On Monday, Northern District of California Judge Marilyn Hall Patel issued an order making Catoosa Fund LP the lead plaintiff in a securities class action suit against Medivation.
According to court documents, the plaintiffs accuse Medivation, its officers and directors of disseminating false and misleading statements touting the effectiveness of Dimebon as a treatment for Alzheimer’s. When Dimebon failed to meet its primary or secondary goals in a phase III clinical trial, however, the defendants were forced to publically disclose its ineffectiveness, which they did on March 3, 2010 before the market opened. As a result of this disclosure, Medivation’s stock fell from $27.15 per share on March 2, 2010 to $13.10 on March 3, 2010.
There were five entities vying for status of lead plaintiff: (1) Hopson Family Investments, Inc., (2) Mark Slotkin, (3) Catoosa Fund, LP, (4) Michael Solomon, and (5) Randy Schindler. The court explained that they were initially ranked by the amount of their investment. After that, it considered whether the claims argued were the ones expected for most members of the class. The court found that Schindler was a day-trader who would be subject to unique defenses and was not suitable to be the lead plaintiff. Slotkin had not purchased stock during the class period, but instead incurred losses by a selling a naked put option, which required him to purchase the devalued stock at an inflated price. That did not make him a "typical" plaintiff. Catoosa purchased the shares within the class period and sold them shortly thereafter making it a "typical" plaintiff. The court found Hopson was equally qualified but purchased a smaller amount stock making it second in line to be lead plaintiff.
The newly combined cases are Applestein v. Medivation No. C 10-0998 and Slotkin v. Medivation No. C. 10-2005. The opinion is below the jump.
Applestein v. Medivation