We secured a total victory for the clients, with all claims against them dismissed

On September 30, 2021, Judge Ann M. Donnelly of the U.S. District Court for the Eastern District of New York granted in full a motion to dismiss a putative securities class action filed against Davis Polk’s clients, a number of the former officers and directors of Synergy Pharmaceuticals, Inc.. The Court denied plaintiffs leave to amend their complaint, handing Davis Polk and its clients a total victory.

The complaint, first brought in 2018 on behalf of a putative class of purchasers of Synergy stock, asserted claims under section 10(b) and section 20(a) of the Exchange Act. Plaintiffs alleged that Synergy, along with a number of its officers and directors, (1) made misstatements concerning the side-effect profile of Synergy’s flagship drug, Trulance, and (2) made misstatements or omitted material information regarding a loan that Synergy had obtained from a private investment firm.

In her decision, Judge Donnelly concluded (1) that plaintiffs had failed to allege any material misstatements regarding Trulance’s side-effect profile or to allege any reasonable connection between any such statements and decreases in Synergy’s stock price, and (2) that plaintiffs had failed to meet their burden to plausibly allege that any statements regarding the loan were made with any intent to deceive, manipulate or defraud investors. In granting the motion to dismiss in full after years of litigation, Judge Donnelly recognized that any further attempt by plaintiffs to amend their complaint would be futile.

The Davis Polk litigation team included partners Edmund Polubinski III (who argued the motion) and Lara Samet Buchwald, and associates Daniel S. Magy, Tyson Dean Kennedy, Daniel J. Thomson and Zachary A. Kaufman. Members of the Davis Polk team are based in the New York and Northern California offices.