United States Court of Appeals

for the Fifth Circuit

No. 20-20487

Paul E. Callinan; Jorge Rivera, 

Plaintiffs—Appellants,

versus

Lexicon Pharmaceuticals, Incorporated; Lonnel Coats; 

Jeffrey L. Wade; Pablo Lapuerta, 

Defendants—Appellees.

Appeal from the United States District Court 

for the Southern District of Texas

USDC No. 4:19-CV-301

Before Dennis and Engelhardt, Circuit Judges, and Hicks, Chief 

District Judge.*

Per Curiam:*

Investors in Lexicon Pharmaceuticals, Inc. brought this class-action 

suit alleging securities fraud against the company and certain of its current 

* Chief Judge of the Western District of Louisiana sitting by designation. 

* Pursuant to 5th Circuit Rule 47.5, the court has determined that this 

opinion should not be published and is not precedent except under the limited 

circumstances set forth in 5th Circuit Rule 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

September 10, 2021

Lyle W. Cayce

Clerk

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and former executives. 1 Lexicon is a publicly traded biopharmaceutical 

company that develops new drugs to treat serious diseases. This case 

involves one of its drugs that ultimately failed to obtain regulatory approval 

by the Food and Drug Administration (“FDA”). 

Sotagliflozin is an oral therapy intended for use in conjunction with 

insulin therapy to improve blood sugar control in adults with diabetes. Like 

many drugs, sotagliflozin bestows benefits encumbered by risks, and its 

regulatory approval depended, in part, on whether the former outweighed 

the latter. On the benefit side of the scale, the drug improves control of blood 

sugar by functioning as an inhibitor, preventing proteins in the body from 

absorbing glucose. On the risk side of the scale, it is associated with increased 

incidences of one of the most well known and serious health risks for people 

who have diabetes: diabetic ketoacidosis (“DKA”). If left untreated, DKA 

is a life-threatening condition that results when the body produces excess 

acids in the bloodstream. 

When sotagliflozin successfully completed all three phases of clinical 

trials, the FDA convened a public advisory committee meeting. The 

committee put to a vote the question of whether “the available data suggest 

that the benefits outweigh the risks and support the approval of 

sotagliflozin.” That question produced a deadlocked vote by the committee, 

an impasse driven largely by concerns about the risk of DKA. Later, the FDA 

determined not to approve sotagliflozin. After both the committee vote and 

the FDA rejection, Lexicon’s stock price declined precipitously. 

Appellants claim that Lexicon made materially false and misleading 

statements and omissions about sotagliflozin, violating Section 10(b) of the 

1 For purposes of this opinion, the investor-plaintiffs are collectively referred to as 

“Appellants” and defendants are collectively referred to as “Lexicon.” 

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Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b–5 

promulgated thereunder, 17 C.F.R. § 240.10b–5. As relevant here, they 

advanced three theories in the district court. First, they alleged that Lexicon 

had minimized the risk of DKA posed by sotagliflozin. Second, they alleged 

that the FDA had warned Lexicon about its use of a particular endpoint in its 

Phase 3 trials and that Lexicon had failed to disclose that warning to 

investors. Third, they alleged that Lexicon failed to disclose that it had not 

prepared a meaningful DKA risk management program for sotagliflozin. 

In a careful and thorough opinion spanning 114 pages, the district 

court granted Lexicon’s motion to dismiss and rejected each of Appellants’ 

theories of liability. First, it concluded that Appellants had not alleged any 

actionable misrepresentations or omissions. Second, it found that, even 

assuming Appellants’ allegations were actionable, the facts alleged do not 

support a strong inference that the misrepresentations were made with 

scienter. Finally, the district court determined that Appellantsfailed to plead 

loss causation. The district court also disallowed Appellants’ request to 

amend their complaint. It resolved that any additional attempt to amend 

would be futile given that they had already filed an amended complaint,

argued strenuously that it stated claims, and failed either to submit a 

proposed second amended complaint or to describe any additional facts that 

could be alleged in it. This appeal followed.

Attentive to the arguments advanced on appeal, we have reviewed the 

district court’s extensive opinion de novo. See Masel v. Villarreal, 924 F.3d

734, 742–43 (5th Cir. 2019). For the reasons stated more fully by the district 

court, see Callinan v. Lexicon Pharms., Inc., 479 F. Supp. 3d 379 (S.D. Tex. 

2020), we agree that Appellants failed to state a claim with sufficient 

particularity to survive a motion to dismiss under the stringent pleading 

requirements imposed by the Private Securities Litigation Reform Act, 15 

U.S.C. § 78u–4. See Owens v. Jastrow, 789 F.3d 529, 535 (5th Cir. 2015). 

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Moreover, the district court considered the relevant factors in determining 

not to grant leave to amend, and we cannot say that it abused its discretion in 

doing so. See Schiller v. Physicians Res. Grp. Inc., 342 F.3d 563, 566 (5th Cir. 

2003). 

Accordingly, the judgment of the district court is AFFIRMED. 

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