Facts

Portola Pharmaceuticals is a biopharmaceutical company developing drugs for blood disorders and inflammation. Its leading drug, Andexxa, reverses the effects of two types of blood thinners which would restore patients' clotting ability. Andexxa gained FDA approval for a limited launch in May 2018 and the broader commercial launch began on January 8, 2019. On January 9, 2020, after Portola announced preliminary net revenues that were much less than anticipated, the company's share fell 40 percent the following day. Subsequent disclosures regarding Andexxa caused Portola stock to decline further. Court-appointed Lead Plaintiff Alameda County Employees' Retirement Association filed a consolidated complaint on behalf of investors who purchased Portola securities between January 8, 2019 and February [28], 2020, asserting claims under both Sections 10 and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2), and 15 of the Securities Act of 1933.

PLAINTIFFS' CONTENTIONS: Plaintiffs alleged that defendants, during the Class Period, violated the federal securities laws by making materially false and/or misleading statements regarding the company's business, operations and prospects.
Specifically, plaintiffs contended that defendants falsely promoted Andexxa's potential, misleading the investing public in regard to the actual value of the drug in two principal respects. First, plaintiffs alleged that defendants allegedly misrepresented and/or failed to disclose material information about the Company's revenue recognition, return reserves, and compliance with Generally Accepted Accounting Principles (GAAP), specifically, Accounting Standard Codification, Topic 606. Plaintiffs alleged that defendants' statements and omissions about the Company's compliance with GAAP were materially misleading because, unbeknownst to investors, defendants recognized revenue of Andexxa promptly upon sale without determining the relative certainty that the sale would not result in a return, as is required under ASC 606. Second, plaintiffs alleged defendants misled investors about the demand and utilization of Andexxa. The statements about demand and utilization were allegedly materially misleading because, as alleged, defendants knew internally that demand and utilization were weak and statements about demand were based on the misstated revenue numbers recognized in violation GAAP and ASC 606. As Andexxa was Portola's only viable product, it comprised nearly 100 percent of the company's revenues and because it was expensive, selling it proved difficult.

DEFENDANTS' CONTENTIONS: Defendants denied all contentions.

Result

The parties reached a settlement agreement wherein the defendants admitted no liability or wrongdoing but agreed to pay $17.5 million to settle class members' claims.