On September 23, 2008, Judge Irma E. Gonzalez granted the defendants’ motion to dismiss the Second Amended Complaint. The plaintiffs are granted leave to file an amended complaint within 30 days of the order. On October 23, 2008, the Lead Plaintiffs filed a Notice of Election to Stand on the Second Amended Consolidated Complaint. According to the Notice, after due consideration of the Order, Lead Plaintiffs hereby notify the Court and all parties to the action that they elect to stand on the Amended Complaint. Lead Plaintiffs respectfully request that final judgment be entered so that appeal can be taken therefrom. On October 31, 2008, the Court issued the Order of Entry of Judgment pursuant to the Lead Plaintiffs’ Notice of Election to Stand on the Second Amended Consolidated Complaint.
On October 16, 2007, U.S. District Judge Irma E. Gonzalez granted the motion to appoint Charles N. Seiji and Raymond J. Mertz as lead plaintiff, and further approved the selection of Coughlin Stoia Geller Rudman & Robbins LLP and Schiffrin Barroway Topaz & Kessler LLP as co-lead counsel for the class. On November 30, 2007, a Consolidated Amended Complaint was filed. On January 11, 2008, defendants responded by filing a motion to dismiss the Consolidated Amended Complaint. On May 13, 2008, the defendants’ motion to dismiss the complaint was granted with leave to amend. On June 11, 2008, a Second Consolidated Amended Complaint and the defendants responded by filing a motion to dismiss the Second Consolidated Amended Complaint.
The original complaint charges Neurocrine and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Neurocrine engages in the discovery and development of drugs for the treatment of neurological and endocrine-related diseases and disorders in the United States. During the Class Period, Neurocrine’s primary business was focused on completing the development and commercialization of Indiplon, a drug defendants claimed could be used for the treatment of insomnia.
The complaint alleges that throughout the Class Period, defendants violated the federal securities laws by disseminating false and misleading statements to the investing public and concealing negative information, making it impossible for shareholders to gain a meaningful or realistic understanding of the progress toward FDA approval and the potential for market success of the Company’s commercially viable 15 mg modified release formulation of Indiplon. As a result of defendants’ false statements, Neurocrine stock traded at inflated levels during the Class Period, during which time the defendants arranged to sell and actually sold $198.7 million worth of shares via a secondary offering of Neurocrine stock and the Company’s top officers and directors were able to reap more than $26 million in insider trading proceeds.
On May 16, 2006, the Company announced that it had received communication from the FDA indicating that the agency had determined that the 15 mg modified release formulation of Indiplon was not approvable at that time. The Company’s shares fell $33.87 or 62% to $20.76 per share. Then on June 16, 2006, the Company’s shares tumbled another 20% after the Company announced that federal health regulators may require additional clinical tests for Indiplon. And finally on June 22, 2006, the Company announced Pfizer had terminated the companies’ collaboration agreement for the development and marketing of Indiplon. Neurocrine shares dropped to a low of $8.61 per share before closing at $9.85 per share on June 23, 2006. In total, the Company’s shares had tumbled 86% from a Class Period high of $71.62 three months earlier.