Determining whether a pharmaceutical company has made a false statement about a clinical trial can raise technical issues. In In re Rigel Pharmaceuticals, Inc. Sec. Litig., 2012 WL 3858112 (9th Cir. Sept. 6, 2012), the plaintiffs alleged that the company misstated the results of a clinical trial for a drug designed to treat rheumatoid arthritis. The district court found that the plaintiffs “had failed to adequately plead a false statement regarding efficacy [of the drug] because disagreements over statistical methodology and study design are insufficient to allege a materially false statement.”
On appeal, the Ninth Circuit agreed with that analysis. The court found that the plaintiffs were really “alleging that Defendants should have used different statistical methodologies, not that Defendants misrepresented the results they obtained from the methodologies they employed.” Even if another statistical methodology would have been better or more accurate, accepting the plaintiffs’ argument “would suggest that a company should announce statistical results that are obtained using a statistical methodology that is adopted after the study data is made available to the researchers and that is different from the methodology used as part of the clinical trial.” Any company that took this approach “could raise concerns regarding reliability, biased scientific methods, or even fraud.”
Holding: Dismissal affirmed (both on falsity and scienter grounds).