Federal Court Dismisses AcelRx Pharms Suit
A California federal court has dismissed with prejudice a putative shareholders’ class action suit against AcelRx Pharms alleging that the company made false or misleading statements in marketing materials for its opioid pain killer Dsuvia (sufentanil) sublingual tablets to expand the target market, putting the company at risk for FDA enforcement action. An A&O Sherman online post says the court granted the motion to dismiss with prejudice because the plaintiffs failed to adequately plead scienter (intent or knowledge of wrongdoing) and that further amendment would be futile.
The post says FDA approved the opioid drug product in 2018 with a REMS. In 2021, FDA issued a Warning Letter to the company about its use of a slogan in two promotional materials that allegedly oversimplified the drug’s application and risks. Within days of FDA and the company announcing the Warning Letter, AcelRx’s stock dropped sharply, the post says.
The plaintiffs argued that the company and individual defendants purposefully used false and misleading marketing materials to expand the drug’s target market from hospitals to ambulatory centers. The defendants moved to dismiss the complaint for failure to state a claim and the court agreed.
To allege scienter, the report says, the plaintiffs relied on statements from 12 former employees that:
- the individual defendants approved the slogan that drew the FDA letter;
- the defendants were aware that FDA was heavily regulating misbranding and knew of internal concerns that the slogan was likely to result in a Warning Letter; and
- the defendants still used the slogan because they were motivated to prove the drug’s success to investors and oversimplify its application to expand into ambulatory surgical centers.
“The court found that, taken together, these allegations did not give rise to a strong inference of scienter,” the post says. “It found particularly significant that plaintiffs did not allege that the individual defendants were aware the promotional materials were false or misleading or that they otherwise violated the Federal Food, Drug, and Cosmetic Act or were noncompliant with the REMS.