In re Ovascience, Inc. Stockholder Litigation (Lawyers Weekly No. 12-177-16)

1 COMMONWEALTH OF MASSACHUSETTS SUFFOLK, ss. SUPERIOR COURT CIV. NO. 15-03087 BLS 2 (Consol. With 16-0645) IN RE OVASCIENCE, INC. STOCKHOLDER LITIGATION MEMORANDUM OF DECISION AND ORDER ON DEFENDANTS’ MOTION TO DISMISS This is a putative class action brought pursuant to Sections 11, 12 and 15 of the Securities Act of 1933. Plaintiffs are investors who purchased stock in the defendant Ovascience, Inc. (Ovascience or the Company). They allege that a Registration Statement issued in connection with a secondary offering of Ovascience stock on January 8, 2015 (the January 8 Offering), contained false statements and material omissions of fact concerning an experimental fertility treatment (AUGMENT) that Ovascience was in the process of developing. In addition to suing Ovascience, plaintiffs have also named as defendants certain of the Company’s officers and directors (collectively, the Ovascience defendants) as well as three investment banks, J.P. Morgan, Credit Suisse and Leerink Partners, which were the underwriters in the January 8 Offering (the Underwriters). The case is now before the Court on the defendants’ Motion to Dismiss pursuant to Rule 12(b) (6), Mass.R.Civ.P. After careful review of the parties’ submissions, the Court concludes that the Motion should be DENIED. This memorandum sets forth a brief explanation of the reasons for that decision. The defendants makes two argument in support of their motion. First, they contend that the Complaint fails to allege sufficient facts, under the standard set forth in Iannachino v. Ford Motor Co., 451 U.S. Mass. 623 (2008), that the Registration Statement contained material 2 misrepresentations.1 This Court disagrees. The Complaint sets forth detailed allegations that the Registration Statement contained misleading statements or failed to include material facts regarding: 1) the science behind AUGMENT; 2) the success rate; 3) the reason why the Company undertook its studies outside of the United States; and 4) the profitability of the Company. Plaintiffs allege that, as a result of the falsely optimistic picture the Registration Statement painted regarding AUGMENT’s prospects as a fertility treatment, stocks prices for Ovascience briefly shot up (with certain of the individual defendants profiting from that rise), then sharply declined when the facts regarding AUGMENT emerged just a few months later – facts that were known at the time the Registration Statement issued. This more than satisfies the requirement that the Complaint set forth facts “plausibly suggesting (not merely consistent with) an entitlement to relief…” Iannacchino, supra, quoting Bell Atl. Corp. v. Twombly, 550 Mass. 544, 555 (2007). The second argument concerns the issue of standing. The claims are brought pursuant to Section 11, 12 and 15 of the Securities Act. In order to have standing to bring a claim under Section 11, a plaintiff must have purchased shares either in the offering […]

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