C.F.R. § 240.10b-5 ......................................................................................................................1
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`Fed. R. Civ. P. 9(b) ..........................................................................................................................8
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`MISCELLANEOUS
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`Merriam-Webster’s Collegiate Dictionary (11th ed. 2020). .........................................................12
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 6 of 34
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`PRELIMINARY STATEMENT
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`This case arises out of the unsuccessful commercial launch of ADUHELMTM,
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`Biogen Inc.’s (“Biogen”) FDA-approved treatment for Alzheimer’s disease. The drug’s
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`approval was the source of enormous hope for Biogen on behalf of patients and the company,
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`and its unsuccessful launch the source of great disappointment. At no time did Biogen promise
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`that the drug would be a commercial success. Plaintiff nevertheless seeks to recover for the
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`decline in stock price in the seven months between FDA approval (June 7, 2021) and a proposal
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`by the Centers for Medicare and Medicaid Services (“CMS”) to limit Medicare coverage for the
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`drug (January 11, 2022) by alleging that the defendants made false or misleading statements in
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`that period. Plaintiff fails to state a claim and the case should be dismissed.
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`The Complaint1 asserts violations of Sections 10(b) and 20(a) of the Securities
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`Exchange Act of 1934 (15 U.S.C. §§ 78a et seq.) and Rule 10b-5 (17 C.F.R. § 240.10b-5) against
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`Biogen, Michel Vounatsos (Biogen’s CEO), Alfred Sandrock (Biogen’s former Chief Medical
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`Officer), and Alisha Alaimo, President of Biogen U.S. (the “Individual Defendants,” and
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`collectively with Biogen, “Defendants”). The Complaint is based principally on allegations that
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`Defendants fraudulently misled the market regarding healthcare providers’ and institutions’
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`readiness to prescribe ADUHELM and the extent to which private and public insurance
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`providers would pay for the costs of treatment. (E.g., AC ¶ 16.) The Complaint, fails, however,
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`to meet the statutorily heightened pleading requirements for a securities fraud suit provided for in
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`the Private Securities Litigation Reform Act (“PSLRA”). Pursuant to the PSLRA and Federal
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`Rules of Civil Procedure 12(b)(6) and 9(b), the Complaint should be dismissed with prejudice
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`for the following independently dispositive reasons:
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`1
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`“AC” and “Complaint” refer to the amended Class Action Complaint, ECF No. 30.
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 7 of 34
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`First, Plaintiff does not plead adequately that any of Defendants’ putative class
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`period statements were false or misleading. (Infra Section I.) The Complaint identifies twenty-
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`five statements contained in earnings calls and investor conference transcripts that allegedly
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`misled investors, but none are actionable.2 For example, Plaintiff challenges eight statements
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`concerning Biogen’s discussions with third-party payors and others about ADUHELM’s price,
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`alleging that those statements “suggest[ed]” that third-party payors had “approved, acquiesced,
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`or at the very least indicated a willingness” to pay the price that Biogen ultimately set for the
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`treatment (approximately $56,000 per year). (See AC ¶¶ 188, 191, 193, 231, 237.) But those
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`statements “suggest” no such thing—they provide only that Biogen engaged in discussions with
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`payors and others about ADUHELM’s price and ultimately decided itself on a price that it
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`determined was fair. (AC ¶ 188.)
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`Second, Plaintiff fails to plead particularized facts demonstrating a “strong
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`inference” of scienter with respect to any challenged statement. (Infra Section II.) The
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`Complaint relies principally on allegations attributed to eight alleged former employees, but
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`none are alleged to have communicated the alleged facts to the Individual Defendants or to have
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`identified someone else who did, and none of their statements are sufficient to establish scienter
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`or support a strong inference of scienter. The allegations are generalized statements that are
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`replete with vague adjectives and adverbs and lack the specificity that the First Circuit requires
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`for allegations attributed to confidential witnesses to be sufficient under the PSLRA to establish
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`the elements of a claim. For example, Plaintiff alleges that Defendants’ estimate that
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`approximately 900 healthcare sites across the United States would be ready to treat patients with
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`2
`Exhibit A attached hereto lists the challenged statements, contextual statements omitted
`from the Complaint that immediately precede or immediately follow each challenged statement,
`and the reasons why each statement is not actionable as a matter of law.
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`2
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 8 of 34
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`ADUHELM following FDA approval were false or misleading because two former employees
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`reportedly observed (in their geographic territory) that “many potential treatment sites” and
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`“many hospitals and clinics” were not ready. (AC ¶¶ 91, 108 (emphasis added).) Adjectives
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`cannot substitute for specific factual allegations showing falsity or scienter, and stripped of those
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`adjectives, the “facts” attributed to the former employees are not contrary to Defendants’ public
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`statements. Furthermore, Plaintiff’s scienter allegations that are not based on former employees
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`are equally deficient to establish a strong inference of scienter.
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`BACKGROUND3
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`Biogen is a global biotechnology company that researches, develops and markets
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`treatments for serious neurological diseases, including ADUHELM. (AC ¶ 38.) ADUHELM is
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`a monoclonal antibody treatment that reduces amyloid beta in the brain, a defining pathology of
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`Alzheimer’s disease. (AC ¶ 39.) Research shows that reduction of amyloid beta is a potential
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`avenue for the prevention and treatment of neurological decline from Alzheimer’s disease.
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`(AC ¶ 39.) More than ten years ago, Biogen began studying ADUHELM as a treatment for
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`Alzheimer’s disease and initiated Phase 3 trials in 2016. (AC ¶¶ 52-53.)
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`A.
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`Biogen And The FDA Evaluate
`The ADUHELM Phase 3 Clinical Trial Data
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`The Phase 3 clinical trials specified that a futility analysis be conducted during the
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`trials. A futility analysis is a common tool to provide early warning that a trial is unlikely to
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`3
`Solely for purposes of this motion to dismiss, Biogen treats the allegations of the
`Complaint as true. In describing the relevant factual background, Defendants rely on documents
`referenced in the Complaint, matters of which the Court may take judicial notice, including
`public records and analyst reports, and documents incorporated into the Complaint. See Tellabs,
`Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007). Copies of such integral
`documents are included in the accompanying Appendix of Public Records (cited as “Tab __”),
`submitted herewith.
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`3
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 9 of 34
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`achieve its endpoints, which can be used to cease trials and avoid needless testing on humans.
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`(See AC ¶ 54.) The futility analysis on ADUHELM was conducted by outside experts
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`independent of Biogen and in March 2019, they recommended that Biogen terminate the two
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`Phase 3 trials based on the probability that the final analysis would not show statistical
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`significance in favor of ADUHELM. (AC ¶¶ 54-55.) On March 21, 2019, Biogen publicly
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`announced the discontinuation of the Phase 3 trials based on the futility analysis. (AC ¶ 55.)
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`Biogen and its scientific team subsequently further evaluated the data from the
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`Phase 3 trials and concluded that the results of the futility analysis were incorrect. (AC ¶ 59.)
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`From June 2019 through October of 2019, representatives of Biogen and the FDA met regularly
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`to discuss ADUHELM. (AC ¶ 58.)
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`B.
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`After Examining The Clinical Trial Data The FDA
`Approves ADUHELM For The Treatment Of Alzheimer’s Disease
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`In October 2019, Biogen announced that it intended to file an application with the
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`FDA for approval of ADUHELM and completed its submission in July 2020. (AC ¶¶ 59-60.)
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`As part of this announcement Biogen noted that “[t]he Phase 3 EMERGE Study met its primary
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`endpoint showing a significant reduction in clinical decline, and Biogen believes that results
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`from a subset of patients in the Phase 3 ENGAGE Study who received sufficient exposure to
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`high dose aducanumab support the findings from EMERGE.” (AC ¶ 59; Tab 1 at 1.) On
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`November 6, 2020, the FDA’s Peripheral and Central Nervous System Drug Advisory
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`Committee (which is made up of outside advisors to the FDA) found by a vote of 10-0, with one
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`member abstaining, that the Phase 3 trials did not present primary evidence of ADUHELM’s
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`efficacy. (AC ¶ 67.)
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`4
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 10 of 34
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`Notwithstanding the Advisory Committee’s views, on June 7, 2021, the FDA
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`approved ADUHELM for the treatment of Alzheimer’s disease, through the FDA’s accelerated
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`approval pathway. (AC ¶ 84.) In approving the drug, the FDA stated:
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`We examined the clinical trial findings with a fine-tooth comb, we solicited input
`from the Peripheral and Central Nervous System Drugs Advisory Committee, we
`listened to the perspectives of the patient community, and we reviewed all relevant
`data. We ultimately decided to use the Accelerated Approval pathway—a pathway
`intended to provide earlier access to potentially valuable therapies for patients with
`serious diseases where there is an unmet need, and where there is an expectation of
`clinical benefit despite some residual uncertainty regarding that benefit. In
`determining that the application met the requirements for Accelerated Approval,
`the Agency concluded that the benefits of ADUHELM for patients with
`Alzheimer’s disease outweighed the risks of the therapy.
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`(Tab 8 at 2-3 (cited in AC ¶ 243 and quoting FDA Press Release).)
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`C.
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`Biogen Evaluates Healthcare Sites To Determine
`Their Capability, Infrastructure, Education And Willingness
`To Treat A Patient With A Potential New Alzheimer’s Therapy
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`In preparation for ADUHELM’s potential approval and commercial launch,
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`Biogen engaged with healthcare sites across the country to determine the extent to which sites
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`would be “ready” to implement ADUHELM treatment in the event of FDA approval. (E.g., AC
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`¶ 62.) As Ms. Alaimo informed investors on June 8, 2021, Biogen deemed a site “ready” if it
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`had “the required capability, infrastructure, education and, most importantly, willingness to treat
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`a patient with a potential new Alzheimer’s therapy.” (AC ¶ 174 (emphasis omitted).)
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`Information to assess whether a healthcare site had sufficient capability, infrastructure,
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`education, and willingness to treat a patient with a potential new Alzheimer’s therapy was
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`collected by Biogen employees designated “Alzheimer’s Account Managers.” (AC ¶ 62.) These
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`Biogen employees used database systems to collect site data and assess site readiness along a
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`number of metrics. (AC ¶¶ 64-65.) The reports shown to Biogen supervisors and executives
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`5
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 11 of 34
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`concerning sites that were deemed ready “utilized a simple red (not ready) to green (ready)
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`color-coded system.” (AC ¶ 66.)
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`D.
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`ADUHELM’s Commercial Launch
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`ADUHELM’s approval immediately became the subject of controversy.
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`ADUHELM’s mechanism of action and underlying clinical data were questioned. (See AC ¶¶
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`206, 208, 212.) In addition, press coverage negatively characterized the FDA’s interactions with
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`Biogen leading up to ADUHELM’s approval. (AC ¶¶ 216, 225.) In an effort to address the
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`misinformation and misunderstanding, on July 22, 2021, Dr. Sandrock, Biogen’s Head of
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`Research and Development, posted on Biogen’s website an open letter to the Alzheimer’s
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`disease community. (Tab 8; AC ¶ 243.) In that letter, Dr. Sandrock commented on the
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`“extensive development, testing and review process,” during which “[Biogen] responded to
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`numerous questions and requests from the FDA,” and also commented that ADUHELM’s
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`approval was “supported by data of more than 3,000 patients and 2.2 million pages of clinical
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`data and analyses.” (Tab 8 at 1-2; AC ¶ 243.)
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`Nevertheless, ADUHELM’s commercial launch continued to face substantial
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`challenges including, in January 2022, a proposal by CMS to sharply limit Medicare coverage
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`for ADUHELM. (AC ¶¶ 249, 269.) On January 11, 2022, CMS issued a draft National
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`Coverage Determination (“NCD”) proposing to limit reimbursement of FDA-approved
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`monoclonal antibodies directed against amyloid for the treatment of Alzheimer’s disease only to
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`patients enrolled in a clinical trial.4 (AC ¶ 269.)
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`4
`An NCD is process used by CMS to determine the circumstances under which it will
`reimburse the costs of an item or service. See https://www.cms.gov/Medicare/
`Coverage/DeterminationProcess.
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`6
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 12 of 34
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`In April 2022, CMS issued a final coverage determination sharply restricting
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`coverage of ADUHELM and future drugs directed against amyloid for the treatment of
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`Alzheimer’s disease. Due to the restrictions on coverage, in May 2022 Biogen announced that it
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`would substantially eliminate its commercial infrastructure supporting ADUHELM. (AC ¶ 273.)
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`E.
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`Plaintiff’s Allegations
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`Following CMS’ issuance of its draft NCD in January 2022, Biogen’s stock fell
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`(AC ¶ 270) and this lawsuit quickly followed. Plaintiff challenges twenty-five statements made
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`between June 7, 2021 through September 9, 2021, principally concerning ADUHELM
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`commercialization efforts. These statements can be grouped into the following categories: (1)
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`three statements concerning Defendants’ estimate that over 900 healthcare sites were ready to
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`implement treatment with ADUHELM following FDA approval (AC ¶¶ 170, 172, 174),
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`(2) seven statements concerning potential obstacles in diagnosing patients with Alzheimer’s
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`disease (AC ¶¶ 176, 179, 228, 234, 239, 252, 255), (3) three statements concerning Medicare
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`coverage (AC ¶¶ 181, 185, 193, 213), (4) eight statements concerning discussions with third-
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`party payors (AC ¶¶ 188, 191, 193, 231, 237), (5) three statements concerning a potential
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`agreement with the Veterans Health Administration (“VA”) to provide ADUHELM to veterans
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`(AC ¶¶ 196, 198), and (6) one statement contained in Dr. Sandrock’s open letter to the
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`Alzheimer’s disease community allegedly describing Biogen’s interactions with the FDA (AC ¶
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`243).
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`Plaintiff also devotes 15 paragraphs (AC ¶¶ 60, 69-70, 72-74, 77-83, 96, 113 ) to
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`statements made before the putative class period. However, pre-class period statements are not
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`actionable. See In re Garrett Motion Inc. Sec. Litig., No. 20 Civ. 7992 (JPC), 2022 WL 976269,
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`at *15 (S.D.N.Y. Mar. 31, 2022) (“A defendant is liable only for those statements made during
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`7
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 13 of 34
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`the class period.”) (citation omitted); see also Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1217
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`n.31 (1st Cir. 1996).
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`ARGUMENT
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`To state a claim under Section 10(b) of the Exchange Act and Rule 10b-5(b),
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`Plaintiff must plead: (i) a material misrepresentation or omission; (ii) scienter; (iii) a connection
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`with the purchase or sale of a security; (iv) reliance; (v) economic loss; and (vi) loss causation.
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`Metzler Asset Mgmt. GmbH v. Kingsley, 928 F.3d 151, 158 (1st Cir. 2019); see also ACA Fin.
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`Guar. Corp. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008). Securities fraud pleadings are also
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`subject to the rigorous requirements of Rule 9(b) and the PSLRA. Rule 9(b) requires that the
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`circumstances constituting the fraud be stated “with particularity.” Fed. R. Civ. P. 9(b). Under
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`the PSLRA, Plaintiff must “specify each statement alleged to have been misleading, [and] the
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`reason or reasons why the statement is misleading.” 15 U.S.C. § 78u-4(b)(1)(B). Plaintiff must
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`also allege with particularity specific facts giving rise to a “strong inference” of scienter. Id. §
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`78u-4(b)(2)(A).
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`I.
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`THE COMPLAINT SHOULD BE DISMISSED
`IN ITS ENTIRETY BECAUSE IT DOES NOT ADEQUATELY
`ALLEGE THAT ANY STATEMENT WAS FALSE OR MISLEADING
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`A complaint brought under Section 10(b) must plead specific facts showing why
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`the statements or omissions were false or misleading. 15 U.S.C. § 78u-4(b)(1); Greebel v. FTP
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`Software, Inc., 194 F.3d 185, 193 (1st Cir. 1999). As set forth below, the Complaint fails to
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`plead the requisite specific facts demonstrating that any of the challenged statements were false
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`or misleading, warranting dismissal.
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`8
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 14 of 34
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`A.
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`Statements Regarding The Number Of
`Healthcare Sites Ready To Implement ADUHELM
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`Plaintiff challenges three statements made in June 2021 expressing Defendants’
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`estimate that more than 900 treatment sites were “ready”5 to treat patients with ADUHELM
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`shortly after FDA approval. (See Ex. A, entries 1, 3, 9; AC ¶¶ 170, 172, 174.) Plaintiff alleges
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`that those statements were false or misleading because certain of the former employees
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`referenced in the Complaint (“FEs”) state that “many sites” were not ready and “many sites”
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`were bulk coded as ready even though they were not individually evaluated. (AC ¶ 173.) The
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`FE statements are not alleged with the specificity required by the PSLRA.
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`First, the Complaint alleges that FE 1 and FE 2 made non-specific statements that
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`Biogen’s site readiness data included “inaccuracies” and that there were “discrepancies” between
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`what that data showed and how it was portrayed in Biogen’s public statements. (AC ¶¶ 91-93,
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`108-10.) Those allegations—attributed to two FEs whose work was limited to the “mid-western
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`part of the country” (AC ¶¶ 86, 103)—do not attempt to quantify the scope of the purported
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`“inaccuracies” or “discrepancies” at the national level that would render Defendants’ 900-site
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`estimate misleading. In fact, the allegations fail to describe any specific “inaccuracies” or
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`“discrepancies” in Biogen’s data. The allegations do not specify which or how many sites in
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`their particular territory (if any) that were allegedly not “ready” were included in the 900-site
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`estimate and thus rendered that estimate incorrect; indeed, stating that “many sites” were not
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`ready does mean that Defendants’ 900-site estimate was false or misleading. Cf. In re Biogen
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`Inc. Secs. Litig., 857 F.3d 34, 42 (1st Cir. 2017) (affirming dismissal of securities complaint and
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`5
`As noted above, Ms. Alaimo informed investors that “ready means that [the sites] have
`the required capability, infrastructure, education and, most importantly, willingness to treat a
`patient with a potential new Alzheimer’s therapy.” (AC ¶ 174 (emphasis omitted).)
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 15 of 34
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`rejecting former employee statements that “do not even begin to quantify the magnitude of the
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`sales decline at the company level”).
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`Second, also insufficient are allegations attributed to FEs 1, 2, 4, 6, 7, and 8
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`concerning the coding of treatment sites administered by the VA. (AC ¶¶ 95, 97, 99, 112, 115,
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`134, 140, 158.) According to the FEs, they were “instructed” to code all VA administered sites
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`ready, even though the FEs did not themselves believe that those sites were ready because VA
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`sites had a “no contact” policy during COVID and they were not able to visit and evaluate them.
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`(AC ¶¶ 97, 112, 134, 140.) Importantly, none of the FEs allege that their managers or any
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`Defendant did not believe that those sites were ready. As Plaintiff acknowledges, Mr. Vounatsos
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`and Ms. Alaimo publicly discussed their negotiations with the VA for a multiyear agreement
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`(AC ¶¶ 196, 198), demonstrating that Biogen personnel at levels higher than any FE were in
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`contact with the VA. Conspicuously absent from the Complaint are specific allegations
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`demonstrating that the VA sites instructed to be coded “ready” were not in fact ready. Moreover,
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`the FEs do not quantify the scope of the bulk coding of VA administered sites, including how
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`that would impact Defendants’ statements.
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`In short, the Complaint fails to allege the requisite specific facts showing why
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`Defendants’ statements that more than 900 sites were ready were false or misleading when made.
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`B.
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`Statements Regarding Diagnosing Patients With Alzheimer’s Disease
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`Plaintiff challenges seven statements addressing efforts at diagnosing patients
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`with Alzheimer’s disease. (See Ex. A, entries 2, 10, 18, 20, 22, 24, 25; AC ¶¶ 176, 179, 228,
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`234, 239, 252, 255.) Plaintiff alleges that those statements were false or misleading because
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`Defendants omitted to tell investors that physicians and facilities were “extremely reluctant” to
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`use lumbar punctures to confirm an Alzheimer’s diagnosis, and that reluctance led to obstacles in
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`prescribing ADUHELM. (AC ¶ 178.) Plaintiff does not allege that Defendants’ actual
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`10
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`Case 1:22-cv-10200-WGY Document 40 Filed 07/27/22 Page 16 of 34
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`statements, which did not concern physician or facility reluctance to use lumbar punctures, were
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`incorrect.
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`First, four of the seven statements merely describe a program Biogen established
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`in partnership with Labcorp and Mayo Clinic Laboratories to assist physicians and patients in
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`accessing cerebrospinal fluid (“CSF”) diagnostic laboratory testing to aid in the diagnosis of
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`Alzheimer’s disease. (AC ¶ 176, 179, 234, 239.) Plaintiff does not allege that those statements
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`were untrue, and its allegation that physicians were “reluctant” to order lumbar punctures does
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`not make statements about the partnership in any way false or misleading.
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`Second, the three other alleged “false” statements concern slowness in scheduling
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`and coordinating diagnostic tests and obtaining test results before treatment with ADUHELM.
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`(AC ¶¶ 228, 252, 255.) Plaintiff’s allegation that Defendants did not inform investors of alleged
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`reluctance to order lumbar punctures is of no moment, because Defendants never said anything
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`about the reluctance or lack of reluctance of physicians or facilities to use lumbar puncture
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`testing. Rather, Defendants’ merely stated that testing was “taking time to schedule and
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`coordinate” and sites are “experienc[ing] several operational issues.” (AC ¶¶ 228, 252.)
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`Pl