Talphera Secures Key Win in Securities Class Action
Palo Alto – May 9, 2024 – Cooley secured a key win on behalf of Talphera (formerly known as AcelRx Pharmaceuticals), a Silicon Valley-based specialty pharmaceutical company focused on the development and commercialization of innovative therapies, in a securities class action lawsuit brought by investors. Lawyers Tijana Brien, Patrick Gibbs, Shannon Eagan, Janelle Fernandes, Greg Merchant, Tiffany Le and Madeleine McNally led the Cooley team representing Talphera.
The lawsuit, first filed in 2021, alleged that Talphera committed securities fraud based on a February 2021 Food and Drug Administration (FDA) warning letter related to two marketing materials for its pain drug, Dsuvia. Two prior times – in September 2022 and July 2023 – Judge Beth Labson Freeman of the US District Court for the Northern District of California issued an order on the investors’ lacking allegations and dismissed their complaint, but gave them leave to amend.
On May 7, 2024, Judge Freeman issued her final order, granting Talphera’s motion to dismiss with prejudice. Despite the addition of five former employees in the investors’ third amended complaint, Judge Freeman held that the plaintiffs had failed to plead scienter. Importantly, while a number of the former employees opined on the likelihood of certain FDA actions and outcomes, Judge Freeman held that the former employees’ personal opinions about what the FDA might do and their speculation as to whether the company would receive a warning letter from the FDA did not establish scienter. The court also reiterated that mere awareness of certain facts (in this case, the use of allegedly false marketing materials) was insufficient to establish scienter.
The case is Sneed Jr. v. AcelRx Pharmaceuticals, Inc. et al. before the US District Court for the Northern District of California (case number 21-cv-04353-BLF).
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