Frank Julianello, on behalf of himself and all others similarly situated, Plaintiff;
K-V Pharmaceutical Company; Gregory J. Divis, Jr.; Scott Goedeke; Thomas McHugh, Defendants - Appellees Lori Anderson, Plaintiff - Appellant
Submitted: March 12, 2015.
Appeal from United States District Court for the Eastern District of Missouri - St. Louis.
For Lori Anderson, Plaintiff - Appellant: David A.P. Brower, Brower & Piven, New York, NY; New York, NY, Eric D. Holland, Holland & Groves, Saint Louis, MO.
For K-V Pharmaceutical Company, Gregory J. Divis, Jr., Scott Goedeke, Defendants - Appellees: Robert P. Berry, Berry & Silberberg, Saint Louis, MO; Jason E. Morrow, F. Joseph Warin, Gibson & Dunn, Washington, DC.
For Thomas McHugh, Defendant - Appellee: Robert P. Berry, Berry & Silberberg, Saint Louis, MO.
Before MURPHY and SHEPHERD, Circuit Judges, and HARPOOL, District Judge.
SHEPHERD, Circuit Judge.
This securities fraud class action involves a class of plaintiffs who purchased
or otherwise acquired shares of K-V Pharmaceutical Company stock during the period in which the company launched and marketed Makena, its new prescription drug. The plaintiffs allege that K-V and three of its officers (collectively K-V) made materially false or misleading statements or omissions related to the product launch. The district court granted K-V's motion to dismiss, holding the challenged statements were protected by the safe-harbor provision of the Private Securities Litigation Reform Act of 1995 (PSLRA), 15 U.S.C. § 78u-4(b), and that the plaintiffs failed to adequately plead scienter under the PSLRA. The district court also denied the plaintiffs' motion for reconsideration of the scope of leave to amend the complaint, denying the plaintiffs the opportunity to amend the complaint as it related to allegations from confidential witnesses. The plaintiffs appeal, and we affirm.
The plaintiffs in this action are holders of publicly traded shares of K-V stock who purchased or otherwise acquired shares between February 14, 2011, and April 4, 2011. Plaintiffs allege that K-V made materially false or misleading statements and omissions during this period regarding K-V's marketing, distribution, and sale of its prescription drug Makena, designed to reduce the risk of pre-term labor for at-risk pregnant women. In 2008, K-V acquired the rights to the drug, then known as Gestiva, rebranded it as Makena, and sought exclusive sales rights under the Orphan Drug Act, 21 U.S.C. § § 360aa-360ee, from the Food and Drug Administration (FDA). The Orphan Drug Act, which encourages drug manufacturers to develop drugs for the treatment of rare diseases or disorders, provides that, with FDA approval, manufacturers of drugs designed to treat diseases or disorders that affect fewer than 200,000 people may obtain seven years of exclusive sales rights. On February 3, 2011, the FDA granted K-V's request for exclusive sales rights.
On February 14, 2011, K-V held a conference call with investors and filed a Form 8-K with the Securities and Exchange Commission (SEC), which incorporated the information discussed in the conference call. At the beginning of the call, K-V made the following statements:
[C]ertain information provided on this conference call may contain various forward-looking statements within the meaning of the [PSLRA] and may be based on or include assumptions concerning the Company's operations, future results and prospects. Such statements may be identified by the use of words such as plan, expect, believe, anticipate, intend, will, should, could, potential and other expressions that indicate future events and trends.
All statements that address expectations or projections about the future, including without limitation statements about . . . the Company's strategy for growth, product development, product launches, regulatory approvals, market position, acquisitions, revenues, expenditures and other financial results are forward-looking statements. These statements involve various risks and uncertainties that could cause our actual results to differ materially from those expressed in such forward-looking statements. These include the risks and ...