Myths and Misconceptions of Biotech Securities Claims: An Analysis of Motion to Dismiss Results from 2005-2016
Doug Greene and Genevieve York-Erwin of Lane Powell and Michael Tomasulo of AHT Insurance co-authored an article titled “Myths and Misconceptions of Biotech Securities Claims: An Analysis of Motion to Dismiss Results from 2005-2016.” The article analyzes decisions on motions to dismiss in securities class actions against biotech companies.
Our study shows that, contrary to popular belief, development-stage biotech companies actually have less to fear from federal securities cases than do many other types of corporate defendants that have a far easier time securing insurance coverage. Over the last decade, these cases have been dismissed at a high rate early in the litigation process, and even more so in recent years. Biotech startups may well end up being sued if and when their flagship products are not approved by the FDA, but courts are sympathetic to the inherent risks of the industry and seem primed to dismiss these suits when defendants can present a credible narrative of good faith conduct.