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District Of New Jersey Pares Claims In Putative Class Action Against Pharmaceutical Company
08/04/2026On July 28, 2026, Judge Robert Kirsch of the United States District Court for the District of New Jersey granted in part and denied in part a motion to dismiss a putative class action asserting claims under the Securities Exchange Act of 1934 against a pharmaceutical company, its former CEO, and its Executive Vice President of Product Development. In re Novo Nordisk A/S Sec. Litig., No. CV 25-713 (RK) (JBD), 2026 WL 2168296 (D.N.J. July 28, 2026). Plaintiffs alleged that the company made misrepresentations relating to a clinical trial for a weight loss and diabetes-treating drug. The Court held that plaintiffs sufficiently alleged one category of misrepresentations but dismissed plaintiffs’ claims to the extent based on other challenged statements.
Plaintiffs—three pension and retirement funds that purchased company American Depositary Receipts (“ADRs”) during a class period running from November 2, 2022 through December 19, 2024—alleged that defendants made 44 false or misleading statements falling into three categories: (1) statements describing the dosing protocol for the drug’s Phase III clinical trial; (2) statements discussing the drug’s tolerability—the ability to maintain patient adherence to the drug regimen—and projected weight-loss efficacy; and (3) statements regarding potential future trials for the drug. Id. at *2–3. Plaintiffs’ core theory of liability was that defendants represented the Phase III trial would adhere to a particular fixed dose of the drug—consistent with prior clinical trials—when, in fact, the company had from the Phase III trial’s outset incorporated a “flexible” dosing protocol permitting participants to modify their dosage at any point during a 52-week (i.e., year-long) maintenance period, and that the drug would produce “at least 25% weight loss.” Id. at *4–6.
Turning to the first category of challenged statements—general descriptions of the Phase III trial’s structure and dosing—the Court concluded they were not actionable. The Court reasoned that statements describing the Phase III trial as “comparing” and “investigating” a 2.4 mg combination dose of the drug were literally true, even accounting for the flexible protocol, and made no representations about tolerability. Id. at *16. The Court further held that, in light of industry custom—as exemplified by both the company’s own prior GLP-1 trials and the trials of its leading competitor, which had permitted dose modifications under certain circumstances—a reasonable investor would not have been misled into believing the Phase III trial required strict patient adherence to a target dose. Id. The Court also dismissed as non-actionable a statement in a nearly illegible footnote on a slide used during an investor presentation that described the drug as a “fixed dose combination” or “FDC,” concluding that the term referred to the fixed ratio of the two component drugs within the drug rather than an inflexible dosage regimen. Id. at *17.
As to the second category of statements—the EVP’s statements concerning the drug’s tolerability and projected weight loss—the Court held that statements concerning the drug’s tolerability were actionable, while statements concerning projected weight loss were not. As for the drug’s tolerability, the Court noted that the EVP had repeatedly stated, in direct response to analyst questions, that dose escalation would “not introduce more tolerability issues,” that the company could achieve greater efficacy “without having to compromise on safety and tolerability,” and that the drug’s tolerability profile would be “broadly in line” with existing GLP-1 treatments. Id. at *18–19. The Court held that by affirmatively characterizing the drug’s tolerability, the EVP had put the subject “in play” and assumed a duty to disclose the flexible dosing protocol the company had incorporated in its Phase III trial to specifically address tolerability concerns observed in prior trials. Id. The Court declined to find, as defendants urged, that the Phase III trial dosing protocol was “substantively identical” to earlier phases, noting several material differences: the Phase III trial eliminated the Phase II requirement that dose modification could occur only if a participant would otherwise discontinue the drug entirely, and it prescribed a more empowered and active role for trial investigators in managing tolerability—including re-escalation attempts, dietary guidance, and symptomatic medication. Id. at *19–20. The Court also observed that the company’s own post-class-period statements acknowledged incorporating a “flexible protocol” during the Phase III trial, undermining defendants’ assertion that nothing had changed from earlier trials to the Phase III trial. Id. at *20. However, the Court held that the EVP’s predictions that the drug would result in patients experiencing “at least 25% weight loss” and “unsurpassed weight loss” were forward-looking statements protected by the Private Securities Litigation Reform Act of 1995’s safe harbor and were accompanied by meaningful cautionary language, and that plaintiffs had not alleged the EVP knew the company’s weight-loss projection model was producing false results. Id. at *21.
The third category of challenged statements—regarding future drug trials—were also dismissed as inactionable. Id. at *22. The Court noted that these statements, which only appeared in a slide used during an investor presentation, were forward-looking, single-bullet-point references to the fact that “potential future trials” might “[e]valuate lower doses for personalized treatment.” Id. The Court held these statements were not alleged to be literally false and were too general and noncommittal to put the company’s approach to tolerability “in play.” Id. The Court also held that there was a “fundamental mismatch” between the challenged statements and the flexible dosing protocol plaintiffs sought to bring within their scope because the Phase III trial’s flexible dosing protocol could not be fairly characterized as the fundamental design of the Phase III trial itself. Id. The Court further observed that plaintiffs had not identified the speaker of the statements on the slides, and thus failed to allege that speaker’s supposed awareness of their falsity. Id. n.30.
With respect to scienter, the Court found plaintiffs’ allegations sufficient as to the EVP but not the CEO. The Court noted that the EVP was consistently held out as the “key person” authorized to answer questions on the company’s behalf about the clinical trial designs for the drug, and other company executives routinely deferred tolerability-related inquiries to him. Id. at *23. His intimate familiarity with the drug (which he described as his “next love”), coupled with the drug’s importance to the company’s positioning against its leading competitor in the GLP-1 market, supported a cogent and compelling inference that he knew of the flexible dosing protocol and withheld it, gambling that the Phase III trial’s results would ultimately render the omission moot. Id. at *24. As to the CEO, however, the Court concluded that plaintiffs failed to allege he made or caused any misstatements held to be actionable, and that his corporate title alone was insufficient to establish liability in the absence of allegations that he was the “ultimate authority” behind any of the actionable statements. Id. at *24–25.
Finally, the Court allowed the Section 20(a) control-person claim to proceed against all three defendants, including the CEO. Although the Court had concluded that Plaintiffs did not adequately allege scienter as against the CEO, the Court explained that the CEO was adequately alleged to have been a “high level officer” of the company during the class period, which the Court found sufficient at the pleadings stage to state a control person claim. Id. at *26.
Securities Litigation