U.S. backs more AE disclosures

The U.S. government filed an amicus brief on Friday arguing that adverse event reports may be material to investors even without statistical significance. The brief was filed in support of shareholders in Matrixx Inc., et al. v. Siracusano, et al., a class action suit alleging that Matrixx Initiatives Inc. (NASDAQ:MTXX) committed securities fraud by failing to disclose reports that some patients lost their sense of smell after using its Zicam Cold Remedy, an OTC intranasal gel and spray, even though the association was not statistically significant.

Circuit and district courts have generally held that drug companies have no duty to disclose AE reports under the Securities Exchange Act of 1934 until there is statistically significant evidence that the AEs may be caused by, and not simply randomly associated with, a drug's use. The District Court for the District of Arizona followed that line of reasoning when it dismissed Siracusano's complaint in 2006, but the U.S. Court of Appeals for the Ninth Circuit rejected that test and remanded the case back to the district court in 2009. Matrixx appealed to the U.S. Supreme Court, which is scheduled to hear oral arguments on Jan. 10, 2011. ...