Opinion ID: 819233
Heading Depth: 2
Heading Rank: 3

Heading: Plaintiffs File Suit

Text: Plaintiffs filed the Complaint on March 18, 2010. They sought compensatory damages under § 11 of the Securities Act, claiming, in essence, that AMAG failed to disclose in the Offering Documents the existing fact that Feraheme users had already suffered adverse reactions to Feraheme requiring hospitalization. AMAG's shares continued to perform poorly in the market after Plaintiffs' suit. On October 18, 2010, the FDA issued a Warning Letter to AMAG, stating that AMAG's website had misrepresented Feraheme's approved uses. The Letter also asserted that AMAG's website had failed to communicate any of the risks associated with the drug, suggesting that Feraheme was safer than ha[d] been demonstrated and therefore plac[ing] the public at risk. Ten days later, AMAG announced for the first time that (1) the FDA had created a Tracked Safety Issue for Feraheme's cardiacrelated SAEs; (2) the FDA had met with the company in September [2010] to discuss SAEs; and (3) the Company was in discussions with -11- the FDA concerning labeling changes. AMAG's shares fell from $19.30 to $15.91 on that day. On November 26, 2010, prompted by the FDA, AMAG announced changes in Feraheme's package insert. The changes included warnings of post-Offering SAEs as well as a requirement that physicians increase the observation period after administering Feraheme to patients. When that news hit the market, AMAG's shares fell to $14.05, a 71% decrease from the Offering price of $48.25 per share. Plaintiffs filed a Second Amended Complaint on December 17, 2010. This time the Complaint pled causes of action under §§ 11, 12 and 15 of the Securities Act and advanced the two claims of omissions at issue here. Among other things, the Complaint alleged that between Feraheme's approval and the Offering AMAG [had] reported to the FDA (but failed to disclose to investors) twenty-three (23) SAEs associated with Feraheme's use, including documented anaphylactic reactions in two female patients . . . with a life-threatening outcome requiring hospitalization . . . . According to the Complaint, AMAG had a duty to disclose the 23 SAEs under Item 303, 17 C.F.R. § 229.303(a)(3)(ii), because the SAEs gave rise to uncertainties that AMAG knew would reasonably have a negative impact on its business. Similarly, the Compliant alleged that the 23 SAEs made the Offering risky or speculative, -12- and therefore, that AMAG had a duty to disclose them under Item 503. 17 C.F.R. § 229.503(c). Further, the Complaint alleged that AMAG failed to disclose that a material portion of its revenues was derived from the internet practices highlighted in the FDA's October 18, 2010 Warning Letter, and thus, implied that AMAG was already engaging in such practices when the Offering took place nine months earlier.