Carl Schwartz v. Arena Pharmaceuticals, Inc.

Lead plaintiff Carl, Schwartz filed a putative federal securities class action against Defendants Arena Pharmaceuticals, Jack Lief, Dominic Behan, William Shanahan, and Christen Anderson in connection with public statements made about Arena’s weight-loss drug, loreaserin. At various times, Defendants all made positive public statements about lorcaserin’s safety and the likelihood of FDA approval. On certain occasions, Defendants claimed that loreaserin was not carcinogenic and referred to supporting “animal studies.” When Arena filed its application with the FDA, the FDA’s advisory panel published a briefing document that disclosed, for the first time, that Arena had been in a “highly unusual” back-and-forth with the FDA regarding the results of cancer studies on rats (the “Rat Study”). For years, Arena knew that the rats receiving loreaserin were getting cancer. And the FDA wanted evidence that it was not a-threat to humans. The market was surprised by the undisclosed Rat Study, and Arena’s stock dropped significantly. Schwartz filed suit after news of the Rat Study broke. After further study, the FDA ultimately signed off on loreaserin, and the product is now on the…