Hsu v. Puma Biotechnology Inc. et al.

Securities fraud

Central District

U.S. District Judge Andrew J. Guilford

Defense lawyers: Latham & Watkins LLP, Andrew B. Clubok, Michele D. Johnson, Colleen C. Smith, Sarah A. Tomkowiak, Kristin N. Murphy, Meryn C.N. Grant, Amanda F. Betsch, Jordan Davisson Cook, Clayton D. LaForge, Wesley J. Horton, Allison S. O'Hara, Andrew C. Dane, Remington B. Lamons

Plaintiff's lawyers: Robbins, Geller, Rudman & Dowd LLP, Patrick J. Coughlin, Susannah R. Conn, Tor Gronborg, Jason A. Forge, Trig R. Smith, Debashish Bakshi, Ting H. Liu, J. Marco Janoski Gray

While a jury found in the plaintiffs favor in the January 2019 trial, defense attorneys for Puma Biotechnology claimed victory after U.S. District Judge Andrew J. Guilford said post-verdict statements beg the question: "Who won the trial?"

"The defendants are spending hundreds of millions of dollars to develop life-saving breast cancer drugs for women," answered Andrew B. Clubok, a partner at Latham & Watkins LLP. "Had the plaintiff's lawyers prevailed in their theory, they would have destroyed this company...The women who are taking this drug won." Guilford replied, "Well stated, Mr. Clubok."

Robbins Geller Rudman & Dowd LLP partner Tor Gronborg told Guilford, "No one, your honor. There was a plaintiff's verdict, but I don't think anyone wins when we have to spend five years dealing with being defrauded."

But Clubok and co-lead counsel Michele D. Johnson said the awarded damages speak for themselves: they could have been as high as nine-figures at the requested $87 per share, but the jury awarded about 5 percent of that, or $4.50 per share. Hsu v. Puma Biotechnology Inc. et al., 15CV-00865 (C.D. Cal., filed June 3, 2015).

"Basically, this was a lawyer-driven case where they tried to take a billion dollars away from this company and make it impossible for it to provide lifesaving medicine," Clubok said in an interview. "That's what we succeeded in defeating."

Robbins partner Jason A. Forge called Clubok and Johnson's victory cries "hysterical and maddening at the same time."

"There were two counts against each defendant, and a verdict was rendered on both counts against the defendants and for the plaintiff," Forge said. "There's no ambiguity whatsoever as to who won the case."

The securities fraud class action was the first in the nation to go to trial in 10 years. It lasted two weeks, with eight jurors deliberating about three days before unanimously concluding on Feb. 4, 2019, that Puma founder and CEO Alan Auerbach committed securities fraud by lying about disease-free survival rates for the breast cancer drug neratinib.

Forge said Puma's stock has recently traded between roughly $8 and $14, down from $147 when Latham started representing the company. He also said the fraud finding means Puma's CEO likely will be barred from serving on the board of a publicly-traded company by the Securities Exchange Commission.

"I don't know how you spin that as a victory," Forge said.

Johnson said neratinib continues to help cancer patients.

"It's being distributed not just in the U.S. but around the world," Johnson said in an interview. "That work couldn't have continued if we didn't get the results that we did."

--Meghann M. Cuniff