Cooley Helps Alcobra Secure Dismissal of Securities Class Action
Washington, DC – May 13, 2016 – Cooley advised Alcobra on the dismissal, with prejudice, of a shareholder class action alleging securities fraud against Alcobra, its CEO and a former company director, in the Southern District of New York.
Headquartered in Tel Aviv, Alcobra is a biopharmaceutical company focused on the development of Metadoxine (MDX), a new type of drug for the treatment of attention deficit hyperactivity disorder (ADHD), and a genetic condition known as Fragile X syndrome. On October 6, 2014, Alcobra announced that MDX had been shown to have a statistically significant effect on a sub-group of patients enrolled in a so-called Phase III study, but had not been shown to have a similarly significant effect on the entire group of patients enrolled in the study. Alcobra's stock price declined along with this news and a class action was brought in the Southern District of New York.
The suit alleged that (a) several of the enrollees in the Phase III study did not meet all of the study's entry criteria; (b) these enrollment violations caused the study to fail; (c) Alcobra knew from the outset the study would fail because of the enrollment violations; and (d) Alcobra issued public statements that concealed the enrollment violations and their effect on the study's results.
Cooley filed a motion to dismiss the action in May 2015, arguing that plaintiffs had not pleaded facts establishing that Alcobra and the individual defendants had fraudulent intent. Cooley also argued that based on plaintiffs' own allegations, as well as public documents of which the court could take judicial notice, it was beyond dispute that the alleged enrollment violations at issue did not cause the Phase III study to fail.
On March 30, 2016, Judge George B. Daniels issued a ruling in which he accepted Cooley's arguments and dismissed the complaint in its entirety. Judge Daniels did not grant plaintiffs leave to amend their complaint. The appeals period for this case has now run.
The team advising Alcobra was led by Lyle Roberts and Jonathan Bach and included George Anhang and Nick Flath.
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