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

Heading: Events Leading up to Plaintiffs' Suit

Text: As related in the Complaint and stated by the district court, the events leading up to this appeal began with AMAG's development of Feraheme, an intravenous iron-replacement drug used to treat iron-deficiency anemia in adult patients with chronic kidney disease. Although two competing FDA-approved ironreplacement therapies dominated the market in which Feraheme intended to compete, AMAG hoped to capitalize on the drug's faster and shorter treatment turn-around time.2 In December 2007, AMAG thus sought approval from the FDA to market Feraheme as an ironreplacement treatment. AMAG disclosed to investors details about Feraheme's FDAapproval process. AMAG's disclosures included information 2 Feraheme could be administered in as little as 17 seconds, with a complete course of treatment requiring two to four visits to a physician. Competing alternatives, in contrast, would be administered over a 15-to-60 minute interval and would require five to ten visits to a physician. -5- concerning Serious Adverse Events (SAEs) that resulted during Feraheme's clinical trials.3 For example, in a January 31, 2008 SEC 8-K Form, AMAG disclosed results of one of the phases of Feraheme's clinical trials, including that the SAE rate was 9.8% among [Feraheme] subjects compared to 12.1% among oral subjects. AMAG also apprised investors that in the [Feraheme] clinical development program that included 2,074 subjects, 31 deaths were observed, but [n]one of these deaths were considered to be related to study treatment. AMAG made similar disclosures in an SEC 10-K Form filed for the fiscal year ending December 31, 2008. There, AMAG stated that, [a]cross all phases of the Feraheme clinical development program with approximately 2,800 total administered doses of Feraheme, there were no cases of anaphylaxis and no deaths determined by the [FDA] investigators to be drug-related.4 3 SAEs are defined as [a]ny adverse drug experience occurring at any dose that results in any of the following outcomes: [d]eath, a life-threatening adverse drug experience, in-patient hospitalization or prolongation of existing hospitalization, a persistent or significant disability/incapacity, or a congenital anomaly/birth defect. 21 C.F.R. § 310.305(b). Pharmaceutical companies are required to report to the FDA all SAEs of which they become aware. See FDA, Guidance for Industry, Good Pharmacovigilance Practice and Good Pharmacoepidemiologic Assessment, 2005 WL 3628217, at  (Mar. 2005). Nevertheless, the fact that an SAE is reported does not necessarily mean that a specific drug caused it. See Matrixx Initiatives, Inc. v. Siracusano, ___ U.S. ___, 131 S. Ct. 1309, 1318-19 (2011). 4 According to the Complaint, anaphylaxis is a life-threatening whole-body allergic reaction to a drug or allergen . . . . The onset of anaphylaxis is rapid, and must be treated, typically . . . -6- AMAG's efforts to secure FDA approval for Feraheme initially failed. By letter dated October 17, 2008, the FDA declined to approve Feraheme due, in part, to a single occurrence of anaphylaxis among 1,726 patients exposed to the drug. The letter also expressed concerns with (1) the occurrence of serious hypotensive reactions in approximately 0.3% of the exposed population; (2) inconsistencies in the reports of SAEs;5 and (3) systematic deficiencies in Feraheme's manufacturing process. The FDA again declined to approve Feraheme on December 22, 2008. It took AMAG until June 30, 2009 to finally obtain the FDA's imprimatur for Feraheme. In approving Feraheme, the FDA sanctioned a product insert for AMAG to include with the drug. Among other things, the product insert explicitly disclosed several safety risks associated with the drug: Feraheme may cause serious hypersensitivity reactions, including anaphylaxis and/or anaphylactoid reactions. In clinical studies, serious hypersensitivity reactions were reported in 0.2% (3/1,726) of subjects receiving Feraheme. Other adverse reactions potentially associated with hypersensitivity (e.g., pruritus, rash, urticaria or wheezing) by injection of epinephrine. The FDA eventually concluded that Feraheme could cause anaphylaxis. 5 This is an example of an inconsistency the FDA cited: To illustrate, subject 554 appears to have experienced a serious hypotensive event that prompted the delay of a second dose of [Feraheme]. The adverse report denoted this event as a 'headache' and did not describe the other clinical problems. -7- were reported in 3.7% (63/1,726) of these subjects. An SEC 8-K Form AMAG filed in July 1, 2009, announced the FDA's approval of Feraheme and shared with potential investors the information in Feraheme's FDA-approved package insert. Feraheme hit the market in July 2009, and AMAG quickly geared up for the Offering. On November 5, 2009, AMAG issued an SEC 10-K Form which disclosed to investors that Feraheme may not receive the same level of market acceptance . . . as competing iron replacement therapy products . . . . The iron replacement therapy market is highly sensitive to several factors including . . . the perceived safety profile of the available products . . . . The Offering Documents were issued in January 2010. The Prospectus included detailed disclosures about the results of Feraheme's clinical trials, the FDA approval process, and the FDAapproved package insert. It also incorporated by reference some of AMAG's filings with the SEC and contained a section regarding the risk factors associated with the Offering, which, according to AMAG, included [o]ur ability to demonstrate to the medical community . . . the clinical efficacy and safety of Feraheme as an alternative to current treatments for iron deficiency anemia . . . . The Prospectus further appraised investors that [AMAG is] subject to ongoing FDA regulatory requirements . . . . Failure to comply with such regulatory requirements or the later discovery of previously unknown problems with Feraheme . . . may result in restrictions on -8- our ability to market and sell Feraheme[;] . . . FDA warning letters; . . . [and] FDA- imposed label changes . . . . Any of these sanctions would have a material adverse impact on our ability to generate revenues and to achieve profitability. . . . . [AMAG's] ability to generate future revenue is solely dependent on our successful commercialization and development of Feraheme . . . . Accordingly, if we are unable to generate sufficient revenues from sales of Feraheme, we may never be profitable, our financial condition will be materially adversely affected, and our business prospects will be limited. The Offering Documents, however, did not mention that AMAG had reported to the FDA at least 23 reports of SAEs since Feraheme's inception to the market. Two of those reports documented, respectively, anaphylactic reactions in two female patients with a life-threatening outcome requiring hospitalization. Fourteen of the other 23 reports stated that SAEs had resulted in hospitalizations due to one or more symptoms associated with anaphylaxis, including cardiac arrest, shortness of breath, a reduction in blood pressure, loss of consciousness, hives, dizziness, or vomiting. The Offering Documents similarly failed to mention that on December 31, 2009, AMAG had reported to the FDA that a 70-year-old patient died following one 510 mg injection of Feraheme and that the drug had been identified by the treating physician as the Primary Suspect for the fatality. -9- The Offering took place on January 21, 2010. Over three million shares of AMAG's common stock were sold to the public at $48.25 per share, bringing AMAG approximately $174 million in net proceeds and over $7.8 million in fees to the underwriters. Within weeks, however, the market value of AMAG's shares began to plummet. On February 4, 2010, a securities analyst reported that several patients using Feraheme had experienced adverse reactions to the drug and that at least one patient had died for reasons that may or may not be directly related to Feraheme. The report also stated that it was impossible to determine whether those incidents fell within the occurrence rate of SAEs disclosed in Feraheme's package insert and that consultants continu[ed] to use Feraheme but adoption rates were slowing. AMAG's shares closed at $38.12 after the issuance of the report. The next day, AMAG issued a press release stating, among other things, that the SAEs identified by the analyst were consistent with the rates disclosed in Feraheme's package insert. According to AMAG's press release, [o]f the estimated 35,000 patient exposures to date, 40 serious adverse events have been reported . . . . No mortality signal has been observed. A single reported death occurred in a patient two days post-Feraheme treatment, which the Company does not believe was the result of Feraheme. Notwithstanding, AMAG's shares still dropped an additional 35 cents at market end. -10- The market price of AMAG's shares took another hit on February 8, 2010. That day, a follow-up analyst report expressed skepticism regarding AMAG's representations as set forth in its press release and stated that one of Feraheme's competing alternatives had been associated with only one SAE and one death during its ten-year market life. AMAG's shares slipped to $36.67.