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1 LAW OFFICES OF BRIAN BARRY2 Brian Barry (135631)
1801 Avenue of the Stars, Suite 3073 Los Angeles, CA 900674 Telephone: (310) 788-0831
Fax: 310-788-08415 Email: [email protected]
6 Liaison Counsel for Lead Plaintiff and the Proposed Class7
8 BERNSTEIN LIEBHARD LLPSandy A. Liebhard ([email protected])
9 U. Seth Ottensoser ([email protected])10 Michael S. Bigin ([email protected] )
Joseph R. Seidman, Jr. ([email protected] )11 Brian Lehman (lehmanfbernlieb.com)12 10 East 40th Street, 22n Floor
New York, NY 1001613 Telephone: (212) 779-141414 Fax: (212) 779-3218
15 Lead Counsel for Lead Plaintiff and the Proposed Class
16 UNITED STATES DISTRICT COURT17 NORTHERN DISTRICT OF CALIFORNIA
18 DAVID APPLESTEIN, Individually and on Behalf of All No. 3:10-cv-00998-19 Others Similarly Situated, MHP
20 Plaintiff,
21vs.
22MEDIVATION, INC., DAVID T. HUNG, C. PATRICK
23 MACHADO, LYNN SEELY, and GREGORY BAILEY,
24Defendants.
25
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27 CONSOLIDATED AND AMENDED COMPLAINT
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1 TABLE OF CONTENTS
2
3 I. NATURE OF THE ACTION 14
II. JURISDICTION AND VENUE 556 III. PARTIES TO THE LITIGATION 5
7 IV. BACKGROUND ON THE FDA AND PRE-MARKET APPROVALOF NEW DRUGS 9
89 V. BACKGROUND ON DIMEBON AND ALZHEIMER’S DISEASE 11
10 VI. THE IMPORTANCE OF DOUBLE BLINDING 13
11 VII. DEFENDANTS’ SCHEME TO DEFRAUD 16
12 VIII. DEFENDANTS FALSELY ATTRIBUTE PHASE 2 RESULTS TO
13 DIMEBON’S EFFECT ON MITOCHONDRIA 19
14 IX. DIMEBON SHOWED FALSE PROMISE AFTER THE BIASED
15PHASE 2 TESTING 21
16 X. DEFENDANTS’ TRULY DOUBLE BLIND PHASE 3 STUDYFAILS 24
1718 XI. DEFENDANTS’ FALSE AND MISLEADING STATEMENTS
ISSUED DURING THE CLASS PERIOD 2519
XII. THE TRUTH IS REVEALED 602021 XIII. ADDITIONAL SCIENTER ALLEGATIONS 64
22 XIV. LOSS CAUSATION 74
23 XV. PRESUMPTION OF RELIANCE (FRAUD ON THE MARKET
24DOCTRINE) 76
25 XVI. CLASS ACTION ALLEGATIONS 77
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1 XVII. FIRST CLAIM - FOR VIOLATING SECTION 10(b) OF THE
2 EXCHANGE ACT AND RULE 10b-5 PROMULGATED
THEREUNDER AGAINST ALL DEFENDANTS 783
XVIII.SECOND CLAIM - FOR VIOLATING SECTION 20(a) OF THE4 EXCHANGE ACT AGAINST THE INDIVIDUAL DEFENDANTS 81
5 XVIX. JURY TRIAL DEMANDED 826
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1 Lead Plaintiff, by its attorneys, alleges the following upon information and
2 belief, except for those allegations that pertain to Lead Plaintiff and its attorneys,
3 which are based on personal knowledge. Lead Plaintiff’s information and belief
4 are based upon, among other things, Lead Counsel’s investigation, which includes
5 without limitation, review and analysis of filings with the United States Securities
6 and Exchange Commission (“SEC”), press releases, conference calls, medical
7 journals, news articles, and analyst reports. Lead Plaintiff believes that substantial,
8 additional evidentiary support will exist for the allegations set forth herein after a
9 reasonable opportunity for discovery.
10 I. NATURE OF THE ACTION
11 1. Lead Plaintiff brings this securities class action on behalf of all
12 purchasers of the securities of Medivation, Inc. (“Medivation” or the “Company”)
13 between September 21, 2006 and March 2, 2010, inclusive (the “Class Period”),
14 who are seeking remedies under the Securities Exchange Act of 1934 (the
15 “Exchange Act”). Lead Plaintiff alleges that Defendants violated the Exchange
16 Act by issuing false statements of material fact to the market and omitting material
17 facts that were necessary in order to make the statements issued not misleading to
18 investors.
19 2. Medivation is a biopharmaceutical company that, since October
20 2004, has held the patent for a drug called Dimebon. In the early 1980s, Dimebon
21 was used in Russia as an over-the-counter oral antihistamine for treatment of
22 allergies such as hay fever. During the Class Period, Medivation sought to market
23 Dimebon in the United States as a treatment for Alzheimer’s disease.
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1 3. Because Defendants claimed that Dimebon was a possible treatment
2 for Alzheimer’s disease, Dimebon was Medivation’s most significant asset.
3 Dimebon, however, was not approved for sale in the United States by the Food and
4 Drug Administration (“FDA”). And in order to market Dimebon for treatment of
5 Alzheimer’s disease, the FDA required that Medivation prove the drug was
6 effective by conducting a series of clinical tests known as Phases 1, 2, and 3.
7 4. The odds were stacked against Medivation: only 33% of drugs are
8 successful at Phase 2 – the first stage at which a drug must demonstrate efficacy.
9 If Medivation could not prove efficacy of Dimebon at Phase 2, the value of the
10 Company would drop. On the other hand, if Phase 2 demonstrated Dimebon was
11 an effective treatment for Alzheimer’s, the value of Medivation securities would
12 rise tremendously given the large Alzheimer’s population. Moreover, Medivation
13 would be an attractive candidate to lure funding from a large pharmaceutical
14 company such as Pfizer, Inc.
15 5. Defendants decided not to take the chance that Dimebon would fail
16 Phase 2. Sources now state that Medivation used uncoated Dimebon pills in its
17 Phase 2 study that tasted bitter and had a numbing effect on the tongue. As any
18 medical doctor – such as Defendant David T. Hung (“Hung”), Medivation’s co-
19 founder and CEO, Defendant Lynn Seely (“Seely”), the Company’s Chief Medical
20 Officer, or Defendant Gregory Bailey (“Bailey”), a director with the Company
21 from its foundation – learns in medical school: if the active pill and the placebo
22 taste different, the study becomes “unblinded” and the subjects know whether they
23 are in the treatment group or in the control group. Patients who know they are
24 receiving the active drug will experience a powerful “placebo effect,” meaning a
25 perceived or actual improvement in their medical condition. Patients who know
26 they are not receiving the active drug will not experience this effect, and may even
27 see a decline in their conditions given that they were hoping to receive an
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1 experimental drug to cure their degenerative and terminal disease. Further,
2 unblinding the patients inevitably leads to unblinding of the doctors, or
3 investigators, as patients would understandably report the bitter taste and numbing.
4 Moreover, Alzheimer’s drug studies are particularly sensitive to unblinding
5 because Alzheimer’s symptoms are measured by a patient’s behavior, rather than
6 strictly empirical facts, such as temperature, tumor size, or the like.
7 6. Unbeknownst to investors, the Phase 2 Study was unblinded.
8 According to Dr. Lon Schneider, MD, MS, a Professor of Psychiatry, Neurology,
9 and Gerontology at the Keck School of Medicine of the University of Southern
10 California and director of the Alzheimer’s Disease Research and Clinical Center
11 (State of California), after the Class Period, Defendants admitted at an investment
12 conference that the Dimebon pills used in the Phase 2 Study had a distinctive taste.
13 Dr. Schneider stated that accordingly, the pills could easily be differentiated by
14 patients in the study.
15 7. As a result of Defendants’ decision to conduct an unblinded study,
16 Defendants made materially false and misleading statements during the Class
17 Period that the Phase 2 Study was: 1) “double-blind”; 2) placebo-controlled; 3)
18 performed in accordance with procedures that other companies had used when
19 testing Alzheimer drugs that the FDA approved; and 4) the Phase 2 Study
20 demonstrated that Dimebon significantly helped Alzheimer patients. Additionally,
21 Defendants even credited Dimebon’s success in treating Alzheimer’s disease to a
22 novel mitochondrial method of action. Instead, the results of the Phase 2 should
23 have been attributed to the fact that the Phase 2 Study was not blinded.
24 8. Defendants’ fraud had its intended effect. When the Company
25 announced the results of the Phase 2 Study (i.e., the “top line” results) on
26 September 21, 2006, the stock surged to a 52-week high with a price increase of
27 38.84%. Two years later, on September 3, 2008, Medivation was able to enter into
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1 an agreement concerning Dimebon with Pfizer Inc., which gave Medivation an up-
2 front cash payment of $225 million.
3 9. But when Defendants conducted the Phase 3 Study, with partner
4 Pfizer, Inc. – who helped fund Phase 3 and was slated to receive 60% of any
5 profits – both the Dimebon and placebo pills were coated with a film to conceal the
6 bitter taste and numbing effects. This film coating ensured that the Phase 3 Study
7 was actually double-blind. Dimebon showed no statistically significant
8 effectiveness for treating Alzheimer’s disease compared to a placebo. Thus, the
9 truth about Dimebon and the flawed Phase 2 Study was revealed, prior to the
10 market open, on March 3, 2010, when Defendants announced that Dimebon had
11 failed the Phase 3 Study.
12 10. On March 3, 2010, the failure to show efficacy during the Phase 3
13 Study caused Medivation’s stock to fall $27.15 per share to close at $13.10 per
14 share on March 3, 2010, down from $40.25 per share on March 2, 2010 – a one-
15 day decline of 67% on volume of 45 million shares, nearly 72 times the average
16 three-month daily volume. At the time, there were 34,004,318 shares of common
17 stock in the Company. Thus, in one day, investors who owned Medivation stock
18 lost almost $1 billion – a total of $923,217,234.
19 11. But before the Phase 3 Study results were released, the Individual
20 Defendants (defined below) profited from the fraud. The Individual Defendants
21 collectively sold almost one million Medivation shares for approximately $22
22 million in proceeds during the Class Period while in possession of inside
23 information about the reliability of the Phase 2 Study.
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1 II. JURISDICTION AND VENUE
2 12. The claims asserted herein arise under and pursuant to Sections 10(b)
3 and 20(a) of the Exchange Act [15 U.S.C. §§ 78j(b) and 78t(a)] and Rule 10b-5
4 promulgated thereunder by the SEC [17 C.F.R. § 240.10b-5].
5 13. This Court has jurisdiction over the subject matter of this action
6 pursuant to 28 U.S.C. §§ 1331 and 1337, and Section 27 of the Exchange Act [15
7 U.S.C. § 78aa].
8 14. Venue is proper in this District pursuant to Section 27 of the
9 Exchange Act, and 28 U.S.C. § 1391(b). Medivation maintains its principal place
10 of business in this District and many of the acts and practices complained of herein
11 occurred in substantial part in this District.
12 15. In connection with the acts alleged in this complaint, Defendants,
13 directly or indirectly, used the means and instrumentalities of interstate commerce,
14 including, but not limited to, the mails, interstate telephone communications, and
15 the facilities of the national securities markets.
16 III. PARTIES TO THE LITIGATION
17 16. The Catoosa Fund LP was appointed Lead Plaintiff pursuant to the
18 Court’s Order entered on April 8, 2011. Lead Plaintiff purchased Medivation
19 securities during the Class Period and was damaged as a result of Defendants’
20 conduct.
21 17. Defendant Medivation is a biopharmaceutical company located at 201
22 Spear Street, 3rd Floor, San Francisco, California, 94105. On December 17, 2004,
23 Medivation, then a privately held company, engaged in a “reverse merger.” That
24 is, Medivation merged with an existing subsidiary of a public company. The
25 public corporation was a “shell,” meaning all that existed of the original company
26 was its corporate shell structure and shareholders.
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1 18. The name of the resulting public company was “Orion Acquisition
2 Corp. II,” which then changed its name to “Medivation, Inc.” in the summer of
3 2005. (This Complaint uses the name “Medivation” when referring to the publicly
4 traded Company from the point of the merger until it changed its name to
5 Medivation, Inc.) The merger allowed Medivation to be publicly traded on the
6 Over-the-Counter Bulletin Board under the symbol “MTMR.” On March 8, 2006,
7 Medivation’s common stock was approved for listing on the American Stock
8 Exchange under the symbol “MDV.” Then on March 8, 2007, Defendants filed a
9 Form 8-K announcing that Medivation was going to withdraw its Common Stock
10 from listing on the American Stock Exchange and transfer its listing to The
11 NASDAQ Global Market under the symbol “MDVN.”
12 19. Since its founding as a publicly traded company, Medivation
13 explained that its goal was to reach “milestone events” and then consider selling to
14 or partnering with a larger pharmaceutical company.
15 20. Defendant Hung co-founded Medivation. Hung is, and at relevant
16 times was, President, Chief Executive Officer (“CEO”) and a director of the
17 Company. Dr. Hung received an M.D. Alpha Omega Alpha from the University of
18 California, San Francisco, School of Medicine, and an A.B. summa cum laude in
19 biology from Harvard College.
20 21. Defendant C. Patrick Machado (“Machado”) co-founded Medivation.
21 Machado is, and at relevant times was, Chief Financial Officer (“CFO”) and Chief
22 Business Officer of the Company.
23 22. Defendant Seely is, and at relevant times was, Senior Vice President
24 and Chief Medical Officer for the Company. Dr. Seely received an M.D. from the
25 University of Oklahoma, College of Medicine and completed her residency and
26 served as chief resident in internal medicine at Yale-New Haven Hospital. She is
27 board-certified in internal medicine, and endocrinology and metabolism.
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1 23. Defendant Gregory Bailey (“Bailey”) has been a director of
2 Medivation since 2005 and holds an M.D. from the University of Western Ontario.
3 Bailey is also member of Medivation’s Compensation Committee and the Audit
4 Committee.
5 24. Defendant Hung and Defendant Machado have known each other
6 since at least 1998. From 1998 to 2001, Defendant Hung served as chief scientific
7 officer (1998-1999) and as President, CEO and a Director (1999-2001) of ProDuct
8 Health, Inc., a privately-held medical device company focused on breast cancer
9 cytological diagnostics. From 1998 until 2001, Defendant Machado served as Vice
10 President, Chief Financial Officer and General Counsel (1998-2000) and as Senior
11 Vice President and Chief Financial Officer (2000-2001) of ProDuct Health, Inc.
12 25. Defendant Hung, Defendant Machado, and Defendant Seely have
13 known each other since at least 2000 when Defendant Seely served as Vice
14 President of Clinical Development at ProDuct Health, Inc. In 2001, Defendant
15 Seely left ProDuct to work as Vice President of Clinical Development for Cytyc
16 Health Corp., a medical device company and subsidiary of Cytyc Corp. In 2001,
17 ProDuct Health, Inc. was acquired by Cytyc Corp. for $167 million after ProDuct
18 Health, Inc. had only spent approximately $22 million in total development costs.
19 Defendant Seely assisted in transitional matters related to Cytyc Corp.’s
20 acquisition of ProDuct Health, and both Defendant Hung and Defendant Machado
21 then served as consultants to Cytyc Corp. from 2001 to 2002.
22 26. In September 2003, Defendant Hung and Defendant Machado
23 founded Medivation as a privately owned company and Defendant Machado
24 served as Senior Vice President and Chief Financial Officer, and member of the
25 board of directors.
26 27. Five individuals served on the original Board of Directors for
27 Medivation: (1) Defendant Hung, (2) Defendant Bailey, (3) Daniel Adams, (4)
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1 Kim Blickenstaff, and (5) Steve Gorlin. Defendant Hung and Defendant Bailey
2 repeatedly sold their stock during the Class Period when the fraud was unknown to
3 investors and the stock was artificially inflated. Defendant Hung sold his stock 17
4 different times for a total of $5,972,685.50. Defendant Bailey sold his stock 20
5 times for a total of $7,562,582.00. Defendant Bailey, like Defendant Hung,
6 graduated from medical school. In contrast, Daniel Adams and Kim Blickenstaff
7 only sold their stock twice – for a total of $320,508.00 and $1,422,846,
8 respectively. The last director, Steve Gorlin, resigned on January 18, 2006, less
9 than a year after being appointed and soon after the Phase 2 testing had begun. In
10 his resignation letter, Gorlin described “his need to focus his professional efforts
11 on the multiple other companies with which he is involved as a director and in
12 other capacities . . . .”
13 28. Defendant Hung, Defendant Machado, Defendant Seely, and
14 Defendant Bailey are referred to herein as the “Individual Defendants.” The
15 Individual Defendants, because of their positions with the Company, possessed the
16 power and authority to control the contents of Medivation’s quarterly reports, press
17 releases and presentations to securities analysts, money and portfolio managers and
18 institutional investors, i.e., the market. The Individual Defendants were provided
19 with copies of the Company’s reports and press releases alleged herein to be
20 misleading prior to or shortly after their issuance and had the ability and
21 opportunity to prevent their issuance or cause them to be corrected. Because of
22 their positions and access to material non-public information available to them but
23 not to the public, the Individual Defendants knew that the adverse facts specified
24 herein had not been disclosed to and were being concealed from the public and that
25 the positive representations which were being made were then materially false and
26 misleading. The Individual Defendants are liable for the false statements pleaded
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1 herein, as those statements were each pieces of “group published” information,
2 meaning the result of the collective actions of the Individual Defendants.
3 IV. BACKGROUND ON THE FDA AND
4 PRE-MARKET APPROVAL OF NEW DRUGS
5 29. The Federal Food, Drug, and Cosmetic Act, 21 U.S.C. §§ 301-399a,
6 requires a drug manufacturer to file an application and receive FDA approval
7 before introducing any new drug into commerce.
8 30. The FDA will only give approval if the FDA is satisfied that the
9 manufacturer has demonstrated the drug’s safety and effectiveness.
10 31. There are five steps that that must occur before the manufacturer
11 demonstrates the drug’s safety and effectiveness: (1) Preclinical Research and
12 Testing, (2) the Investigational New Drug Application, (3) Clinical Trials, (4) New
13 Drug Application, and (5) FDA Review.
14 32. Step One: Preclinical Research and Testing. All experimental
15 drugs must be tested on animals before they can be given to patients in clinical
16 trials. During preclinical testing, the drug manufacturer’s main goal is to
17 determine if the drug is reasonably safe for initial use by humans.
18 33. Step Two: Investigational New Drug Application. After the
19 preclinical testing is complete, the drug’s sponsor files an Investigational New
20 Drug Application with the FDA. The FDA has 30 days to review the application.
21 If there is no objection, the manufacturer may begin clinical testing on humans.
22 The IND application is not a request for permission to market a new drug. Rather,
23 the application is for an exemption from the prohibition in the Federal Food, Drug,
24 and Cosmetic Act against shipping experimental drugs in interstate commerce
25 without FDA approval. Drugs with approved INDs may be legally shipped. Once
26 the FDA has reviewed an IND’s animal test data and concluded that the drug is
27 safe enough to be initially tested on humans, clinical testing may begin.
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1 34. Step Three: Clinical trials. Clinical trials on humans are carried
2 out in three phases.
3 35. Phase 1 focuses on assessing the drug’s safety in a group of healthy
4 volunteers, usually at very small doses. These preliminary tests are used to
5 determine whether small doses of the drug cause any immediate safety problems
6 that could make continuation of the trial impossible. The information gathered
7 from these trials also helps investigators determine whether the drug’s dosage
8 needs to be adjusted before it is given to a larger number of study participants in
9 the testing phases that lie ahead. If there are no serious or unexpected
10 complications, the clinical testing moves on to Phase 2.
11 36. Phase 2 trials are often “double blinded,” meaning that neither the
12 investigators nor the patients know which group of patients is receiving the active
13 drug or the placebo. The tests are double blinded to reduce error, self-deception
14 and bias.
15 37. Approximately 33% of the drugs are successful at Phase 2.
16 38. Phase 3 trials are primarily focused on confirming that a drug is
17 effective and safe. Phase 3 trials involve thousands of patients and produce
18 additional information about the effectiveness and safety of the drug. These tests
19 also help define the drug’s overall benefit-to-risk ratio, and provide more
20 information on the drug’s side effects, whether it interacts with foods or other
21 medications, and whether certain patient populations should avoid its use
22 altogether.
23 39. Approximately 80% of drugs that enter Phase 3 clinical trials are
24 eventually approved. Indeed, the market expected Dimebon’s Phase 3 to be
25 successful based on the Phase 2 results. Analysts stated that Phase 3 success
26 would only cause the stock to rise 20 percent indicating that investors had already
27 priced a successful Phase 3 into the stock price. Michelle Fay Cortez, Mystery
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1 Alzheimer’s Drug May Yield Advance for Pfizer, Bloomberg.com (Feb. 2, 2010)
2 available at
3 http://www.bloomberg.com/apps/news?pid=email_en&sid=a_K7yqGmtkpk.
4 40. Step Four: New Drug Application. If clinical studies confirm that a
5 new drug is relatively safe and effective, the manufacturer files a New Drug
6 Application (“NDA”), the actual request to manufacture and sell the drug in the
7 United States. The NDA must include all data from animal and laboratory testing,
8 comprehensive information about the drug’s chemistry and pharmacology, and the
9 complete results of all clinical investigations. Samples of the finished product are
10 also included.
11 41. Step Five: FDA Review. When an NDA is reviewed, agency
12 statisticians and epidemiologists closely examine the drug’s safety and efficacy
13 data. At the same time, samples of the drug undergo laboratory analysis. When
14 the FDA examines a drug’s safety and efficacy profile, it focuses on the quality
15 and totality of the clinical trial data. FDA officials will meet with the sponsor to
16 discuss possible deficiencies in the application that must be resolved to the FDA’s
17 satisfaction before final approval is given.
18 V. BACKGROUND ON DIMEBON AND ALZHEIMER’S DISEASE
19 42. In 1983, Dimebon was approved in Russia as an over-the-counter oral
20 antihistamine for the treatment of allergic rhinitis and allergic dermatitis. It was
21 later taken off the market when better antihistamines with fewer side effects were
22 introduced. It was never available in the United States.
23 43. In the early 1990’s, research began in Russia into whether there could
24 be a link between Dimebon and Alzheimer’s disease.
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1 44. Alzheimer’s disease is a progressive, ultimately fatal, disorder in
2 which certain types of nerve cells in particular areas of the brain degenerate and
3 die for unknown reasons.
4 45. The financial market for Alzheimer’s drugs is enormous. The
5 Company discussed the financial possibilities of an Alzheimer’s drug in a February
6 22, 2007 press release:
7 Alzheimer’s disease, the leading cause of dementia, is characterized
8 by the progressive loss of memory, thinking (cognitive function) and
the ability to perform the activities of daily living (global function).
9 There is currently no cure. According to the Alzheimer’s Association
10and the American Health Assistance Foundation:
11 • Alzheimer’s disease currently affects approximately 4.5 million
12 people in the U.S., including as many as 10% of people aged 65 andolder and nearly 50% of those aged 85 and older.
13• Worldwide, Alzheimer’s disease affects 18 million people, and
14that number is expected to reach 34 million by 2025.
15• There are 350,000 new diagnoses of Alzheimer’s disease, and
16 59,000 Alzheimer’s disease deaths, per year in the U.S.
17• Following initial diagnosis, patients live 8 years, on average,
18 but may live up to 20 years with the disease.
19 • Total annual expenditures on Alzheimer’s disease in the U.S.
20 exceed $100 billion annually, and the average lifetime cost per
21Alzheimer’s disease patient is $174,000.
22 46. According to the Company’s 2006 Annual Report, there were only
23 four drugs approved by the FDA for treating Alzheimer’s disease: Aricept,
24 Exelon, Razadyne, and Namenda. Pfizer, Inc. held the patent to one drug, Aricept,
25 which was to expire on November 25, 2010.
26 47. In February 2001, the U.S. Patent Office issued patent number
27 6,187,785, which described Dimebon’s potential utility in Alzheimer’s and other
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1 neurodegenerative disorders. The patent was given to Selena Laboratories, a
2 company started by Dr. Sergey Sablin. The patent emphasized Dimebon’s activity
3 as an NMDA receptor antagonist – the same mechanism of action as Namenda,
4 another popular Alzheimer’s drug produced by Forest Laboratories. Dr. Sablin
5 relocated to the United States from Russia to commercialize the Dimebon patent.
6 48. In June 2001, four months after the U.S. Dimebon patent was issued,
7 Dr. Sablin and others published a Phase 1 clinical study for Dimebon involving 14
8 patients in Russia. The trial, in which patients received an oral dose three times
9 per day for an eight week period, was performed at a single test site and used an
10 unproven scale to measure cognitive function.
11 49. Using these methods, and in large part because Dimebon had not
12 shown any significant adverse effects when taken for allergies in Russia for over
13 two decades, Dimebon passed this Phase 1 study in 2001.
14 50. Two years after the Phase 1 study, Medivation was founded in
15 September 2003 by Defendants Hung and Machado. The Company bought the
16 rights to Dimebon a month later, in October 2003.
17 VI. THE IMPORTANCE OF DOUBLE BLINDING
18 51. Medivation conducted the Phase 2 Dimebon Alzheimer’s study in
19 Russia.
20 52. The Phase 2 Study lasted six months and involved 183 patients at
21 eleven different sites in Russia. The Phase 2 Study’s results were announced by
22 the Company on the first day of the Class Period, September 21, 2006.
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1 53. Blinding is fundamental to a Phase 2 test. As the FDA has explained,
2 “Blinding is intended to ensure that subjective assessments and decisions are not
3 affected by knowledge of treatment assignment.”
4 http://www.fda.gov/RegulatoryInformation/
5 Guidances/ucm125802.htm#P234_13165
6 54. The FDA defines “double-blind” to mean that “both subjects and
7 investigators, as well as sponsor or investigator staff involved in the treatment or
8 clinical evaluation of subjects, are unaware of each subject’s assigned treatment.”
9 See Ctr. for Biologics Evaluation & Research, U.S. Dep’t of Health & Human
10 Servs., Guidance for Industry, E10 Choice of Control Group and Related Issues in
11 Clinical Trials 4 (2001) available at http:// www. fda. gov/ cder/ guidance/ 4155
12 fnl. pdf.Blinding. A test being termed double-blind, means neither the patient nor
13 the investigator know which patients are taking the drug being tested and which are
14 taking a placebo.
15 55. “Masking” is another commonly used term to describe blinding.
16 56. In May, 2001, the FDA, together with the U.S. Department of Health
17 and Human Services, the Center for Drug Evaluation and Research, and the Center
18 for Biologics Evaluation and Research, published a “Choice of Control Group and
19 Related Issues in Clinical Trials”. The study states as follows:
20 DETAILED CONSIDERATION OF TYPES OF CONTROL
21A. Placebo Control
22
231. Description
24 In a placebo-controlled trial, subjects are assigned, almost always
25by randomization, to either a test treatment or to a placebo. Aplacebo is a dummy treatment that appears as identical as possible
26 to the test treatment with respect to physical characteristics such as
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1 color, weight, taste and smell, but that does not contain the test
2 drug....
3 2. Ability to Minimize Bias
4 The placebo-controlled trial, using randomization and blinding,
5 generally minimizes subject and investigator bias. Such trials,
6 however, are not impervious to blind-breaking through recognition
of pharmacologic effects of one treatment; blinded outcome
7 assessment can enhance bias reduction in such cases.
8 57. According to Steven Piantadosi, Clinical Trials: A Methodological
9 Perspective (2d ed. 2005):
10Masking (blinding) reduces assessment bias . . . . Masking can be
11 accomplished by ensuring that both treatments look, feel, or taste the
12same and that the investigators do not know or reveal the assignmentto the patients. . . . Double masking (double blinding) implies that
13 both patient and investigator responsible are unaware of which
14treatment is being administered. This type of masking furtherincreases the usefulness of subjective endpoints because investigators
15 can also be influence by their expectations. This is especially true if
16the investigator has been exposed to seemingly favorablepreclinical data, believes strongly in the biological basis on which
17 the therapy was developed, and/or has professional or financial
18[interest] in the success of the study. Effective treatment maskingis essential in such cases.
19
20 Id. at 180 (emphasis added).
21 58. Blinding is particularly critical to a Phase 2 clinical trial testing the
22 effects of a drug on Alzheimer’s disease. The symptoms of Alzheimer’s disease
23 are mostly behavioral and the disease cannot be measured with an instrument such
24 as a thermometer or blood pressure device. For example, the widely accepted
25 cognitive function test used in clinical trials to measure changes in the core
26 symptoms of Alzheimer’s is the Alzheimer’s disease Assessment Scale (the
27 “ADAS-cog”). The ADAS-cog consists of 11 tasks in which observers measure
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1 the disturbances of memory, language, praxis, attention and other cognitive
2 abilities, which are often referred to as the core symptoms of Alzheimer’s, by
3 questioning the subject and observing behavior.
4 59. Designing a test so that the active drug tastes the same as the placebo
5 is a basic and well-known measure that scientists take to ensure the test is double-
6 blind. As one article has stated, “The blind may be compromised in a variety of
7 ways, however, beginning with differences in medication taste or smell.” R.H.
8 Perlis et al.., “Assuring that Double-blind is Blind,” The American Journal of
9 Psychiatry 167, 250-2 (2010) (emphasis added).
10 60. Patients who knew they were receiving Dimebon were more likely to
11 report favorable outcomes as measured by the ADAS-cog because they expected a
12 benefit by being in the treatment group. In addition, observers are less likely to
13 identify and report treatment responses in a no-treatment group and more sensitive
14 to a favorable outcome in patients receiving Dimebon.
15 VII. DEFENDANTS’ SCHEME TO DEFRAUD
16 61. Medivation decided to conduct the Phase 2 Dimebon Alzheimer’s
17 study in Russia. The Phase 2 Study involved 183 patients at eleven different sites
18 in Russia. Phase 2 Study’s results were announced by the Company on the first
19 day of the Class Period, September 21, 2006.
20 62. The Phase 2 Study was not double blind because Defendants directed
21 the Dimebon manufacturer to use Dimebon pills that did not have a coated capsule
22 to mask the taste of the Dimebon pill compared to the placebo.
23 63. Dr. Lon S. Schneider, MD, MS, is professor of psychiatry, neurology,
24 and gerontology at the University of Southern California Keck School of
25 Medicine, director of the Alzheimer’s Disease Research and Clinical Center (State
26 of California), director of the USC NIH Alzheimer’s Disease Research Center
27 clinical core, and has reviewed numerous Alzheimer drug trials. Dr. Schneider
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1 agreed to discuss the events concerning Dimebon with Lead Counsel and has
2 reviewed the comments in the following paragraphs ¶¶ 64-70.
3 64. Dr. Schneider stated that “[t]he Phase 2 study was not a double-blind,
4 placebo-controlled trial. The study was deceptive because the active drug pills and
5 the placebo pills in the study were different; they were not identically appearing
6 and tasting.”
7 65. According to Dr. Schneider, conventionally, in double-blind, placebo-
8 controlled drug trials, neither the study site investigators, testers, nor the patients or
9 their caregivers know what drug is being given. To preserve the “blind,” and
10 minimize bias, the drug, the active pharmaceutical ingredient being tested, is
11 masked. Masking is accomplished by manufacturing the drug and its placebo
12 comparator into pills that are identical in every way, shape, color and form.
13 66. Dr. Schneider stated that the pills used in Russia in the Phase 2 trial
14 were provided by the commercial manufacturer of Dimebon and were not the same
15 as the placebo pills. For example, they were uncoated and as such, Dimebon’s
16 bitterness could be tasted.
17 67. Dr. Schneider also stated that tellingly, unlike other clinical trials,
18 Defendants did not describe the pills used in the Phase 2 Study. “There would
19 typically be a sentence saying, ‘The pills, tablets, or capsules were identically
20 appearing in size, color, taste, etc.’ The standard practice in clinical trial papers is
21 to describe in detail what the test substance looked like.” For example, [Dr. Karl]
22 Kieburtz and colleagues from the University of Rochester Parkinson’s Study
23 Group who conducted Medivation’s Phase 2 Huntington disease trial with
24 Dimebon described the study drugs as follows:
25 The study drug [Dimebon] was formulated as a tablet and
26encapsulated to maintain masking. Latrepirdine [Dimebon] andmatching placebo were supplied by KP Pharmaceutical Technology
27 Inc (Bloomington, Indiana) and manufactured by QS Pharma
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1 (Boothwyn, Pennsylvania). (Kieburtz et al Archives of Neurology
2February 2010).
3 68. Dr. Schneider also discussed Dimebon’s Phase 3 failure with an
4 attendee at the SG Cowen & Co. Annual Health Care Conference held in Boston
5 March 8-11, 2010, a week after Medivation announced the Phase 3 Study results
6 (“SG Cowen Conference”). The attendee stated that Defendants Hung and Seely,
7 after an oral slide presentation, were questioned by an analyst about whether the
8 pills in the Phase 2 study were identical. Dr. Schneider’s colleague stated that
9 Defendants Hung and Seely admitted that the pills were not identical. Dr.
10 Schneider stated that Defendants, “Doctors Hung and Seely offered what many
11 doctors in the field have long suspected – that the tablets were not identical in
12 appearance and that Dimebon had a bitter or numbing taste, but the placebo did
13 not.”
14 69. Accordingly, Dr. Schneider believes that the Phase 2 trial was not a
15 double-blind trial but was rather unblinded – and thus subject to biased assessment,
16 results, and reporting, even if it was unconscious – as investigators, staff, patients
17 and caregivers can be aware of differences between the pills and make biased
18 assessments. For example, when investigators know that certain patients are taking
19 an active drug because they are telling them that their mouth is numb – and the
20 placebo group is reporting no side effect – those patients could then be up-rated or
21 their rating scale scores could be intentionally or unintentionally exaggerated or
22 improved. “If you suspect someone is on placebo, you might down-rate them.”
23 Dr. Schneider stated that there is often great pressure on investigators to show
24 positive results and that “[t]his is why we go to lengths to do true, randomized,
25 placebo-controlled, double-blinded study, making sure the pills are identical.”
26 70. Dr. Schneider added that when Dimebon was made for the Phase 3
27 trial in the United States, Defendants “made sure it was manufactured according to
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1 FDA GMP standards and prepared as hard-coated tablets that you can’t break open
2 easily, and therefore, you can’t taste.”
3 71. Additionally, Roy Jones, director of Alzheimer’s Research and
4 Therapy, stated in a September 13, 2010, article entitled “Dimebon
5 disappointment” that:
6 The Dimebon formulation used in Russia appears different from that
7 of the multinational study. The original medication has a bitter taste
and a numbing effect on the tongue, which could lead to unblinding,
8 whereas in the later study the tablet was film-coated.
9Alzheimer's Research & Therapy 2010, 2:25 (13 September 2010).
1072. Significantly, Defendants knew the Phase 2 test would be biased
11unless the Dimebon was masked. In a separate, unsuccessful, Dimebon study of
12the drug’s effect on Huntington’s disease, which was conducted in the United
13States and United Kingdom from July 18, 2007 to July 16, 2008, the Company
14informed investors that in that study, Dimebon “was formulated as a tablet and
15encapsulated to maintain masking.” [Emphasis added.]
16VIII. DEFENDANTS FALSELY ATTRIBUTE PHASE 2
17 RESULTS TO DIMEBON’S EFFECT ON MITOCHONDRIA
18 73. Though the Dimebon patent claimed the mechanism of action was a
19 NMDA receptor antagonist (similar to another FDA approved Alzheimer drug),
20 throughout the Class Period, Defendants claimed that Dimebon worked through a
21 novel mechanism of action – by boosting energy-producing cellular mitochondria.
22 74. In May 2003, Dr. Bachurin and others published data indicating that
23 Dimebon, among other drugs, could prevent the inappropriate opening of
24 mitochondrial pores due to neurotoxins such as beta-amyloid. Importantly, the
25 tissues used in the study were from rat liver – not brain. Further, the tests were
26 conducted at many orders above proper concentration levels.
27
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1 75. The chief support for Defendants’ mitochondrial mechanism of action
2 appears to be work by Dr. Maria Ankarcrona of the Karolinska Institute in Sweden.
3 Dr. Ankarcrona apparently performed experiments on cortical neuronal cultures.
4 These neurons were introduced to ionomycin (a chemical used in research to raise
5 the intracellular level of calcium and as a research tool to understand transport
6 across biological membranes) and the mitochondrial membrane potential was
7 measured with indicators. Dr. Ankarcrona claimed that .1nM of Dimebon was
8 enough to reduce potential mitochondrial changes in response to ionomycin. There
9 were apparently no controls to these experiments – negative or positive. Further,
10 the importance of the Dimebon dose was unclear since similar effects were
11 reported at .1, 1, 10, and 100nM concentrations – very different orders of
12 magnitude.
13 76. A number of scientists tried to replicate Dimebon’s mechanism of
14 action in their own laboratories. Yet Medivation would not provide Dimebon for
15 these experiments. As reported by Dr. Ilya Bezprozvanny in a 2010 issue of Drug
16 News & Perspectives, other scientists were unable to replicate Dr. Ankarcrona’s
17 results:
18 Despite being continuously presented at scientific and investors
19meetings, these results have never been published in a peer-reviewedjournal. Not convinced by Dr. Ankarcrona’s results, a number of
20 scientists attempted to investigate Dimebon’s mechanism of action in
21their own laboratories. Unfortunately, Dimebon was not madeavailable for independent experimental studies by Medivation. When
22 our request for a sample of Dimebon was not satisfied by Medivation,
23we hired a contract research organization, Nanosyn, to synthesize asample of Dimebon based on publicly available structural
24 information.... [W]e did not observe any evidence of mitochondrial
25protective effects in a nanomolar concentration range as claims by Dr.Ankarcrona.... Based on these results, we concluded that Dimebon is
26 not likely to act on mitochondria.
27
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1 77. Dr. Schneider stated in a March 3, 2010 news article that although
2 some evidence supports the idea that Dimebon hits mitochondria, laboratory data
3 shows that Dimebon hits all sorts of brain chemicals including serotonin and
4 dopamine. Emphasizing mitochodria, he says “is just cherry-picking a particular
5 mechanism of action that may or may not be relevant.”
6 78. Further, the issue of what concentrations of Dimebon are needed to
7 affect mitochondria is key. Dr. Schneider pointed to an independent study
8 showing that while the drug can have neuroprotective effects in animals, the
9 concentrations of the drug achieved in humans are far too low to have
10 neuroprotective effects. The 2009 study from the UT Southwestern Medical
11 Center in Dallas, published in the journal Molecular Neurodegeneration, concluded
12 that the high concentration of Dimebon required to achieve neuroprotective effects
13 in animals “is not likely to be achieved in human trials.”
14 79. Indeed, Defendants’ claim that Dimebon effected the Mitochondria
15 through a novel mechanism of action helped convince the market that Dimebon
16 was not just an antihistamine.
17 IX. DIMEBON SHOWED FALSE PROMISE
18AFTER THE BIASED PHASE 2 TESTING
19 80. On September 21, 2006, the first day of the Class Period, the
20 Company announced that the Phase 2 Study was a success. The Company claimed
21 that Dimebon met all efficacy endpoints in a “randomized, double-blinded,
22 placebo-controlled Phase 2 clinical study of 183 patients with mild to moderate
23 Alzheimer’s disease conduced at 11 sites in Russia.”
24 81. Defendants informed the public of the specific results of the Phase 2
25 Study, specifically stating that:
26 Compared with patients receiving placebo, patients treated withDimebon demonstrated highly statistically significant improvement on
27 the study’s primary efficacy endpoint, the Alzheimer’s Disease
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1 Assessment Scale-cognition (ADAS-cog; 4.0 point improvement in
2 the mean change from baseline to week 26 as compared to placebo; p
< 0.0001), and on the key secondary efficacy endpoint, the Clinical
3 Global Impression of Change (CGIC; 0.6 point improvement in the
4mean change from baseline to week 26 as compared to placebo; p <0.0001). Dimebon-treated patients also achieved statistically
5 significant improvement (p < 0.01) compared with placebo patients on
6 all three of the other secondary efficacy endpoints - the Activities of
Daily Living, the Neuropsychiatric Inventory and the Mini Mental
7 State Examination.
8In addition to these improvements in comparison to placebo,
9 Dimebon-treated patients also showed statistically significant
10 improvement over baseline on all five efficacy endpoints used in thisstudy (p < 0.05). By contrast, placebo-treated patients deteriorated
11 from baseline on all five endpoints.
12Dimebon was well tolerated in this study. There were fewer serious
13 adverse events in Dimebon-treated patients than in placebo-treated
14 patients. No gastrointestinal side effects occurred in more than 3% ofthe Dimebon-treated patients except for dry mouth, which occurred in
15 13.5% of the Dimebon-treated patients. A higher percentage of
16 Dimebon-treated patients than placebo-treated patients completed thetrial (87.6% and 81.9%, respectively), for an overall trial completion
17 rate of 84.7%.
18
1982. Dr. Rachelle Doody, MD, PhD, Effie Marie Cain Chair, Director of
20 the Alzheimer’s Disease and Memory Disorders Center at Baylor College of
21 Medicine, and a member of Medivation’s Clinical and Scientific Advisory Board,
22 stated in the September 21, 2006 press release:
From my review of these rigorously collected data, I believe the23 results are striking. It is very rare for a Phase 2 Alzheimer’s24 disease study to demonstrate significance on all of the primary
25and secondary endpoints, five in this case, and with strongstatistical significance. I look forward to continued collaboration
26 with the Medivation team to further develop Dimebon as a potential
27new therapy for Alzheimer’s disease. [Emphasis added.]
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1 83. The results were so strong that, according to Samuel Gandy, associate
2 director of the Alzheimer’s Disease Research Center at Mount Sinai School of
3 Medicine in New York, Dimebon would win FDA approval even if the Phase 3
4 study “is only half as good as the original.” Michelle Fay Cortez, Mystery
5 Alzheimer’s Drug May Yield Advance for Pfizer, Bloomberg.com (Feb. 2, 2010)
6 available at
7 http://www.bloomberg.com/apps/news?pid=email_en&sid=a_K7yqGmtkpk .
8 84. Defendant Hung stated in the September 21, 2006 press release that
9 Dimebon had performed better than other Alzheimer drugs. Defenant Hung stated
10 that “[i]n a meta-analysis of 10 randomized, double-blinded, placebo-controlled
11 trials of approved Alzheimer’s disease drugs, published in 2006, treatment with
12 these drugs produced an average ADAS-cog improvement over placebo of 2.7
13 points. We thus believe that our results support continued, aggressive pursuit of the
14 further studies required to assess Dimebon’s potential safety and efficacy in
15 treating Alzheimer’s disease.”
16 85. The results of the Phase 2 Study were later published in the in the July
17 19, 2008 issue of The Lancet. The Lancet article was written and researched by
18 Defendants Hung and Sealey, amongst others, who represented that the Phase 2
19 success was the result of a “ double-blind, placebo-controlled trial, [of] patients
20 with mild-to-moderate Alzheimer’s disease treated with Dimebon . . . .” [Emphasis
21 added.]
22 86. The Company repeated the results from the “double-blind” Phase 2
23 Study at conferences and in public filings with the SEC.
24 87. The Company also allowed participants in the biased Phase 2 Study to
25 continue taking Dimebon past the initial six month period. According to the
26 Company’s 2009 Annual Report,
27
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1 Patients who completed the initial six months of treatment in the
2Russian Study were offered the opportunity to continue treatment foran additional six months on a blinded basis in the same treatment
3 group to which they originally were randomized. Patients who
4completed the blinded treatment periods, twelve months in the case ofthe Russian Study . . ., were offered the opportunity to receive
5 [d]imebon 20 mg three times a day on an open label basis.
688. The Company also disclosed in its public filings that the FDA did not
7perform an in depth review of the Phase 2 Study. The Company stated in its SEC
8Form 10-KSB for fiscal year ended December 31, 2007 that:
9In January 2008, the FDA informed us that this trial can be used as
10 one of the two pivotal studies required to support the approval of
11 Dimebon to treat mild-to-moderate Alzheimer’s disease, as long as asignificant portion of the sites in our confirmatory pivotal Phase 3 trial
12 are located in the United States. However, as is typically the case at
13 this stage of the regulatory review process, the FDA has not yetperformed an in-depth review of our preclinical and clinical data, so
14 its views remain subject to change.
15X. DEFENDANTS’ TRULY DOUBLE BLIND PHASE 3 STUDY FAILS
16
1789. In June 2008, the Company began the pivotal Phase 3 Alzheimer’s
18 test for Dimebon. The study, called the Connection Study, was a double-blind,
19 placebo-controlled study conducted largely in the United States as required by the
FDA.20
2190. The Company stated in its annual report for fiscal year 2008 on March
22 16,2009:
We have commenced a second pivotal Phase 3 Alzheimer’s disease
23 clinical trial, known as the CONNECTION trial, to confirm the results
24 seen in our first pivotal trial. The CONNECTION trial will enrollapproximately 525 patients with mild-to-moderate Alzheimer’s
25 disease at approximately 60 sites in the United States, Europe and
26 South America. Patients will be randomized to one of three treatment
27groups: Dimebon 20 mg three times per day (the same dose of
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1 Dimebon studied in our first pivotal trial), Dimebon 5 mg three times
2 per day or placebo. Patients will be treated for six months and may not
be taking any other Alzheimer’s disease drugs during the trial. After
3 completing six months of treatment, all patients—including placebo
4patients—will be offered the opportunity to receive Dimebon in anopen-label extension of at least six months. The primary endpoints in
5 the CONNECTION trial are the ADAS-cog and the CIBIC-plus.
6 These are the two endpoints that have been accepted by the FDA to
support registration of all approved drugs for mild-to-moderate
7 Alzheimer’s disease.
891. Unlike, the Phase 2 testing in Russia, this test was within the
9jurisdictional limits of the FDA and was designed to prevent bias. Defendants
10instructed the manufacturer of Dimebon to coat both the Dimebon and the placebo
11pills to conceal the bitter taste and numbness caused by Dimebon.
1292. On March 2, 2010, the Company announced that the double-blind
13Phase 3 test had failed miserably – patients treated with Dimebon had no
14statistically significant improvements for the 20mg group compared to placebos.
15Defendants reported that the Dimebon patients and the placebo patients were
16essentially unimproved.
1793. Dimebon has since failed every double blinded test for treatment of
18neurological disease. The purported revolutionary mitochondrial method of action
19has not been confirmed by independent testing. Moreover, Dimebon is not
20permitted for sale in the United States and even its use as an antihistamine in
21Russia has been largely abandoned because the drug’s side effects outweigh its
22ability to treat allergies.
23XI. DEFENDANTS’ FALSE AND MISLEADING
24 STATEMENTS ISSUED DURING THE CLASS PERIOD
25 94. On September 21, 2006, the Company issued the following press
26 release:
27
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1 MEDIVATION’ S DIMEBON MEETS ALL FIVE EFFICACY
2ENDPOINTS IN PHASE 2 ALZHEIMER’S DISEASE STUDY
3 SAN FRANCISCO (September 21, 2006) - Medivation, Inc. (AMEX:
4 MDV) today announced that its proprietary drug Dimebon TM met allfive efficacy endpoints in a six-month randomized, double-blinded,
5 placebo-controlled Phase 2 clinical study of 183 patients with mild to
6 moderate Alzheimer’s disease conducted at 11 sites in Russia.Compared with patients receiving placebo, patients treated with
7 Dimebon demonstrated highly statistically significant improvement on
8 the study’s primary efficacy endpoint, the Alzheimer’s DiseaseAssessment Scale-cognition (ADAS-cog); 4.0 point improvement in
9 the mean change from baseline to week 26 as compared to placebo; p
10 < 0.0001), and on the key secondary efficacy endpoint, the ClinicalGlobal Impression of Change (CGIC; 0.6 point improvement in the
11 mean change from baseline to week 26 as compared to placebo; p <
12 0.0001). Dimebontreated patients also achieved statisticallysignificant improvement (p < 0.01) compared with placebo patients on
13 all three of the other secondary efficacy endpoints - the Activities of
14 Daily Living, the Neuropsychiatric Inventory and the Mini MentalState Examination.
15
16 In addition to these improvements in comparison to placebo,Dimebon-treated patients also showed statistically significant
17 improvement over baseline on all five efficacy endpoints used in this
18 study (p < 0.05). By contrast, placebo-treated patients deteriorated
19from baseline on all five endpoints.
20 Dimebon was well tolerated in this study. There were fewer seriousadverse events in Dimebon-treated patients than in placebo-treated
21 patients. No gastrointestinal side effects occurred in more than 3% of
22 the Dimebon-treated patients except for dry mouth, which occurred in13.5% of the Dimebon-treated patients. A higher percentage of
23 Dimebon-treated patients than placebo-treated patients completed the
24 trial (87.6% and 81.9%, respectively), for an overall trial completion
25rate of 84.7%. [Emphasis added].
26 95. Defendants’ statements that the Phase 2 Study were “double-blind”
27 and “placebo-controlled” were materially misleading because Defendants knew or
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1 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
2 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
3 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
4 patients to distinguish between the Dimebon pill and the placebo because patients
5 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
6 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
7 See ¶¶ 51-72.
8 96. Defendants’ statements concerning the positive results of the Phase 2
9 Study were materially false and misleading because Defendants knew or with
10 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
11 positive results because it was not double-blind. As alleged herein, Defendants
12 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
13 false and misleading positive results. See ¶¶ 51-72.
14 97. On November 15, 2006, the Company filed a Form 8-K with the SEC
15 attaching a press release issued that same day, stating, in relevant part:
16 MEDIVATION PROVIDES CLINICAL DEVELOPMENT UPDATE
17FOR ITS THREE PROGRAMS
18 SAN FRANCISCO (November 15, 2006) – Medivation, Inc. (AMEX:
19 MDV) today announced updated clinical development plans andmilestones for its three programs in Alzheimer’s disease,
20 Huntington’s disease and hormone-refractory prostate cancer.
21
22DimebonTM for Alzheimer’s and Huntington’s Diseases
23 “Given the safety and significant efficacy data generated in ourrecently completed Phase 2 trial in Alzheimer’s disease, we believe
24 that aggressive development of Dimebon is clearly merited,” said25 David Hung, M.D., president and chief executive officer of
26Medivation. [Emphasis added.]
27
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1 98. Defendants’ statements concerning the positive results of the Phase 2
2 Study were materially false and misleading because Defendants knew or with
3 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
4 positive results because it was not double-blind. As alleged herein, Defendants
5 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
6 false and misleading positive results. See ¶¶ 51-72.
7 99. On January 30, 2007, the Company issued the following press release:
8 Medivation’s DimebonTM Phase 2 Trial Results To Be Presented At
9 8th International Conference On Alzheimer’s And Parkinson’s
Diseases10
11 SAN FRANCISCO (January 30, 2007) - Medivation, Inc. (AMEX:MDV) today announced that results of its Phase 2 efficacy study of
12 DimebonTM in Alzheimer’s disease will be presented at the 8th
13 International Conference on Alzheimer’s and Parkinson’s Diseases:Progress and New Perspectives in Salzburg, Austria. This marks the
14 first scientific meeting at which data from the trial will be presented.
15 Topline results from this study were reported in September 2006.
16 ****
17 The six-month, randomized, double-blinded, placebo-controlledPhase 2 trial evaluated 183 patients with mild to moderate
18 Alzheimer’s disease. Primary and secondary endpoints assessed
19 cognitive function, memory, ability to perform tasks of daily living,global function and behavior, and included the same endpoints
20 accepted by the U.S. Food and Drug Administration to approve
21 currently marketed drugs to treat mild to moderate Alzheimer’sdisease. Dimebon met all five efficacy endpoints in this study with
22 strong statistical significance compared with placebo. Dimebon-
23 treated patients also showed statistically significant improvement overbaseline on all five efficacy endpoints, meaning that patients taking
24 Dimebon were at higher levels of performance on all five endpoints at
25 the end of six months than they were before starting the study.
26[Emphasis added.]
27
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1 100. Defendants’ statements that the Phase 2 Study were “double-blind”
2 and “placebo-controlled” were materially misleading because Defendants knew or
3 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
4 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
5 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
6 patients to distinguish between the Dimebon pill and the placebo because patients
7 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
8 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
9 See ¶¶ 51-72.
10 101. Defendants’ statements concerning the positive results of the Phase 2
11 Study were materially false and misleading because Defendants knew or with
12 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
13 positive results because it was not double-blind. As alleged herein, Defendants
14 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
15 false and misleading positive results. See ¶¶ 51-72.
16 102. On February 23, 2007, the Company filed its annual report for 2006
17 on Form 10-KSB (“2006 Annual Report”). The report was signed by Defendants
18 Machado, Hung, and Bailey. The report stated, in pertinent part:
19 Phase 2 Clinical Trial
20In September 2006, we reported top-line results of a six-month,
21 randomized, double-blinded, placebo-controlled Phase 2 efficacy
22 study of Dimebon in 183 patients with mild to moderate Alzheimer’sdisease. This study was conducted at 11 sites in Russia, pursuant to
23 approval granted by the Russian Ministry of Health in 2005. In
24 collaboration with our experienced U.S. Alzheimer’s disease clinicaladvisors, we designed this study to mirror as closely as possible the
25 design of the pivotal registration studies previously accepted by
26 the FDA as the basis for approving drugs for the treatment ofmild to moderate Alzheimer’s disease. Specifically, we used the
27 same clinical endpoints, the same duration of treatment, and
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1 substantially identical patient inclusion and exclusion criteria in our
2study as were used in previous pivotal registration studies, and wetook steps to ensure that the study was conducted in accordance
3 with good clinical practices (GCP). However, we caution you that
4 the FDA has not accepted our study as a pivotal registration study,
and may never do so.5
6 We met all five efficacy endpoints in this study with a high level ofstatistical significance. Compared with patients receiving placebo,
7 patients treated with Dimebon demonstrated highly statistically
8 significant improvement on the study’s primary efficacy endpoint, theAlzheimer’s Disease Assessment Scale-cognitive subscale (ADAS-
9 cog); 4.0 point improvement in the mean change from baseline to
10 week 26 as compared to placebo; p < 0.0001), and on the keysecondary efficacy endpoint, the Clinician’s Interview-Based
11 Impression of Change—plus caregiver assessment (CBIC-plus; 0.6
12 point improvement in the mean change from baseline to week 26 ascompared to placebo; p < 0.0001). Dimebon-treated patients also
13 achieved statistically significant improvement (p < 0.01) compared
14 with placebo-treated patients on all three of the other secondaryefficacy endpoints—the Activities of Daily Living, the
15 Neuropsychiatric Inventory and the Mini Mental State Examination.
16In addition to these improvements in comparison to placebo,
17 Dimebon-treated patients also showed statistically significant
18 improvement over their own starting baseline scores on all fiveefficacy endpoints used in this study (p < 0.05). This means that
19 patients taking Dimebon were at higher levels of performance on all
20 five endpoints at the end of six months than they were before startingthe study. By contrast, placebo-treated patients deteriorated from
21 baseline on all five endpoints. [Emphasis added.]
22
23103. Defendants’ statements concerning the positive results of the Phase 2
24 Study were materially false and misleading because Defendants knew or with
25 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
26 positive results because it was not double-blind. As alleged herein, Defendants
27
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1 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
2 false and misleading positive results. See ¶¶ 51-72.
3 104. Defendants’ statement that in the Phase 2 Study “we took steps to
4 ensure that the study was conducted in accordance with good clinical
5 practices (GCP)” was materially false and misleading because Defendants knew
6 or with deliberate recklessness disregarded that the Phase 2 Study was biased to
7 produce positive results because it was not double-blind. See ¶¶ 51-72.
8 105. On March 19, 2007, the Company issued the following press release:
9 Medivation Announces Presentation of Full Top-Line Data From
10Dimebon(TM) Six-Month Trial at Major International Alzheimer’sDisease Conference
11
12 SAN FRANCISCO, March 19, 2007 /PRNewswire-FirstCall viaCOMTEX News Network/ -- Medivation, Inc. (Amex: MDV) today
13 announced that six-month results from its randomized, double-
14 blinded, placebo-controlled Phase 2 efficacy trial of Dimebon(TM)in patients with mild-to-moderate Alzheimer’s disease demonstrated
15 that patients treated with Dimebon were significantly improved
16 compared to patients taking placebo on all five efficacy endpointsstudied, which assessed cognitive function, memory, ability to
17 perform tasks of daily living, global function and behavior.
18Full top-line data from this trial were presented yesterday for the first
19 time as an oral presentation (abstract #1662) at the 8th International
20 Conference on Alzheimer’s and Parkinson’s Diseases: Progress andNew Perspectives, in Salzburg, Austria, by the study’s lead
21 investigator, Rachelle S. Doody, M.D., Ph.D., the Effie Marie Cain
22 Chair in Alzheimer’s Disease Research at the Alzheimer’s Diseaseand Memory Disorders Center, Baylor College of Medicine in
23 Houston.
24New data presented in Salzburg included the magnitude and levels of
25 statistical significance by which the Dimebon-treated patients
26 outperformed the placebo-treated patients on the Mini Mental State
27Exam (MMSE: p<0.0001), the Alzheimer’s Disease Cooperative
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1 Study Group-Activities of Daily Living (ADCS-ADL: p=0.002), and
2 the Neuropsychiatric Inventory (NPI: p=0.006). As previously
reported, Dimebon-treated patients also demonstrated significant
3 improvement versus placebo on both the primary and key secondary
4 endpoints in this study -- the Alzheimer’s Disease Assessment Scale-
cognitive subscale (ADAS-cog: p<0.0001) and the Clinician’s
5 Interview-Based Impression of Change with a caregiver interview
6 (CIBIC-plus: p<0.0001). Dimebon was well tolerated in this study.
[Emphasis added.]7
8 106. Defendants’ statements that the Phase 2 Study were “double-blind”
9 and “placebo-controlled” were materially misleading because Defendants knew or
10 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
11 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
12 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
13 patients to distinguish between the Dimebon pill and the placebo because patients
14 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
15 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
16 See ¶¶ 51-72.
17 107. Defendants’ statements concerning the positive results of the Phase 2
18 Study were materially false and misleading because Defendants knew or with
19 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
20 positive results because it was not double-blind. As alleged herein, Defendants
21 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
22 false and misleading positive results. See ¶¶ 51-72.
23 108. On November 14, 2007, the Company issued its quarterly report on
24 Form 10-QSB. The report, which was signed by Defendant Machado, stated, in
25 pertinent part:
26 Alzheimer’s Disease Program. In a randomized, double-blinded,placebo-controlled clinical trial of 183 patients with mild to
27 moderate Alzheimer’s disease conducted at 11 sites in Russia,
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1 Dimebon improved the clinical course of Alzheimer’s disease patients
2by causing statistically significant improvements over placebo in eachof the five primary aspects of the disease – memory, thinking,
3 activities of daily living, behavior and overall clinical function.
4 Significant gains over placebo in all five primary disease aspects were
evident after as little as 12 weeks of treatment, and were maintained
5 after both six months and a full year of treatment. In addition, after six
6 months of treatment Dimebon patients were significantly better on all
five disease aspects than they were at the beginning of the study. The
7 real world impact of these data was evaluated by independent
8 assessment, including caregiver interviews, which confirmed
improvement or stabilization in 81 % of Dimebon-treated patients after
9 six months of treatment. Importantly, Dimebon’s overall benefit
10compared to placebo continued to increase over time, and was largerat one year than at six months. [Emphasis added.]
11
12 109. Defendants’ statements that the Phase 2 Study were “double-blind”
13 and “placebo-controlled” were materially misleading because Defendants knew or
14 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
15 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
16 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
17 patients to distinguish between the Dimebon pill and the placebo because patients
18 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
19 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
20 See ¶¶ 51-72.
21 110. Defendants’ statements concerning the positive results of the Phase 2
22 Study were materially false and misleading because Defendants knew or with
23 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
24 positive results because it was not double-blind. As alleged herein, Defendants
25 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
26 false and misleading positive results. See ¶¶ 51-72.
27 111. On January 28, 2008, the Company issued the following press release:
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1 Medivation Plans to Initiate Pivotal Confirmatory Phase 3 Trial of
2 Dimebon(TM) for Alzheimer’s Disease in Second Quarter of 2008
3 SAN FRANCISCO, Jan 28, 2008 /PRNewswire-FirstCall via
4 COMTEX News Network/ -- Medivation, Inc. (Nasdaq: MDVN)today announced that, based on its end-of-Phase 2 meeting with the
5 U.S. Food and Drug Administration (FDA), the Company plans to
6 begin a pivotal confirmatory Phase 3 trial of Dimebon(TM) for mild-to-moderate Alzheimer’s Disease in the second quarter of 2008.
7
8****
In the previously completed trial Dimebon-treated patients were
9 significantly improved over placebo patients on both the ADAS-cog
10 and CIBIC-plus, with p values of less than 0.0001. This level ofstatistical significance is several times better than what is required to
11 obtain marketing approval.
12“We changed as little as possible in the design of the Phase 3 trial
13 given the highly statistically significant results of our previous14 trial,” said Lynn Seely, M.D., chief medical officer of Medivation.
“The primary endpoints, duration of treatment and patient inclusion
15 and exclusion criteria are all substantially identical to the previous
16 trial. The primary differences are that the Phase 3 trial will beglobal and will test two doses of Dimebon -- the dose studied in the
17 previous trial plus a lower dose to address the regulatory18 recommendation that minimum effective dose be explored in the
19development of investigational drugs.” [Emphasis added.]
20 112. Defendants’ statements concerning the positive results of the Phase 2
21 Study were materially false and misleading because Defendants knew or with
22 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
23 positive results because it was not double-blind. As alleged herein, Defendants
24 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
25 false and misleading positive results. See ¶¶ 51-72.
26 113. Defendants’ statements that “We changed as little as possible in the
27 design of the Phase 3 trial” and discussing the “primary difference” between
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1 Phase 2 and Phase 3 were materially false and misleading because Defendants
2 knew or with deliberate recklessness disregarded that that Defendants changed the
3 Dimebon pills in the Phase 3 Study by coating them to mask the pills and prevent
4 bias. See ¶¶ 51-72.
5 114. On February 19, 2008, the Company issued its annual report on Form
6 10-KSB (the “2007 Annual Report”). The report, signed by Defendants Machado,
7 Hung, and Bailey, stated, in pertinent part:
8 Mechanism of Action
9Based on preclinical research that we have conducted, we believe
10 that Dimebon is exerting its activity through a novel mechanism
11 of action involving blockade of mitochondrial pores. [Emphasisadded.]
12
13 115. Defendants’ statements identifying the mitochondria as Dimebon’s
14 method of action were materially false and misleading because Defendants knew
15 or with deliberate recklessness disregarded that Dimebon’s effect on the
16 mitochondria was based on flawed studies and disputed by members of the
17 scientifically community. See ¶¶ 73-79.
18 116. The 2007 Annual Report also stated:
19 We completed our first pivotal Alzheimer’s disease trial in 2006. Thisrandomized, double-blinded, placebo-controlled clinical trial
20 enrolled 183 patients with mild-to-moderate Alzheimer’s disease at 11
21 sites in Russia. Patients were randomized to two treatment groups—one of which received Dimebon three times per day and the other of
22 which received placebo—and were not permitted to take any other
23 Alzheimer’s disease drugs during the trial.
24 ****
25 Dimebon caused statistically significant improvement over placebo onall five clinical endpoints after six months and a full year of treatment.
26 Particularly high levels of statistical significance were achieved after
27 both six months and a full year of treatment on both of the two
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1 endpoints used by the FDA to approve drugs for mild-to-moderate
2 Alzheimer’s disease—the Alzheimer’s Disease Assessment Scale-
cognitive subscale (ADAS-cog) (p<0.0001 at both six months and one
3 year) and the Clinician’s Interview Based Impression of Change-plus
4caregiver interview (CIBIC-plus) (p<0.0001 at six months andp=0.006 at one year). These levels of significance are many times
5 better than that required to obtain marketing approval (p<0.05).
6 Dimebon’s benefits over placebo were seen very quickly after
treatment began, reaching statistical significance on four of the five
7 clinical endpoints, including both the ADAS-cog and the CIBIC-plus,
8 after only twelve weeks of therapy. Compared to their starting scores
at the beginning of the trial, Dimebon-treated patients were
9 significantly better on all five endpoints after six months of treatment
10and remained stabilized on all five clinical endpoints after a full yearof treatment. By contrast, scores of the placebo-treated patients
11 declined from their starting levels on all five endpoints after both six
12months and a full year of treatment. The overall benefit seen inDimebon-treated patients compared to placebo-treated patients
13 continued to increase in magnitude over the course of the trial. The
14mean drug-placebo difference on the ADAS-cog increased from 4.0points at six months to 6.9 points at one year, while that on the
15 CIBIC-plus increased from 0.6 points at six months to 0.8 points at
16one year. The clinical relevance of these data was evaluated byindependent assessment, including caregiver interviews, which
17 confirmed improvement or stabilization in 81 % and 70% of Dimebon-
18treated patients after six months and a full year of treatment,respectively. [Emphasis added.]
19
20 117. Defendants’ statements that the Phase 2 Study were “double-blind”
21 and “placebo-controlled” were materially misleading because Defendants knew or
22 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
23 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
24 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
25 patients to distinguish between the Dimebon pill and the placebo because patients
26 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
27
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1 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
2 See ¶¶ 51-72.
3 118. Defendants’ statements concerning the positive results of the Phase 2
4 Study were materially false and misleading because Defendants knew or with
5 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
6 positive results because it was not double-blind. As alleged herein, Defendants
7 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
8 false and misleading positive results. See ¶¶ 51-72.
9 119. On March 15, 2008, the Company issued the following press release:
10 Medivation’s Dimebon(TM) Stabilizes Behavioral Symptoms in
11Alzheimer’s Disease Patients, Resulting in Reduced CaregiverDistress
12
13 -- Neuropsychiatric Data from Pivotal Trial Presented at AnnualMeeting of American Association for Geriatric Psychiatry --
14
15 SAN FRANCISCO and ORLANDO, Fla., March 15, 2008/PRNewswire-FirstCall via COMTEX News Network/ -- Medivation,
16 Inc. (Nasdaq: MDVN) today announced that clinical results from its
17 first pivotal trial of Dimebon (TM) showed that behavioral symptomswere stabilized in patients with mild-to-moderate Alzheimer’s disease
18 (AD) over a one-year period, resulting in decreased caregiver distress.
19 Benefits of Dimebon were seen across most behavioral symptoms andwere most prominent in the symptoms of depression, apathy,
20 hallucinations, irritability and motor disturbance (i.e., engaging in
21 repetitive activities, such as pacing around the house). The data werepresented today during a poster session on new research topics at the
22 annual meeting of the American Association for Geriatric Psychiatry
23 (AAGP) by Jeffrey Cummings, M.D., the Augustus Rose Professor ofNeurology at the University of California, Los Angeles, and Director
24 of the UCLA Alzheimer’s Disease Center.
25****
26 Dimebon Showed Statistically Significant Benefit Versus Placebo on
27 All Key Efficacy Endpoints
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1 Medivation previously announced efficacy and safety results from the
2pivotal, 12-month, double-blind, placebo-controlled trial ofDimebon in 183 patients with mild-to-moderate AD. Dimebon
3 demonstrated statistically significant benefit versus placebo on all five
4 efficacy endpoints at both six and 12 months. These endpoints
spanned all of the most frequently studied aspects of Alzheimer’s
5 disease: cognition and memory, overall clinical function, activities of
6 daily living and behavioral problems. Importantly, on every endpoint
studied, the benefits of Dimebon over placebo at one year were stable
7 or greater when compared to benefits at six months. No marketed drug
8 for the treatment of Alzheimer’s disease has shown this level of
efficacy in published trials. [Emphasis added.]9
10 120. Defendants’ statements that the Phase 2 Study were “double-blind”
11 and “placebo-controlled” were materially misleading because Defendants knew or
12 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
13 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
14 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
15 patients to distinguish between the Dimebon pill and the placebo because patients
16 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
17 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
18 See ¶¶ 51-72.
19 121. Defendants’ statements concerning the positive results of the Phase 2
20 Study were materially false and misleading because Defendants knew or with
21 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
22 positive results because it was not double-blind. As alleged herein, Defendants
23 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
24 false and misleading positive results. See ¶¶ 51-72.
25 122. On April 15, 2008, the Company issued a press release stating, in
26 pertinent part:
27
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1 Dimebon Showed Statistically Significant Benefit Versus Placebo on
2 All Key Efficacy Endpoints
3 Medivation previously announced efficacy and safety results from the
4 pivotal, 12-month, double-blind, placebo-controlled trial ofDimebon in 183 patients with mild-to-moderate AD. Dimebon
5 improved the clinical course of Alzheimer’s disease patients by
6 causing statistically significant improvements over placebo in each ofthe five primary aspects of the disease -- memory, thinking, activities
7 of daily living, behavior and overall clinical function. Significant
8 gains over placebo were evident after as little as 12 weeks oftreatment, and were maintained after both six months and a full year
9 of treatment. In addition, after six months of treatment, Dimebon
10 patients were significantly better on all five disease aspects than theywere at the beginning of the study. The real-world impact of these
11 data was evaluated by independent assessment, including caregiver
12 interviews, which confirmed improvement or stabilization in 81percent of Dimebon-treated patients after six months of treatment.
13 Importantly, Dimebon’s overall benefit compared to placebo
14 continued to increase over time, and was larger at one year than at sixmonths. [Emphasis added.]
15
16 123. Defendants’ statements that the Phase 2 Study were “double-blind”
17 and “placebo-controlled” were materially misleading because Defendants knew or
18 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
19 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
20 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
21 patients to distinguish between the Dimebon pill and the placebo because patients
22 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
23 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
24 See ¶¶ 51-72.
25 124. Defendants’ statements concerning the positive results of the Phase 2
26 Study were materially false and misleading because Defendants knew or with
27 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
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1 positive results because it was not double-blind. As alleged herein, Defendants
2 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
3 false and misleading positive results. See ¶¶ 51-72.
4 125. On April 17, 2008, the Company issued a press release stating, in
5 pertinent part:
6 Dimebon Significantly Improved Cognitive Function at One Year
7****
8 Results showed that Dimebon-treated patients were significantly
9 improved compared with placebo on 9 of the 11 ADAS-cogsubdomains after one year of treatment. Benefits were observed in
10 memory (word recall, p=0.04; word recognition, p=0.03;
11 remembering instructions, p=0.10); orientation (p= 0.01);constructional praxis (the ability to copy simple drawings or patterns,
12 p=0.005) and ideational praxis (the ability to perform a familiar but
13 complex sequence of actions, p=0.006); and language (followingcommands, p<0.0001; naming objects, p<0.0001; word finding,
14 p=0.005; comprehension, p=0.15; overall language, p=0.0002).
15“We have recently presented a number of different findings from our
16 first pivotal trial of Dimebon at scientific conferences, demonstrating
17 that this investigational drug has a beneficial impact on the keyaspects of Alzheimer’s disease -- from behavioral symptoms to
18 thinking and memory problems to impairments in daily function,” said
19 Lynn Seely, M.D., chief medical officer of Medivation. . . .
20 Dimebon Showed Statistically Significant Benefit Versus Placebo on
21 All Key Efficacy Endpoints
22 Medivation previously announced efficacy and safety results from the
23 pivotal, 12-month, double-blind, placebo-controlled trial of
24Dimebon in 183 patients with mild-to-moderate AD. Dimebonimproved the clinical course of Alzheimer’s disease patients by
25 causing statistically significant improvements over placebo in each of
26the five primary aspects of the disease -- memory, thinking, activitiesof daily living, behavior and overall clinical function. Significant
27 gains over placebo were evident after as little as 12 weeks of
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1 treatment, and were maintained after both six months and a full year
2 of treatment. In addition, after six months of treatment, Dimebon
patients were significantly better on all five disease aspects than they
3 were at the beginning of the study. The real-world impact of these
4data was evaluated by independent assessment, including caregiverinterviews, which confirmed improvement or stabilization in 81
5 percent of Dimebon-treated patients after six months of treatment.
6 Importantly, Dimebon’s overall benefit compared to placebo
continued to increase over time, and was larger at one year than at six
7 months. [Emphasis added.]
8126. Defendants’ statements that the Phase 2 Study were “double-blind”
9and “placebo-controlled” were materially misleading because Defendants knew or
10with deliberate recklessness disregarded that the Phase 2 Study was neither double-
11blind nor placebo-controlled. As alleged herein, Defendants used uncoated
12Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
13patients to distinguish between the Dimebon pill and the placebo because patients
14given Dimebon experienced Dimebon’s bitter taste and numbing effect.
15Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
16See ¶¶ 51-72.
17127. Defendants’ statements concerning the positive results of the Phase 2
18Study were materially false and misleading because Defendants knew or with
19deliberate recklessness disregarded that the Phase 2 Study was biased to produce
20positive results because it was not double-blind. As alleged herein, Defendants
21designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
22false and misleading positive results. See ¶¶ 51-72.
23128. On May 9, 2008, the Company issued its quarterly report on Form 10-
24Q. The report, signed by Defendant Machado, stated, in pertinent part:
25Based on data generated in independent outside laboratories, we
26 believe that Dimebon operates through a novel mitochondrial
27 mechanism of action.
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1 129. Defendants’ statements identifying the mitochondria as Dimebon’s
2 method of action were materially false and misleading because Defendants knew
3 or with deliberate recklessness disregarded that Dimebon’s effect on the
4 mitochondria was based on flawed studies and disputed by members of the
5 scientifically community. See ¶¶ 73-79.
6 130. On June 9, 2008, the Company issued the following press release:
7 Medivation Initiates Second Pivotal Phase 3 Trial of Dimebon(TM) in
8 Patients With Alzheimer’s Disease
9 - Dimebon Showed Statistically Significant Benefit Versus Placebo
10 on All Key Efficacy Endpoints in First Pivotal Trial -
11 SAN FRANCISCO, June 9, 2008 /PRNewswire-FirstCall via
12 COMTEX News Network/ -- Medivation, Inc. (Nasdaq: MDVN)today announced it has initiated dosing of patients in its second
13 pivotal Phase 3 trial of the investigational drug Dimebon(TM) in
14 patients with mild-to-moderate Alzheimer’s disease (AD). . . .
15 “We saw very encouraging results in our first pivotal trial, in which
16 Dimebon demonstrated statistically significant improvements overplacebo on all five efficacy endpoints at both six months and at one
17 year. We look forward to confirming the efficacy and safety of
18 Dimebon in the CONNECTION study,” said Lynn Seely, M.D., ChiefMedical Officer of Medivation.
19
20 ****
21Medivation previously announced results from its first pivotal trial ofDimebon in 183 patients with mild-to-moderate Alzheimer’s disease,
22 which showed that Dimebon improved the clinical course of
23Alzheimer’s disease by demonstrating statistically significantimprovements over placebo in each of the five primary aspects of the
24 disease -- memory, thinking, activities of daily living, behavior and
25overall clinical function. Significant gains over placebo were evidentafter as little as 12 weeks of treatment, and were maintained after both
26 six months and a full year of treatment. Importantly, overall benefit
27
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1 compared to placebo continued to increase over time, and was larger
2at one year than at six months. [Emphasis added.]
3 131. Defendants’ statements concerning the positive results of the Phase 2
4 Study were materially false and misleading because Defendants knew or with
5 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
6 positive results because it was not double-blind. As alleged herein, Defendants
7 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
8 false and misleading positive results. See ¶¶ 51-72.
9 132. On July 7, 2008, the Company issued the following press release:
10 Medivation Announces Positive Top-Line Results From Phase 2
11 Dimebon Study in Huntington’s Disease
12 ****
13 “We are very encouraged that Dimebon improved cognition and waswell tolerated in both trials assessing efficacy that we have conducted
14 to date -- this trial and our first pivotal trial in Alzheimer’s disease.
15 The consistency seen in the data between these two trials underscoresthe potential for this drug,” said Lynn Seely, M.D., chief medical
16 officer of Medivation. “These data are also important because they17 provide further support for our belief that Dimebon is exerting its
benefits through a novel mechanism of action targeting18 mitochondrial dysfunction, a contributor to the loss of neuronal
19 function in Huntington’s disease.” [Emphasis added.]
20 133. Defendants’ statements identifying the mitochondria as Dimebon’s
21 method of action were materially false and misleading because Defendants knew
22 or with deliberate recklessness disregarded that Dimebon’s effect on the
23 mitochondria was based on flawed studies and disputed by members of the
24 scientifically community. See ¶¶ 73-79.
25 134. On July 17, 2008, Medivation issued a press release entitled
26 “Medivation Announces Publication in The Lancet of Dimebon Pivotal Trial27
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1 Results in Alzheimer’s Disease - Dimebon Improved the Clinical Course of
2 Alzheimer’s Disease; Patients Experienced Statistically Significant Improvements
3 in Memory and Thinking, Activities of Daily Living, Behavior and Overall
4 Function,” which stated in part:
5 Medivation, Inc. today announced publication of the results of its first
6 Alzheimer’s disease pivotal clinical trial of the investigational drug
Dimebon in the July 19, 2008 issue of The Lancet. In this double-
7 blind, placebo-controlled trial, patients with mild-to-moderate
8 Alzheimer’s disease treated with Dimebon experienced statistically
significant improvements compared to placebo in all the key aspects
9 of the disease: memory and thinking, activities of daily living,
10behavior and overall function.
11 After both six months and a full year of treatment, Dimebon-treated
12 patients were significantly better than placebo-treated patients on allkey aspects of the disease. The benefit on the primary endpoint, the
13 Alzheimer’s Disease Assessment Scale-cognitive subscale (ADAS-
14 cog) at six months, was highly significant (p<0.0001). Patientstreated with Dimebon were also significantly improved at six months
15 over baseline on all measures (p=0.005 on ADAS-cog). Dimebon’s
16 benefit over placebo continued to increase throughout the 12-monthtreatment period. At the end of 12 months, Dimebon-treated patients
17 preserved their starting level of function on each measure of
18 Alzheimer’s disease. The results of this trial suggest that, if thefindings are replicated, Dimebon could advance Alzheimer’s
19 treatment, offering more hope for patients and their caregivers.”
20 [Emphasis added.]
21 135. Defendants’ statements that the Phase 2 Study were “double-blind”
22 and “placebo-controlled” were materially misleading because Defendants knew or
23 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
24 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
25 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
26 patients to distinguish between the Dimebon pill and the placebo because patients
27 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
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1 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
2 See ¶¶ 51-72.
3 136. Defendants’ statements concerning the positive results of the Phase 2
4 Study were materially false and misleading because Defendants knew or with
5 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
6 positive results because it was not double-blind. As alleged herein, Defendants
7 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
8 false and misleading positive results. See ¶¶ 51-72.
9 137. On July 30, 2008, Medivation issued a press release entitled
10 “Medivation Presents Positive New Data on Dimebon’s Long-Term Efficacy and
11 Novel Mechanism of Action at the International Conference on Alzheimer’s
12 Disease,” which stated in part:
13 Medivation, Inc. today announced new data showing that its
14investigational drug Dimebon continues to produce broad,clinically meaningful benefits in Alzheimer’s disease patients after
15 long-term dosing, and appears to operate through a novel
16mechanism of action. These data were presented today in a podiumsession and two poster sessions at the 2008 Alzheimer’s Association
17 International....
18Dimebon’s Novel Mechanism of Action
19
20 In a podium presentation at ICAD 2008, Medivation presentednew data on Dimebon’s novel mitochondrial mechanism of action.
21 Mitochondria generate energy for cells and play important roles in
22 mediating cell function and survival. Mitochondrial dysfunction hasbeen linked in the published literature to both Alzheimer’s and
23 Huntington’s diseases. Preclinical data presented showed that24 Dimebon improves mitochondrial function in the setting of
cellular stress with very high potency. For example, Dimebon25 treatment improved mitochondrial function and increased the
26 number of surviving cells after treatment with a cell toxin knownas ionomycin in a dose-dependent fashion. The effect of Dimebon
27 to improve mitochondrial dysfunction has been confirmed in the
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1 independent laboratory of Maria Ankarcrona, Ph.D., Associate
2 Professor at the Karolinska Institutet in Sweden.
3 . . . . This is a novel mechanism that may, in part, explain the
4 clinical benefits seen in Alzheimer’s patients treated with Dimebon.”
5 About the Pivotal Study. Dimebon’s first pivotal Alzheimer’s trial
6 was a randomized, double-blind, placebo-controlled study of 183patients with mild to moderate Alzheimer’s disease. In this study,
7 patients treated with Dimebon experienced statistically significant
8 improvements compared to placebo in all the key aspects of thedisease: memory and thinking, activities of daily living, behavior and
9 overall function - after both six months and a full year of treatment.
10 Dimebon’s benefit over placebo continued to increase throughout the12-month treatment period. At the end of 12 months, Dimebon-
11 treated patients preserved their starting level of function on each
12 measure of Alzheimer’s disease. [Emphasis added.]
13 138. Defendants’ statements that the Phase 2 Study were “double-blind”
14 and “placebo-controlled” were materially misleading because Defendants knew or
15 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
16 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
17 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
18 patients to distinguish between the Dimebon pill and the placebo because patients
19 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
20 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.21 See ¶¶ 51-72.
22 139. Defendants’ statements concerning the positive results of the Phase 2
23 Study were materially false and misleading because Defendants knew or with
24 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
25 positive results because it was not double-blind. As alleged herein, Defendants26
27
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1 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
2 false and misleading positive results. See ¶¶ 51-72.
3 140. Defendants’ statements identifying the mitochondria as Dimebon’s
4 method of action were materially false and misleading because Defendants knew
5 or with deliberate recklessness disregarded that Dimebon’s effect on the
6 mitochondria was based on flawed studies and disputed by members of the
7 scientifically community. See ¶¶ 73-79.
8 141. On August 11, 2008, Medivation reported its second quarter 2008
9 financial results, in a release which stated in part:
10 Medivation, Inc. today reported on its corporate progress and financial
11results for the quarter ended June 30, 2008.
12 “Based on the significant findings of the Dimebon 12-month pivotal
13 trial in Alzheimer’s disease recently published in The Lancet, as wellas the promising results from our Phase 2 study in Huntington’s
14 disease announced last month, we believe Dimebon is among the most
15 promising drug candidates being investigated today to treat patientswith debilitating, and ultimately fatal, neurodegenerative diseases,”
16 said David Hung, M.D., president and chief executive officer of
17 Medivation. ...
18 • Published results of the first pivotal clinical trial of Dimebon in
19 the July 19, 2008 issue of The Lancet. The article highlightedthat patients with mild-to-moderate Alzheimer’s disease treated
20 with Dimebon experienced statistically significant
21 improvements compared to placebo on all of the key aspects ofthe disease - memory and thinking, activities of daily living,
22 behavior and overall function - over a 12-month period.
23 • Presented new Dimebon data at three presentations at the 2008
24 Alzheimer’s Association International Conference on
25 Alzheimer’s Disease (ICAD):
26 • Presented results from a six-month, open-label extension
27of the 12-month placebo-controlled study showing that
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1 Dimebon continued to improve the clinical course of the
2 disease. After 18 months of treatment, Dimebon
preserved function in patients at or near their original
3 levels upon entering the trial across all key aspects of
4 Alzheimer’s disease. Dimebon remained well tolerated
throughout the 18-month treatment period.5
• Presented new 12-month data from subgroup analyses by
6 disease severity of the first pivotal trial showing that
7 Dimebon benefited both mild and moderate patients,resulting in significant benefit on the study’s primary
8 endpoint, the Alzheimer’s Disease Assessment
9 Scale¬cognitive subscale (ADAS-cog). The drug-placebo difference in moderate patients was 9.7 ADAS-
10 cog points after 12 months of Dimebon treatment.11
• Presented new preclinical data at a podium presentation
12 on Dimebon’s novel mechanism of action, showing that
13 Dimebon improves mitochondrial function in the settingof cellular stress with very high potency. Mitochondria,
14 which generate energy for cells and play important roles
15 in mediating cell function and survival, have beenassociated with both Alzheimer’s and Huntington’s
16 diseases in the published literature. [Emphasis added.]
17 142. Defendants’ statements concerning the positive results of the Phase 2
18 Study were materially false and misleading because Defendants knew or with
19 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
20 positive results because it was not double-blind. As alleged herein, Defendants
21 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
22 false and misleading positive results. See ¶¶ 51-72.
23 143. Defendants’ statements identifying the mitochondria as Dimebon’s
24 method of action were materially false and misleading because Defendants knew
25 or with deliberate recklessness disregarded that Dimebon’s effect on the26
27
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1 mitochondria was based on flawed studies and disputed by members of the
2 scientifically community. See ¶¶ 73-79.
3 144. On August 11, 2008, the Individual Defendants held a conference call
4 with analysts. On that call, Defendant Hung stated:
5 We believe that Dimebon has a novel mitochondrial mechanism of
6 action that makes it a promising potential treatment for diseases such
as Alzheimer’s and Huntington’s and potentially other
7 neurodegenerative diseases as well.
8In a podium presentation at the ICAD 2008 meeting in Chicago at the
9 end of July we presented new preclinical data on Dimebon’s
10 mechanism of action that showed Dimebon improves mitochondrialfunction and increased the number of surviving cells after treatment
11 with a cell toxin known as ionomycin in a dose dependent fashion.
12The effect of Dimebon on improving mitochondrial dysfunction
13 has been confirmed in an independent laboratory at the14 Karolinska Institute in Sweden. We also presented data that
showed Dimebon promoted neurite outgrowth, an important step15 in the formation of new brain cell connection. [Emphasis added.]
16
17145. Defendants’ statements identifying the mitochondria as Dimebon’s
18 method of action were materially false and misleading because Defendants knew
19 or with deliberate recklessness disregarded that Dimebon’s effect on the
20 mitochondria was based on flawed studies and disputed by members of the
21 scientifically community. See ¶¶ 73-79.
22146. On September 3, 2008, Medivation issued a press release entitled
“Pfizer and Medivation Enter into Global Agreement to Co-Develop and Market2324 Dimebon for the Treatment of Alzheimer’s and Huntington’s Diseases,” which
25 stated in part:
Dimebon is an orally-available, small molecule that has been26 shown to inhibit brain cell death in preclinical models relevant to27 Alzheimer’s disease and Huntington’s disease, making it a potential
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1 treatment for these and other neurodegenerative conditions. Based on
2preclinical data generated to date, Dimebon appears to improve thefunction of mitochondria, the energy generators in cells that play a
3 vital role in governing brain cell health, growth and overall function.
4 Dimebon also has been shown to stimulate the outgrowth of nerves
from brain cells, or neurites, a process that is believed to play an
5 important role in restoring or generating new brain cell connections.
6 [Emphasis added.]
7 147. Defendants’ statements concerning the positive results of the Phase 2
8 Study were materially false and misleading because Defendants knew or with
9 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
10 positive results because it was not double-blind. As alleged herein, Defendants
11 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
12 false and misleading positive results. See ¶¶ 51-72.
13 148. Defendants’ statements identifying the mitochondria as Dimebon’s
14 method of action were materially false and misleading because Defendants knew
15 or with deliberate recklessness disregarded that Dimebon’s effect on the
16 mitochondria was based on flawed studies and disputed by members of the
17 scientifically community. See ¶¶ 73-79.
18 149. On November 10, 2008, Medivation filed its quarterly report on Form
19 10-Q, signed by Defendant Machado. The report stated as follows:
20 Our lead product candidate, Dimebon, has successfully completed the
21 first of two pivotal clinical trials required to seek marketing approvalfrom the U.S. Food and Drug Administration, or FDA, in the U.S. for
22 mild-to-moderate Alzheimer’s disease. ... Based on data generated in
23 independent third party laboratories, we believe that Dimebonoperates through a novel mitochondrial mechanism of action.
24
25 150. Defendants’ statements concerning the positive results of the Phase 2
26 Study were materially false and misleading because Defendants knew or with
27 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
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1 positive results because it was not double-blind. As alleged herein, Defendants
2 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
3 false and misleading positive results. See ¶¶ 51-72.
4 151. Defendants’ statements identifying the mitochondria as Dimebon’s
5 method of action were materially false and misleading because Defendants knew
6 or with deliberate recklessness disregarded that Dimebon’s effect on the
7 mitochondria was based on flawed studies and disputed by members of the
8 scientifically community. See ¶¶ 51-72.
9 152. On December 9, 2008, Medivation issued a press release entitled
10 “Medivation Presents New Data on Dimebon’s Novel Mechanism of Action -
11 Dimebon Shown to Impact Two Key Aspects of Brain Cell Function,” which
12 stated in part:
13 Medivation, Inc. presented new data that provide additional evidence
14that Dimebon, its lead product candidate in development to treatAlzheimer’s and Huntington’s diseases, potentially operates via a
15 novel mitochondrial mechanism of action. In preclinical studies,
16Dimebon was shown to impact two key aspects of brain cell function:it promoted neurite outgrowth and it preserved mitochondrial function
17 after brain cells were challenged with beta amyloid, a toxic substance
18often associated with Alzheimer’s disease and the loss of brain cells.
19 “In experiments in which brain cells were exposed to
20 different toxins, including beta amyloid, Dimebon was shown tostabilize mitochondrial function, a vital element of neuron
21 function and survival,” said Andrew Proffer, Ph.D., vice
22 president, preclinical development for Medivation. “Thesefindings suggest that Dimebon may have benefits on slowing the
23 progression of Alzheimer’s disease by preserving mitochondria)
24 function. This potential novel mechanism may help explain theclinical benefits seen to date in Alzheimer’s patients treated with
25 Dimebon.”
26****
27
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1 Dimebon’s effect on improving mitochondrial dysfunction
2has been confirmed previously in the independent laboratory ofMaria Ankarcrona, Ph.D., associate professor at the Karolinska
3 Institutet in Sweden. Additional data about Dimebon’s potential
4 novel mechanism of action were presented in November at theSociety for Neuroscience’s “Neuroscience 2008” conference in
5 Washington, D.C.
6Preclinical data also have been presented that suggest that
7 Dimebon works through a different mechanism of action than other
8 drugs that focus on targets implicated in cognition and memory loss,such as cholinesterase inhibition. In these experiments, Dimebon was
9 shown to be a weak cholinesterase inhibitor, and additional data from
10 binding assays showed that Dimebon did not have strong affinity toother standard targets. This suggests that Dimebon’s potential novel
11 mitochondrial mechanism of action may account for the clinical
12 benefit observed in the Dimebon Alzheimer’s and Huntington’sdisease clinical trials completed to date. [Emphasis added.]
13
14 153. Defendants’ statements identifying the mitochondria as Dimebon’s
15 method of action were materially false and misleading because Defendants knew
16 or with deliberate recklessness disregarded that Dimebon’s effect on the
17 mitochondria was based on flawed studies and disputed by members of the
18 scientifically community. See ¶¶ 73-79.
19 154. On March 16, 2009, Medivation filed its annual report for the 2008
20 fiscal year on Form 10-K (the “2008 Annual Report”). The report was signed by
21 Defendants Hung, Machado, Palekar, and Bailey. The report stated, in pertinent
22 part:
23 Mechanism of Action
24 We believe that Dimebon is exerting its activity through a novel
25 mechanism of action involving enhancement of mitochondrialfunction.....
26
27
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1 In July 2008, we presented new preclinical data on Dimebon’s novel
2 mitochondrial mechanism of action. These data showed that Dimebon
improves mitochondrial function in the setting of cellular stress with
3 very high potency. For example, Dimebon treatment improved
4 mitochondrial function and increased the number of surviving cells in
a dose-dependent fashion after treatment with a cell toxin known as
5 ionomycin.
6 ****
7 In addition, we believe based on preclinical data that Dimebon works
8 through a different mechanism of action than other drugs that focus ontargets implicated in cognition and memory loss, such as
9 cholinesterase inhibition. In these preclinical experiments, Dimebon
10 was shown to be a weak cholinesterase inhibitor, and additional datafrom binding assays showed that Dimebon did not have strong affinity
11 to other standard targets. This suggests that Dimebon’s potential
12 novel mitochondrial mechanism of action may account for theclinical benefit observed in the Dimebon Alzheimer’s and
13 Huntington’s disease clinical trials completed to date. [Emphasis
14 added.]
15 155. Defendants’ statements identifying the mitochondria as Dimebon’s
16 method of action were materially false and misleading because Defendants knew
17 or with deliberate recklessness disregarded that Dimebon’s effect on the
18 mitochondria was based on flawed studies and disputed by members of the
19 scientifically community. See ¶¶ 73-79.
20 156. The 2008 Annual Report also stated:
21 First Pivotal Clinical Trial
22We completed our first pivotal Alzheimer’s disease trial in 2007. This
23 randomized, double-blinded, placebo-controlled clinical trial
24 enrolled 183 patients with mild-to-moderate Alzheimer’s disease at 11sites in Russia. Patients were randomized to two treatment groups—
25 one of which received Dimebon three times per day and the other of
26 which received placebo—and were not permitted to take any other
27Alzheimer’s disease drugs during the trial. We used five widely-
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1 accepted clinical endpoints in this trial to assess Dimebon’s effects on
2 all of the primary aspects of Alzheimer’s disease—memory, thinking,
activities of daily living (bathing, feeding, self-care, etc), behavior
3 (agitation, aggression, delusions, hallucinations, etc.) and overall
4 clinical function. Patients were treated for six months, and those who
completed the initial six months of treatment were offered the
5 opportunity to continue treatment for an additional six months on a
6 blinded basis in the same treatment group to which they originally
were randomized.7
8 Dimebon caused statistically significant improvement over placebo onall five clinical endpoints after six months and a full year of treatment.
9 Particularly high levels of statistical significance were achieved after
10 both six months and a full year of treatment on both of the twoendpoints used by the FDA to approve drugs for mild-to-moderate
11 Alzheimer’s disease—the Alzheimer’s Disease Assessment Scale-
12 cognitive subscale, or ADAS-cog, (p<0.0001 at both six months andone year) and the Clinician’s Interview-based Impression of Change-
13 plus caregiver input, or CIBIC-plus, (p<0.0001 at six months and
14 p=0.006 at one year). These levels of significance are many timesbetter than that required to obtain marketing approval (p<0.05).
15 Dimebon’s benefits over placebo were seen very quickly after
16 treatment began, reaching statistical significance on four of the fiveclinical endpoints, including both the ADAS-cog and the CIBIC-plus,
17 after only twelve weeks of therapy. Compared to their starting scores
18 at the beginning of the trial, Dimebon-treated patients weresignificantly better on all five endpoints after six months of treatment
19 and remained stabilized on all five clinical endpoints after a full year
20 of treatment. By contrast, scores of the placebo-treated patientsdeclined from their starting levels on all five endpoints after both six
21 months and a full year of treatment. The overall benefit seen in
22 Dimebon-treated patients compared to placebo-treated patientscontinued to increase in magnitude over the course of the trial. The
23 mean drug-placebo difference on the ADAS-cog increased from 4.0
24 points at six months to 6.9 points at one year, while that on theCIBIC-plus increased from 0.6 points at six months to 0.8 points at
25 one year. The clinical relevance of these data was evaluated by
26 independent assessment, including caregiver input, which confirmedimprovement or stabilization in 81% and 70% of Dimebon-treated
27
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1 patients after six months and a full year of treatment, respectively.
2 [Emphasis added.]
3 157. Defendants’ statements that the Phase 2 Study were “double-blind”
4 and “placebo-controlled” were materially misleading because Defendants knew or
5 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
6 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
7 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
8 patients to distinguish between the Dimebon pill and the placebo because patients
9 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
10 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
11 See ¶¶ 51-72.
12 158. Defendants’ statements concerning the positive results of the Phase 2
13 Study were materially false and misleading because Defendants knew or with
14 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
15 positive results because it was not double-blind. As alleged herein, Defendants
16 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
17 false and misleading positive results. See ¶¶ 51-72.
18 159. On March 16, 2009, Medivation reported its fourth quarter and year-
19 end 2008 financial results in a release which stated in part:
20 Medivation, Inc. today reported on its corporate progress and
21 financial results for the fourth quarter and year ended December 31,2008.
22
23 ****
24 Mechanism of Action (MOA)
25• Presented new data at various medical conferences,
26 including the recent AD/PD conference, that provide
27 additional evidence that Dimebon potentially stabilizes
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1 and improves mitochondrial function in a way that
2prevents neuron death and dysfunction, a mechanismthought to be distinct from currently available
3 Alzheimer’s disease medications.
4 • At AD/PD, we presented new research from the
5 Karolinska Institutet, which quantified the impact ofDimebon on mitochondrial function. Responses were
6 seen on mitochondrial function at low concentrations of
7 Dimebon across multiple experiments, and Dimebonshowed potent mitochondrial responses in both stressed
8 and normal cells.
9 160. Defendants’ statements identifying the mitochondria as Dimebon’s
10 method of action were materially false and misleading because Defendants knew11
or with deliberate recklessness disregarded that Dimebon’s effect on the12
mitochondria was based on flawed studies and disputed by members of the13
scientifically community. See ¶¶ 73-79.
14161. On May 11, 2009, Medivation filed its quarterly report on Form 10-Q,
15signed by Defendant Machado. The report stated, in pertinent part:
16Based on data generated in independent third party laboratories, we
17 believe that Dimebon operates through a novel mitochondrial
18 mechanism of action.
19 162. Defendants’ statements identifying the mitochondria as Dimebon’s
20 method of action were materially false and misleading because Defendants knew
21 or with deliberate recklessness disregarded that Dimebon’s effect on the
22 mitochondria was based on flawed studies and disputed by members of the
23 scientifically community. See ¶¶ 73-79.
24 163. On May 27, 2009, Medivation announced the pricing of a secondary
25 public offering. The Prospectus Supplement for the offering stated in part:
26 Our Dimebon program
27
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1 ****
2Mechanism of action
3
4 We believe that Dimebon is exerting its activity through a novelmechanism of action involving enhancement of mitochondrial
5 function.
6****
7
8 In July 2008, we presented new preclinical data on Dimebon’s
9 novel mitochondrial mechanism of action. These data showed that
Dimebon improves mitochondrial function in the setting of cellular
10 stress with very high potency. For example, Dimebon treatment
11improved mitochondrial function and increased the number ofsurviving cells in a dose-dependent fashion after treatment with a cell
12 toxin known as ionomycin.
13 ****
14
15 In these preclinical experiments, Dimebon was shown to be a weakcholinesterase inhibitor, and additional data from binding assays
16 showed that Dimebon did not have strong affinity to other standard
17 targets. This suggests that Dimebon’s potential novel mitochondrialmechanism of action may account for the clinical benefit observed in
18 the Dimebon Alzheimer’s and Huntington’s disease clinical trials
19 completed to date.
20 164. Defendants’ statements identifying the mitochondria as Dimebon’s
21 method of action were materially false and misleading because Defendants knew
22 or with deliberate recklessness disregarded that Dimebon’s effect on the
23 mitochondria was based on flawed studies and disputed by members of the
24 scientifically community. See ¶¶ 73-79.
25 165. The prospectus also stated:
26 First pivotal clinical trial27
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1 We completed our first pivotal Alzheimer’s disease trial in 2007. This
2randomized, double-blinded, placebo-controlled clinical trialenrolled 183 patients with mild-to-moderate Alzheimer’s disease at 11
3 sites in Russia. Patients were randomized to two treatment groups—
4 one of which received Dimebon three times per day and the other of
which received placebo—and were not permitted to take any other
5 Alzheimer’s disease drugs during the trial. We used five widely-
6 accepted clinical endpoints in this trial to assess Dimebon’s effects on
all of the primary aspects of Alzheimer’s disease—memory, thinking,
7 activities of daily living (bathing, feeding, self-care, etc.), behavior
8 (agitation, aggression, delusions, hallucinations, etc.) and overall
clinical function. Patients were treated for six months, and those who
9 completed the initial six months of treatment were offered the
10opportunity to continue treatment for an additional six months on ablinded basis in the same treatment group to which they originally
11 were randomized.
12Dimebon caused statistically significant improvement over placebo on
13 all five clinical endpoints after six months and a full year of treatment.
14 Particularly high levels of statistical significance were achieved afterboth six months and a full year of treatment on both of the two
15 endpoints used by the FDA to approve drugs for mild-to-moderate
16 Alzheimer’s disease—the Alzheimer’s Disease Assessment Scale-cognitive subscale, or ADAS-cog, (p<0.0001 at both six months and
17 one year) and the Clinician’s Interview-based Impression of Change-
18 plus caregiver input, or CIBIC-plus, (p<0.0001 at six months andp=0.006 at one year). These levels of significance are many times
19 better than that required to obtain marketing approval (p<0.05).
20 Dimebon’s benefits over placebo were seen very quickly aftertreatment began, reaching statistical significance on four of the five
21 clinical endpoints, including both the ADAS-cog and the CIBIC-plus,
22 after only twelve weeks of therapy. Compared to their starting scoresat the beginning of the trial, Dimebon-treated patients were
23 significantly better on all five endpoints after six months of treatment
24 and remained stabilized on all five clinical endpoints after a full yearof treatment. By contrast, scores of the placebo-treated patients
25 declined from their starting levels on all five endpoints after both six
26 months and a full year of treatment. The overall benefit seen inDimebon-treated patients compared to placebo-treated patients
27 continued to increase in magnitude over the course of the trial. The
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1 mean drug-placebo difference on the ADAS-cog increased from 4.0
2 points at six months to 6.9 points at one year, while that on the
CIBIC-plus increased from 0.6 points at six months to 0.8 points at
3 one year. The clinical relevance of these data was evaluated by
4 independent assessment, including caregiver input, which confirmed
improvement or stabilization in 81% and 70% of Dimebon-treated
5 patients after six months and a full year of treatment, respectively.
6 [Emphasis added.]
7 166. Defendants’ statements that the Phase 2 Study were “double-blind”
8 and “placebo-controlled” were materially misleading because Defendants knew or
9 with deliberate recklessness disregarded that the Phase 2 Study was neither double-
10 blind nor placebo-controlled. As alleged herein, Defendants used uncoated
11 Dimebon pills in the Phase 2 Study. Using uncoated Dimebon pills allowed
12 patients to distinguish between the Dimebon pill and the placebo because patients
13 given Dimebon experienced Dimebon’s bitter taste and numbing effect.
14 Accordingly, the Phase 2 study was unblinded and not truly placebo-controlled.
15 See ¶¶ 51-72.
16 167. Defendants’ statements concerning the positive results of the Phase 2
17 Study were materially false and misleading because Defendants knew or with
18 deliberate recklessness disregarded that the Phase 2 Study was biased to produce
19 positive results because it was not double-blind. As alleged herein, Defendants
20 designed and executed the Phase 2 Study using uncoated Dimebon pills to cause
21 false and misleading positive results. See ¶¶ 51-72.
22 168. On August 5, 2009, Medivation filed its quarterly report on Form 10-
23 Q, signed by Defendant Machado. The report stated, in pertinent part:
24 Based on data generated in independent third party laboratories, we
25 believe that Dimebon operates through a potential novelmitochondrial mechanism of action.
26
27
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1 169. Defendants’ statements identifying the mitochondria as Dimebon’s
2 method of action were materially false and misleading because Defendants knew
3 or with deliberate recklessness disregarded that Dimebon’s effect on the
4 mitochondria was based on flawed studies and disputed by members of the
5 scientifically community. See ¶¶ 73-79.
6 XII. THE TRUTH IS REVEALED
7 Dimebon Fails Phase 3 Trials; Medivation
8Loses $ 923 Million In Market Capitalization In One Day
9 170. On March 3, 2010, before the market opened, Medivation issued a
10 devastating press release with the results of the CONNECTION study:
11 In CONNECTION Study, Dimebon Does Not Meet Primary and
12 Secondary Efficacy Endpoints
13 Separate Phase 3 Safety Study Demonstrates Dimebon’s Tolerability
14 When Used Alone or in Combination with Approved Alzheimer’sDisease Medicines
15
16 NEW YORK & SAN FRANCISCO, Mar 03, 2010 (BUSINESSWIRE) -- Pfizer Inc. (NYSE: PFE) and Medivation, Inc. (NASDAQ:
17 MDVN) today announced results from two Phase 3 trials of the
18 investigational drug Dimebon (latrepirdine*) in patients withAlzheimer’s disease (AD). In the CONNECTION trial, Dimebon did
19 not meet its co-primary or secondary efficacy endpoints compared to
20 placebo. Co-primary endpoints were measures of cognition and globalfunction.
21
22 “The results from the CONNECTION study are unexpected, and we
23are disappointed for the Alzheimer’s community,” said Dr. DavidHung, president and chief executive officer of Medivation. “We are
24 working with our colleagues at Pfizer to better understand the
25CONNECTION data and we plan to present these data at anupcoming medical meeting.”
26
27
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1 Dimebon was well tolerated in both the CONNECTION study and in
2a separate Phase 3 safety and tolerability study, which confirmedDimebon’s tolerability when dosed alone or in combination with
3 approved Alzheimer’s disease medicines.
4“We are evaluating the CONNECTION data with Medivation. After
5 that review, Pfizer will be in a position to determine appropriate next
6 steps regarding the Dimebon program,” said Dr. Briggs W. Morrison,senior vice president, clinical development, Primary Care Business
7 Unit at Pfizer. “We recognize the significant medical need, and we are
8 committed to advancing treatment options for Alzheimer’s disease.”
9 About the CONNECTION Study
10CONNECTION is a Phase 3, multi-national, double-blind, placebo-
11 controlled safety and efficacy trial involving 598 patients with mild-
12 to-moderate AD at 63 sites in North America, Europe, and SouthAmerica. Patients had a mean age of 74.4 years and a mean score of
13 17.7 on the Mini-Mental State Examination (MMSE) upon entry into
14 the study. More than 40 percent of the patients enrolled were in theUnited States. In the study, patients were randomized to one of three
15 treatment groups, receiving Dimebon 20 mg three times a day (TID),
16 Dimebon 5 mg TID, or placebo TID for six months. The 5 mg armwas included in the study to help define the effective dose range for
17 Dimebon treatment.18
19No statistically significant improvements for the 20 mg TID grouprelative to placebo were achieved on the co-primary endpoints. One
20 primary endpoint evaluated the effect of Dimebon on cognition, as
21measured by the Alzheimer’s Disease Assessment Scale-cognitivesubscale (ADAS-cog), and showed that Dimebon-treated patients
22 achieved a 0.1 point difference from patients receiving placebo
23(p=0.86). Neither group was significantly changed from baseline.The other primary endpoint evaluated the effect of Dimebon on
24 independently-rated global function over the course of the six-month
25trial, as measured by the Clinician’s Interview-Based Impression ofChange Plus Caregiver Input (CIBIC-plus; p=0.81). According to the
26 CIBIC-plus scale, 64.9 percent of the patients treated with Dimebon
2720 mg TID showed improvement or no change at Week 26 compared
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1 to 65.4 percent of placebo-treated patients. Results for the Dimebon 5
2mg dose were similar to the Dimebon 20 mg and placebo, althoughthey were numerically lower.
3
4 The 20 mg TID Dimebon-treated patients also showed no statisticallysignificant differences compared to placebo on the secondary efficacy
5 endpoints. After six months of treatment, patients treated with
6 Dimebon showed a 0.4 point difference from patients taking placeboon activities of daily living (p=0.61), as measured by the Alzheimer’s
7 Disease Cooperative Study Activities of Daily Living Scale (ADCS-
8 ADL). Neither group was significantly changed from baseline. TheDimebon-treated group showed a 1.6 point improvement on behavior
9 compared to placebo (p=0.17), as measured by the Neuropsychiatric
10 Inventory (NPI). Compared to baseline, each group was improved, butthis change was only significant for the Dimebon group. On the Mini
11 Mental State Examination (MMSE), another measure of cognition,
12 both groups improved significantly over baseline (Dimebon 0.7;placebo 1.2). The difference favoring placebo was not significant
13 (p=0.10). Results for the Dimebon 5 mg dose were similar to
14 Dimebon 20 mg and placebo, although they were numerically lower.Dimebon, 20 mg orally three-times daily, was well tolerated in the
15 study. The number of patients with at least one adverse event was
16 similar in the Dimebon 20 mg and placebo groups (72.0% vs. 74.2%,respectively). The most frequently reported adverse events (>5%) in
17 patients in the 20 mg Dimebon group occurring more commonly than
18 in the placebo group included somnolence (11.0% vs. 10.1%), drymouth (8.5% vs. 6.6%), headache (9.5% vs. 5.6%), dizziness (7.5%
19 vs. 5.1%), constipation (5.5% vs. 3.5%), cough (7.5% vs. 3.5%) and
20 depression (6.0% vs. 3.5%). Similar rates of adverse events wereobserved for the 5 mg TID group. No clinically significant findings
21 were noted in assessment of vital signs, clinical laboratories or on
22 electrocardiography (ECG). [Emphasis added.]
23 171. On March 3, 2010, The Science Business published a healthcare blog
24 entitled “Medivation Alzheimer’s Drug Was Hyped,” which stated in part:
25 Shares of Medivation plunged 67% today after the Alzheimer’s
26 drug it was developing with Pfizer failed abysmally in its first bigclinical trial. Investors and some Alzheimer’s researchers had had
27
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1 high hope that the drug, called Dimebon, would be the first drug to
2 slow the course of the disease.
3 But a top doctor from University of Southern California says
4 that there were signs all along that the drug wasn’t all it was made outto be. The drug, a former antihistamine sold in Russia, emerged from
5 nowhere a few years ago to become one of the hottest new
6 Alzheimer’s drugs in testing. The excitement, however, was basedvirtually entirely on one smallish trial of under 200 patients conducted
7 in Russia. And the mechanism of action of the drug was murky all
8 along.
9 “This drug was so hyped,” says USC psychiatrist and
10 Alzheimer’s expert Lon Schneider “When you look at this drug[chemically] there is nothing particularly special about it.” He
11 says its tricyclic chemical structure is roughly similar to lots of
12 antihistamines, antidepressants, and antipsychotic drugs. There isnothing in its structure to indicate it would have remarkable effect, he
13 argues.
14Schneider says he has no problem with Pfizer’s business
15 decision to gamble on an unproven drug from Russia. What bothers
16 him, he says, is the way Medivation and its allies positioned Dimebonas the next big thing in Alzheimer’ disease without good evidence to
17 support this.18
19Medivation has argued for years that there is something
unusual about the drug. It has pointed to lab evidence and20 suggests that the drug [sic] not merely a symptom enhancer, but
21might actually slow the course of the disease over time. Inparticular, the company has pushed the concept that the main
22 effect of the drug is to boost the health of energy producing
23structures inside cells called mitochondria.
24 Some evidence definitely supports the idea that Dimebon hits
25 mitochondria. But Schneider says that lab data also shows the drughits all sorts of other brain chemicals including serotonin and
26 dopamine. Emphasizing mitochodria, he says “is just cherry-picking
27 a particular mechanism of action that may or may not be relevant.”
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1 Schneider points to an independent study showing that while
2 the drug can have neuroprotective effects in animals, the
concentrations of the drug achieved in humans are far to low [sic] to3 have neuroprotective effects. The 2009 study from the UT
4Southwestern Medical Center in Dallas, published in the journalMolecular Neurodegeneration, concluded that the high concentration
5 of Dimebon required to achieve neuroprotective effects in animals “is
6 not likely to be achieved in human trials.” (Schneider has consulted
for Pfizer, Medivation, and other companies testing Alzheimer’s7 drugs.) [Emphasis added.]
8 172. On March 3, 2010, Medivation’s shares plummeted $27.15 per share
9 from their Class Period high of $40.25 per share to close at $13.10 per share on10
March 3, 2010 – one-day decline of 67% on volume of 45 million shares,11
following the announcement.12
XII. ADDITIONAL SCIENTER ALLEGATIONS 13
173. As alleged herein, there is a strong inference that Defendants knew or14
with deliberate recklessness disregarded that the public documents and statements15
issued or disseminated in the name of the Company were materially false and16
misleading. As set forth in detail elsewhere herein, Defendants participated in the17
fraudulent scheme and course of conduct alleged herein, by virtue of their receipt18
of information reflecting the true facts regarding Medivation, their control over19
Medivation and the materially false and misleading misstatements alleged herein20
and/or their associations with the Company, which made them privy to confidential21
proprietary information concerning Medivation.22
174. Defendants’ misconduct relates to Medivations’s core operations.23
Dimebon was one of Medivation’s two drugs in development during the Class24
Period. Defendants had control over the design of the Phase 2 Study. Defendants25
stated in the Class Period annual reports that Medivation controlled the patent for26
Dimebon and selected a Russian manufacturer to manufacture the Phase 2 Study27
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1 pills. Accordingly, the Individual Defendants are deemed to have knowledge of
2 events concerning the Phase 2 Study.
3 Individual Defendant’s Insider Sales Raise a Strong Inference of Scienter
4 175. The Individual Defendants were also financially motivated to commit
5 the wrongdoing alleged herein. During the Class Period, the Individual Defendants
6 sold almost 1 million shares of Medivation common stock while in possession of
7 materially adverse, inside information for proceeds of almost $22 million, as
8 shown in the chart below:
9 Rule10 10b5-1
Trading11 Plan12 Adoption Sale Share Unit Total
Date Date Insider Amount Price Proceeds13
14 undated 07/18/08 Gregory Bailey 3,303 $19.00 $62,757.00
15 undated 07/21/08 Gregory Bailey 18,697 $19.00 $355,243.00
16 undated 09/17/08 Gregory Bailey 22,000 $29.70 $653,404.00
17 undated 01/22/09 Gregory Bailey 22,000 $19.03 $418,770.0018
undated 05/22/09 Gregory Bailey 13,300 $24.01 $319,333.0019
20undated 05/26/09 Gregory Bailey 1,700 $24.13 $41,021.00
21 undated 06/10/09 Gregory Bailey 8,700 $21.36 $185,832.00
22 undated 06/10/09 Gregory Bailey 11,300 $20.74 $234,362.00
23 undated 09/14/09 Gregory Bailey 10,000 $25.99 $259,900.00
24undated 11/20/09 Gregory Bailey 14,000 $29.00 $406,000.00
25
26 undated 11/20/09 Gregory Bailey 14,000 $25.99 $363,860.00
27
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1 undated 12/01/09 Gregory Bailey 10,000 $31.49 $314,900.00
2 undated 12/04/09 Gregory Bailey 10,000 $34.04 $340,400.00
3 undated 12/17/09 Gregory Bailey 10,000 $35.44 $354,400.004
5undated 12/21/09 Gregory Bailey 10,000 $36.40 $364,000.00
6 undated 12/23/09 Gregory Bailey 10,000 $38.42 $384,200.00
7 undated 01/14/10 Gregory Bailey 10,000 $38.00 $380,000.00
8 undated 01/27/10 Gregory Bailey 20,000 $33.35 $667,000.00
9 undated 02/09/10 Gregory Bailey 20,000 $36.82 $736,400.0010
undated 02/23/10 Gregory Bailey 20,000 $36.04 $720,800.0011
12TOTALS 259,000 $7,562,582.00
13
14 12/13/06 03/16/07 David Hung 25,000 $17.80 $445,000.00
15 12/13/06 06/05/07 David Hung 25,000 $16.42 $410,582.00
1612/13/06 09/19/07 David Hung 25,000 $19.01 $475,288.00
17
1812/13/06 12/03/07 David Hung 25,000 $13.14 $328,475.00
19 10/09/07 03/03/08 David Hung 25,000 $15.64 $391,002.00
20 10/09/07 06/09/08 David Hung 25,000 $14.89 $372,248.00
21 10/09/07 09/25/08 David Hung 3,554 $30.09 $106,940.00
2210/09/07 09/25/08 David Hung 21,446 $29.62 $635,308.00
23
2410/09/07 12/03/08 David Hung 5,435 $14.38 $78,176.50
25 10/09/07 12/03/08 David Hung 19,565 $13.76 $269,259.00
26 09/08/08 03/18/09 David Hung 13,656 $17.02 $232,425.00
27
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1 09/08/08 03/18/09 David Hung 11,344 $16.29 $184,794.00
2 09/08/08 06/30/09 David Hung 11,704 $22.22 $260,120.00
3 09/08/08 07/01/09 David Hung 13,296 $22.97 $305,361.004
509/08/08 09/09/09 David Hung 6,880 $25.98 $178,709.00
6 09/08/08 09/10/09 David Hung 18,120 $25.79 $467,248.00
7 undated 12/07/09 David Hung 25,000 $33.27 $831,750.00
8 TOTALS 300,000 $5,972,685.50
9
1012/13/06 03/16/07 Clarence Machado 10,000 $17.80 $178,000.00
11
1212/13/06 06/05/07 Clarence Machado 10,000 $16.67 $166,724.00
13 12/13/06 09/19/07 Clarence Machado 10,000 $18.92 $189,210.00
14 12/13/06 12/03/07 Clarence Machado 10,000 $13.10 $131,033.00
15 10/09/07 03/03/08 Clarence Machado 10,000 $15.63 $156,252.00
1610/09/07 06/09/08 Clarence Machado 10,000 $14.90 $149,036.00
17
1810/09/07 09/25/08 Clarence Machado 10,000 $29.64 $296,394.00
19 10/09/07 12/03/08 Clarence Machado 6,711 $14.38 $96,504.20
20 10/09/07 12/03/08 Clarence Machado 3,289 $13.87 $45,616.80
21 02/27/09 03/18/09 Clarence Machado 13,167 $16.92 $222,786.00
2202/27/09 03/18/09 Clarence Machado 6,833 $16.17 $110,490.00
2302/27/09 06/30/09 Clarence Machado 11,273 $22.23 $250,569.00
24
25 02/27/09 07/01/09 Clarence Machado 8,727 $22.82 $199,118.00
26 02/27/09 09/09/09 Clarence Machado 6,461 $26.00 $167,956.00
27
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1 02/27/09 09/10/09 Clarence Machado 13,539 $25.79 $349,210.00
2 N/A 11/11/09 Clarence Machado 20,000 $28.28 $565,600.00
3 undated 12/07/09 Clarence Machado 20,000 $33.27 $665,400.004
5undated 01/20/10 Clarence Machado 10,000 $37.07 $370,700.00
6 N/A 02/19/10 Clarence Machado 30,000 $37.26 $1,117,800.00
7 TOTALS 220,000 $5,428,399.00
8
9 12/13/06 03/16/07 Lynn Seely 9,000 $17.80 $160,200.0010
12/13/06 06/05/07 Lynn Seely 9,000 $16.70 $150,291.0011
1212/13/06 09/19/07 Lynn Seely 9,000 $18.94 $170,460.00
13 12/13/06 12/03/07 Lynn Seely 9,000 $13.11 $117,954.00
14 10/09/07 03/03/08 Lynn Seely 9,000 $15.64 $140,721.00
15 10/09/07 06/09/08 Lynn Seely 9,000 $14.94 $134,426.00
1610/09/07 09/25/08 Lynn Seely 9,000 $29.57 $266,117.00
17
1810/09/07 12/03/08 Lynn Seely 1,271 $14.48 $18,406.80
19 10/09/07 12/03/08 Lynn Seely 7,729 $14.10 $109,003.00
20 09/22/08 03/18/09 Lynn Seely 11,280 $16.92 $190,858.00
21 09/22/08 03/18/09 Lynn Seely 6,720 $16.16 $108,595.00
2209/22/08 06/30/09 Lynn Seely 13,484 $22.24 $299,845.00
23
2409/22/08 07/01/09 Lynn Seely 4,516 $22.75 $102,751.00
25 09/22/08 09/09/09 Lynn Seely 6,835 $25.98 $177,597.00
26 09/22/08 09/10/09 Lynn Seely 11,165 $25.79 $287,994.00
27
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1 09/22/08 12/07/09 Lynn Seely 18,000 $33.27 $598,860.00
2 TOTALS 144,000 $3,034,078.803
4GRAND
5 TOTALS 923,000 $21,997,745.306
7176. Prior to the Class Period, the Individual Defendants did not sell any
8Medivation stock.
9The Individual Defendants Made
10 Suspiciously-Timed Sales With Respect
11 To Various Medivation Announcements
12 177. Within the month following the announcement of the Pfizer deal on
13 September 3, 2008, the Individual Defendants sold over 66,000 shares for proceeds
14 of almost $2 million. See ¶ 175.
15 178. On June 9, 2008, Defendants Hung, Machado, and Seely sold 44,000
16 Medivation shares for proceeds of $655,710 – the same day that Medivation
17 announced glowing news concerning Dimebon. See ¶¶ 130, 175.
18 179. On July 18 and 21, 2008, Defendant Bailey sold a total of 22,000
19 Medivation shares for proceeds of $418,000 – within days after Medivation’s
20 announcement of Phase 2 Dimebon results for Alzheimer’s in the Lancet. See ¶¶
21 134, 175.
22 180. On March 18, 2009, Defendants Hung, Machado, and Seely sold a
23 total of 63,000 Medivation shares for proceeds of over $1 million just two days
24 after Defendants made positive statements about Dimebon in connection with the
25 Company’s fourth quarter 2008 results on March 16, 2009. See ¶¶ 159, 175.
26 181. Between January 14, 2010 and February 23, 2010 – just weeks before
27 the devastating March 2, 2010 announcement – Defendants Bailey and Machado
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1 unloaded 110,000 Medivation shares for proceeds of approximately $4 million.
2 See ¶¶ 170, 175.
3 Certain Individual Defendants Sold
4 Substantial Amounts Of Their Medivation Stock
5 182. Several Individual Defendants sold suspicious amounts of their
6 Medivation stock.
7 183. On December 7, 2009, Defendant Seely sold 100% of his Medivation
8 holdings.
9 184. On February 19, 2010 – less than two weeks before announcing the
10 adverse news about Dimebon – Defendant Machado sold 22% of his Medivation
11 holdings.
12 Suspicious Patterns – Sales By IndividualDefendants On The Same Day
13
14185. Many of the Individual Defendants, particularly Hung, Machado, and
15 Seely, repeatedly sold Medivation stock on the same day.
16186. On March 16, 2007, Defendants Hung, Machado and Seely sold a
17 total of 33,810 Medivation shares for proceeds of approximately $600,000.
18187. On June 5, 2007, Defendants Hung, Machado, and Seely sold a total
19 of 44,000 Medivation shares for proceeds of $727,597.
20188. On September 19, 2007, Defendants Hung, Machado, and Seely sold a
21 total of 44,000 Medivation shares for proceeds of $834,958.
22189. On December 3, 2007, Defendants Hung, Machado, and Seely sold a
23 total of 44,000 Medivation shares for proceeds of $577,462.
24190. On March 3, 2008, Defendants Hung, Machado and Seely sold a total
25 of 44,000 Medivation shares for proceeds of $687,975.
26191. On June 9, 2008, Defendants Hung, Machado, and Seely sold a total
27 of 44,000 Medivation shares for proceeds of $655,710.
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1 192. On September 25, 2008, Defendants Hung, Machado, and Seely sold a
2 total of 44,000 Medivation shares for proceeds of $1,304,759.
3 193. On December 3, 2008, Defendants Hung, Machado and Seely sold a
4 total of 44,000 Medivation shares for proceeds of $616,966.
5 194. On March 18, 2009, Defendants Hung, Machado, Palekar and Seely
6 sold a total of 63,000 Medivation shares for proceeds of approximately $1 million.
7 195. On June 30, 2009, Defendants Hung, Machado, and Seely sold a total
8 of 36,461 Medivation shares for proceeds of approximately $800,000.
9 196. On July 1, 2009, Defendants Hung, Machado, and Seely sold a total of
10 26,539 Medivation shares for proceeds of $607,230.
11 197. On September 9, 2009, Defendants Hung, Machado, and Seely sold a
12 total of 41,576 Medivation shares for proceeds of approximately $1 million.
13 198. On December 7, 2009, Defendants Hung, Machado, and Seely sold a
14 total of 63,000 Medivation shares for proceeds of approximately $2 million.
15 Certain Individual Defendants Created
16 Preset Sell Orders With Knowledge ThatThe Price Of Medivation Stock Would Drop
17
18199. On December 13, 2006, three insiders – (1) President and CEO David
19 Hung, (2) Chief Medical Officer Lynn Seely, and (3) Senior Vice President and
20 CFO Machado Clarence Patrick – adopted “Rule 10b5-1” trading plans with
21 knowledge or with deliberate recklessness as to the fact that the Phase 2 Study was
22 materially false and misleading.
23200. The name of this trading plan refers to the fact that, in 2000, the SEC
24 adopted Rule 10b5-1 and allowed an affirmative defense is available if, at a time
25 when the insider had no material nonpublic information, the insider commits to the
future trades.26
27
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1 201. Rule 10b5-1 plans give insiders a motive to delay the release of bad
2 news until after the automatic sales are completed.
3 202. In fact, commentators have explained that one should expect more
4 false or misleading statements by insiders when the insiders have adopted Rule
5 10b5-1 plans than when they do not adopt such a plan. See, e.g., Stanley Veliotis,
6 Rule 10b5-1 Trading Plans and Insiders’ Incentive to Misrepresent, 47 Am. Bus.
7 L.J. 313 (2010).
8 203. Hung, Seely, and Machado used their Rule 10b5-1 plans to quickly
9 sell their Medivation stock for large profits before the Phase 3 Study results were
10 released. By December 3, 2007, Hung’s first plan ended and he had sold
11 $1,659,345 in stock; Machado had sold $664,967; and Seely had sold $598,905.
12 204. Throughout the Class Period, Defendants repeatedly set up automatic
13 trading plans to quickly sell the stock, as demonstrated by the following chart:
14 Defendants Were Motivated To Commit Fraud
15 To Obtain Funding For Medivation
16 205. The Individual Defendants were also financially motivated to commit
17 the wrongdoing alleged herein to attract a financing partner for Dimebon.
18 206. Defendants repeatedly stated the importance of finding a partner for
19 Dimebon during the Class Period. For example, Defendants stated: “Our business
20 strategy relies in part on potentially selling or partnering successful product
21 development candidates with larger pharmaceutical, biotechnology or medical
22 device companies for late-stage clinical trials and/or commercialization. For
23 example, because Alzheimer’s disease is a large market requiring a large sales
24 force, we expect to seek a commercial partner for Dimebon in that indication.”
25 207. The 2006 Annual Report also discussed the need for Medivation to
26 find a partner for Dimebon:
27
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1 We may never attract partners for our technologies or receive
2marketing approval in any jurisdiction.... We have not yet sold orpartnered any of our product development candidates with third party
3 collaborators, and we cannot control whether we will be able to do so
4 on favorable terms or at all. Our business strategy relies in part on
potentially selling or partnering successful product development5 candidates with larger pharmaceutical, biotechnology or medical
6device companies for late-stage clinical trials and/orcommercialization. For example, because Alzheimer’s disease is a
7 large market requiring a large sales force, we expect to seek a
8 commercial partner for Dimebon in that indication. We may also
be required to enter into collaborative relationships to complement our
9 internal efforts, whether in research and development, manufacturing
10or commercialization, and/or to generate necessary financing. Wehave not entered into any such sales or collaborations to date. It may
11 be difficult for us to find third parties that are willing to enter into
12such transactions on acceptable economic terms or at all. [Emphasisadded].
13
14 208. By June 30, 2008, Medivation had cash and cash equivalents of only
15 $33.4 million. If Medivation did not find a business partner soon, it would need to
16 raise cash before finishing Dimebon’s Phase 3 Study.
17 209. On September 3, 2008, Defendants announced “Pfizer and Medivation
18 Enter into Global Agreement to Co-Develop and Market Dimebon for the
19 Treatment of Alzheimer’s and Huntington’s Diseases,” which stated in part:
20 Under the terms of the agreement, Medivation will receive anup-front cash payment of $225 million. Medivation also is eligible to
21 receive payments of up to $500 million upon the attainment of
22 development and regulatory milestones plus additional undisclosedcommercial milestone payments. Medivation and Pfizer will
23 collaborate on the Phase III program in Alzheimer’s disease,
24 Huntington’s disease development and regulatory filings in the UnitedStates. The companies will share all U.S. development and
25 commercialization expenses along with U.S. profits/losses on a 60
26 percent/40 percent basis, with Pfizer assuming the larger share of bothexpenses and profit/losses. In addition, Medivation will co-promote
27 Dimebon to specialty physicians in the U.S.
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1 Pfizer will have responsibility for development, regulatory and
2commercialization outside the U.S. and will pay Medivation tieredroyalties on commercial sales outside of the U.S. The agreement is
3 subject to approval under the Hart-Scott-Rodino Antitrust
4 Improvements Act of 1976. J.P. Morgan served as financial advisor,
and Cooley Godward Kronish LLP served as legal advisor, to
5 Medivation on this transaction.
6210. After landing Pfizer as Medivation’s Dimebon partner, Defendant
7Hung stated on a November 10, 2008 conference call:
8As you may be aware, we consistently articulated our strategy to
9 pursue a partnership for Dimebon and if collaboration deliver what
10 we thought to accomplish will allow us to achieve our strategicobjectives of maximizing the global market opportunity for Dimebon,
11 are retaining a significant role in ongoing development activities,
12 building out our US especially commercial infrastructure andretaining significant economic participation in [sic] the Dimebon’s
13 ultimate commercial success.
14Our Pfizer partnership also provides us with significant financial
15 resources including the $225 million upfront payment that we
16 received last month up to $500 million in potential development andregulatory milestones based on achievement of targeted global net
17 sales level. [Emphasis added.]
18XIII. LOSS CAUSATION
19
20211. During the Class Period, as detailed herein, Defendants engaged in a
21 scheme to deceive the market and a course of conduct that artificially inflated
22 Medivation’s stock price and operated as a fraud or deceit on Class Period
23 purchasers of Medivation stock by misrepresenting the Company’s key product
24 and the implications of the findings from earlier studies on Dimebon. Later,
25 however, when Defendants’ prior misrepresentations and fraudulent conduct were
26 disclosed and became apparent to the market, Medivation stock fell precipitously
27 as the prior artificial inflation came out of Medivation’s stock price. As a result of
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1 their purchases of Medivation stock during the Class Period, plaintiff and other
2 members of the Class suffered economic loss, i.e., damages under the federal
3 securities laws.
4 212. Defendants’ false and misleading statements had the intended effect
5 and caused Medivation securities to trade at artificially inflated levels throughout
6 the Class Period – Medivation common stock reached a price as high as $40.25 per
7 share.
8 213. On March 3, 2010, before the market opened, Defendants were forced
9 to publicly disclose that Dimebon had failed its first late phase clinical trial as the
10 drug did not meet its primary or secondary endpoints. These public revelations
11 indicated that the prior representations about Dimebon for treatment of
12 Alzheimer’s disease had been false. As investors and the market became aware
13 that Medivation’s statements had been false and misleading and that Medivation’s
14 actual business prospects, which had long been obfuscated by the scheme to distort
15 the study results, were, in fact, poor, the prior artificial inflation came out of
16 Medivation’s stock price, damaging investors.
17 214. As a direct result of Defendants’ admissions and the public revelations
18 regarding the truth about Medivation’s key drug and its actual business prospects
19 going forward, Medivation’s stock price plummeted 67%, on unusually high
20 volume, falling from $40.25 on March 2, 2009, to $13.10 per share on March 3,
21 2010. This drop removed the inflation from Medivation’s stock price, causing real
22 economic loss to investors who had purchased the stock during the Class Period.
23 215. The 67% decline in Medivation’s stock price at the end of the Class
24 Period was a direct result of the nature and extent of Defendants’ fraud finally
25 being revealed to investors and the market. The timing and magnitude of
26 Medivation’s stock price decline negates any inference that the loss suffered by
27 plaintiff and other Class members was caused by changed market conditions,
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1 macroeconomic or industry factors or Company-specific facts unrelated to the
2 Defendants’ fraudulent conduct. The economic loss, i.e., damages, suffered by
3 plaintiff and other members of the Class, was a direct result of Defendants’
4 fraudulent scheme to artificially inflate Medivation’s stock price and the
5 subsequent significant decline in the value of Medivation’s stock when
6 Defendants’ prior misrepresentations and other fraudulent conduct were revealed.
7 XIV. PRESUMPTION OF RELIANCE
8(FRAUD ON THE MARKET DOCTRINE)
9 216. At all relevant times, the market for Medivation’s securities was an
10 efficient market for the following reasons, among others:
11 (a) Medivation’s stock met the requirements for listing, and was
12 listed and actively traded on the NASDAQ and the American Stock
13 Exchange, highly efficient and automated markets;
14 (b) As a regulated issuer, Medivation filed periodic public reports
15 with the SEC, as well as NASDAQ and the American Stock
16 Exchange;
17 (c) Medivation regularly communicated with public investors via
18 established market communication mechanisms, including through
19 regular disseminations of press releases on the national circuits of
20 major newswire services and through other wide-ranging public
21 disclosures, such as communications with the financial press and other
22 similar reporting services; and
23 (d) Medivation was followed by several securities analysts
24 employed by major brokerage firms who wrote reports which were
25 distributed to the sales force and certain customers of their respective
26 brokerage firms. Each of these reports was publicly available and
27 entered the public marketplace.
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1 217. As a result of the foregoing, the market for Medivation’s securities
2 promptly digested current information regarding Medivation from all publicly-
3 available sources and reflected such information in Medivation’s stock price.
4 Under these circumstances, all purchasers of Medivation’s securities during the
5 Class Period suffered similar injury through their purchase of Medivation’s
6 securities at artificially inflated prices and a presumption of reliance applies.
7 XV. CLASS ACTION ALLEGATIONS
8 218. Plaintiff brings this action as a class action pursuant to Rule 23 of the
9 Federal Rules of Civil Procedure on behalf of all persons who purchased or
10 otherwise acquired Medivation securities during the Class Period (“Plaintiffs” or
11 the “Class”). Excluded from the Class are Defendants and their families, the
12 officers and directors of the Company, at all relevant times, members of their
13 immediate families and their legal representatives, heirs, successors or assigns and
14 any entity in which Defendants have or had a controlling interest.
15 219. The members of the Class are so numerous that joinder of all
16 members is impracticable. The disposition of their claims in a class action will
17 provide substantial benefits to the parties and the Court. Medivation has over 34.7
18 million shares of stock outstanding, owned by hundreds if not thousands of
19 persons.
20 220. There is a well-defined community of interest in the questions of law
21 and fact involved in this case. Questions of law and fact common to the members
22 of the Class which predominate over questions which may affect individual Class
23 members include:
24 (a) whether the Exchange Act was violated by Defendants;
25 (b) whether Defendants omitted and/or misrepresented material
26 facts;
27
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1 (c) whether Defendants’ statements omitted material facts
2 necessary to make the statements made, in light of the circumstances
3 under which they were made, not misleading;
4 (d) whether Defendants knew or deliberately disregarded that their
5 statements were false and misleading;
6 (e) whether the price of Medivation securities was artificially
7 inflated; and
8 (f) the extent of damage sustained by Class members and the
9 appropriate measure of damages.
10 221. Plaintiff’s claims are typical of those of the Class because plaintiff
11 and the Class sustained damages from Defendants’ wrongful conduct.
12 222. Plaintiff will adequately protect the interests of the Class and has
13 retained counsel who are experienced in class action securities litigation. Plaintiff
14 has no interests which conflict with those of the Class.
15 FIRST CLAIM
16 XVI. FOR VIOLATING SECTION 10(b) OF THE
17 EXCHANGE ACT AND RULE 10b-5 PROMULGATEDTHEREUNDER AGAINST ALL DEFENDANTS
18223. Lead Plaintiff repeats and realleges each and every allegation
19contained above as if fully set forth herein.
20224. During the Class Period, Defendants carried out a plan, scheme, and
21course of conduct that was intended to and, throughout the Class Period, did: (i)
22deceive the investing public regarding Medivation’s business, operations,
23management and the intrinsic value of Medivation securities; (ii) enable
24Defendants to artificially inflate the price of Medivation securities; (iii) enable
25Medivation’s insiders to sell millions of dollars of their privately-held Medivation
26stock while in possession of materially adverse, non-public information about the
27
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1 Company; and (iv) cause Lead Plaintiff and other members of the Class to
2 purchase Medivation securities at artificially inflated prices. In furtherance of this
3 unlawful scheme, plan and course of conduct, Defendants, jointly and individually
4 (and each of them) took the actions set forth herein.
5 225. Defendants, individually and in concert, directly and indirectly, by the
6 use, means or instrumentalities of interstate commerce and/or of the mails, engaged
7 and participated in a continuous course of conduct to misrepresent and/or conceal
8 adverse, material information about the business, operations, and future prospects
9 of Medivation as specified herein.
10 226. Defendants employed devices, schemes and artifices to defraud, while
11 in possession of materially adverse, non-public information and engaged in acts,
12 practices, and a course of conduct as alleged herein in an effort to assure investors
13 of Medivation’s value and performance and continued substantial growth, which
14 included the making of, or the participation in the making of, untrue statements of
15 material facts and omitting to state material facts necessary in order to make the
16 statements made about Medivation and its business operations and future prospects
17 in the light of the circumstances under which they were made not misleading, as
18 set forth more particularly herein, and engaged in transactions, practices, and a
19 course of business that operated as a fraud and deceit upon the purchasers of
20 Medivation securities during the Class Period.
21 227. Defendants had actual knowledge of the misrepresentations and
22 omissions of material facts set forth herein, or acted with deliberate recklessness of
23 the truth in that they failed to ascertain and to disclose such facts. Such
24 Defendants’ material misrepresentations and/or omissions were done knowingly or
25 with deliberate recklessness of the purpose and effect of concealing Medivation’s
26 core product and future business prospects from the investing public and
27 supporting the artificially inflated price of its securities.
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1 228. As a result of the dissemination of the materially false and misleading
2 information and failure to disclose material facts, as set forth above, the market
3 prices of Medivation securities were artificially inflated during the Class Period.
4 In ignorance of the fact that the market prices of Medivation securities were
5 artificially inflated, and relying directly or indirectly on the false and misleading
6 statements made by Defendants, or upon the integrity of the market in which the
7 securities traded, and/or on the absence of material, adverse information that was
8 known to or with deliberate recklessness disregarded by Defendants but not
9 disclosed in public statements by Defendants during the Class Period, Lead
10 Plaintiff and the other members of the Class acquired Medivation securities during
11 the Class Period at artificially high prices and were damaged by the revelation of
12 the true facts about Medivation, its business, and its operations.
13 229. At the time of said misrepresentations and omissions, Lead Plaintiff
14 and other members of the Class were ignorant of their falsity, and believed them to
15 be true. Had Lead Plaintiff and the other members of the Class and the
16 marketplace known the truth regarding the problems that Medivation was
17 experiencing, which were not disclosed by Defendants, Lead Plaintiff and other
18 members of the Class would not have purchased or otherwise acquired their
19 Medivation securities, or, if they had acquired Medivation securities during the
20 Class Period, they would not have done so at the artificially inflated prices that
21 they paid.
22 230. By virtue of the foregoing, Defendants have violated Section 10(b) of
23 the Exchange Act and Rule 1 0b-5 promulgated thereunder.
24 231. As a direct and proximate result of Defendants’ wrongful conduct,
25 Lead Plaintiff and the other members of the Class suffered damages in connection
26 with their respective purchases and sales of the Company’s securities during the
27 Class Period and the revelation of the truth at the end of the Class Period.
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1 SECOND CLAIM
2 XVII. FOR VIOLATING SECTION 20(a) OF THE EXCHANGE ACT
3 AGAINST THE INDIVIDUAL DEFENDANTS
4 232. Plaintiffs repeat and reallege each and every allegation contained
5 above as if fully set forth herein.
6 233. The Individual Defendants acted as controlling persons of Medivation
7 within the meaning of Section 20(a) of the Exchange Act as alleged herein. By
8 virtue of their high-level positions, and their ownership and contractual rights,
9 participation in and/or awareness of the Company’s operations and/or intimate
10 knowledge of the false statements filed by the Company with the SEC and
11 disseminated to the investing public, the Individual Defendants had the power to
12 influence and control and did influence and control, directly or indirectly, the
13 decision-making of the Company, including the content and dissemination of the
14 various statements that Lead Plaintiff contends are false and misleading. The
15 Individual Defendants were provided with or had unlimited access to copies of the
16 Company’s reports, press releases, public filings and other statements alleged by
17 Lead Plaintiff to be misleading prior to and/or shortly after these statements were
18 issued and had the ability to prevent the issuance of the statements or cause the
19 statements to be corrected.
20 234. In particular, the Individual Defendants had direct and supervisory
21 involvement in the day-to-day operations of the Company and, therefore, are
22 presumed to have had the power to control or influence the particular transactions
23 giving rise to the securities violations as alleged herein, and exercised the same.
24 235. As set forth above, the Medivation and the Individual Defendants
25 each violated Section 10(b) and Rule 10b-5 by their acts and omissions as alleged
26 in this Complaint. By virtue of their positions as controlling persons, the Individual
27 Defendants are liable pursuant to Section 20(a) of the Exchange Act. As a direct
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1 and proximate result of Defendants’ wrongful conduct, Lead Plaintiff and other
2 members of the Class suffered damages in connection with their purchases of the
3 Company’s securities during the Class Period.
4 WHEREFORE, Lead Plaintiff prays for relief and judgment, as follows:
5 (a) Determining that this action is a proper class action under Rule
6 23 of the Federal Rules of Civil Procedure;
7 (b) Awarding compensatory damages in favor of Plaintiffs and the
8 other Class members against all Defendants for all damages
9 sustained as a result of Defendants’ wrongdoing, in an amount
10 to be proven at trial, including interest thereon;
11 (c) Awarding Lead Plaintiff and the Class their reasonable costs
12 and expenses incurred in this action, including counsel fees and
13 expert fees; and
14 (d) Such other and further relief as the Court may deem just and
15 proper.
16 XVIII. JURY TRIAL DEMANDED
17 Lead Plaintiff hereby demands a trial by jury.
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DATED: May 9, 2011 Respectfully submitted,
LAW OFFICES OF BRIAN BARRYBrian Barry1801 Avenue of the Stars, Suite 307Los Angeles, CA 90067Telephone: (310) 788-0831
Liaison Counsel for Lead Plaintiff and theProposed Class
BERNSTEIN LIEBHARD LLP
Sandy A. LiebhardU. Seth Ottensoser (admitted pro hac vice)Michael S. BiginJoseph R. Seidman, Jr.Brian Lehman10 East 40th Street, 22 nd FloorNew York, NY 10016Telephone: (212) 779-1414
Lead Counsel for Lead Plaintiff and theProposed Class
Case3:10-cv-00998-EMC Document110 Filed05/09/11 Page87 of 87
CERTIFICATE OF SERVICE
I hereby certify that on the 9 1h day of May, 2011, I caused a true and accurate copy of the
foregoing Consolidated and Amended Complaint to be served by FedEx and ECF upon the
following:
Angela L. Dunning, Esq.Cooley LLPFive Palo Alto Square3000 El Camino RealPalo Alto, CA 94306-2155
1+ PETER ALLOCCO