Facts

Plaintiffs were investors who filed a putative securities class action against XBiotech Inc., an Austin-based pharmaceutical company, and its underwriter W.R. Hambrecht & Co. LLC in relation to clinical trials for XBiotech's flagship product.

PLAINTIFF'S CONTENTIONS: XBiotech conducted an Initial Public Offering of 4 million shares for a total offering amount of $76 million in April 2015. Plaintiffs alleged that, at the time of the IPO, XBiotech was conducting a clinical trial in Europe and that its registration statement with the SEC was false because it failed to disclose alleged problems with the clinical trial. Plaintiffs alleged that XBiotech's registration statement misrepresented the number of patients enrolled in the clinical trial, the date when the study would be completed, and the qualifications of an outside research organization that assisted in the trial. Plaintiffs further alleged that XBiotech omitted information about delays in the progress of the clinical trial.

DEFENDANT'S CONTENTIONS: Defendants argued that the prospectus and registration statement for XBiotech's IPO adequately warned investors about the uncertainties regarding the clinical trials at issue.

Result

In June 2017, a Los Angeles Superior Court judge granted defendants' motion to dismiss based on forum non convenience. In July 2017, plaintiffs re-filed their case in Texas State Court. Defendants removed the case to federal court, where the litigation was stayed pending the outcome of the Cyan Inc. v. Beaver County Employee Retirement Fund case in the United States Supreme Court. In April 2018, the case was remanded to Texas State Court following the U.S. Supreme Court's March 2018 ruling in Cyan holding that cases brought pursuant to Section 11 of the Securities Act of 1933 cannot be removed to federal court. In May 2018, defendants filed a motion to dismiss the putative class action pending in Texas State Court. In October 2018, the Texas court granted defendants' motion to dismiss the Texas case. In November 2018, the California case that had been stayed was dismissed.