GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy Michael ... · Defendant Sandesh Mahatme...

CLASS ACTION COMPLAINT

GLANCY BINKOW & GOLDBERG LLP

Lionel Z. Glancy

Michael Goldberg

Robert V. Prongay

Casey E. Sadler

1925 Century Park East, Suite 2100

Los Angeles, California 90067

Telephone: (310) 201-9150

Facsimile: (310) 201-9160

LAW OFFICES OF HOWARD G. SMITH

Howard G. Smith

3070 Bristol Pike, Suite 112

Bensalem, PA 19020

Telephone: (215) 638-4847

Facsimile: (215) 638-4867

Attorneys for Plaintiff

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

PLAINTIFF, Individually and on Behalf of

All Others Similarly Situated,

Plaintiff,

v.

SAREPTA THERAPEUTICS, INC.,

CHRISTOPHER GARABEDIAN, and

SANDESH MAHATME,

Defendants.

Case No. DRAFT

CLASS ACTION COMPLAINT FOR

VIOLATIONS OF THE FEDERAL

SECURITIES LAWS

JURY TRIAL DEMANDED


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Plaintiff (“Plaintiff”), by and through his attorneys, alleges the following upon

information and belief, except as to those allegations concerning Plaintiff, which are alleged

upon personal knowledge. Plaintiff’s information and belief is based upon, among other things,

his counsel’s investigation, which includes without limitation: (a) review and analysis of

regulatory filings made by SAREPTA THERAPEUTICS, INC. (“Sarepta” or the “Company”),

with the United States Securities and Exchange Commission (“SEC”); (b) review and analysis of

press releases and media reports issued by and disseminated by Sarepta; and (c) review of other

publicly available information concerning Sarepta.

NATURE OF THE ACTION AND OVERVIEW

1. This is a class action on behalf of purchasers of Sarepta securities between April

21, 2014 and October 27, 2014, inclusive (the “Class Period”), seeking to pursue remedies under

the Securities Exchange Act of 1934 (the “Exchange Act”).

2. Sarepta is a biopharmaceutical company focused on the discovery and

development of unique RNA-based therapeutics for the treatment of rare and infectious diseases.

3. The Company is focused on advancing the development of its Duchenne muscular

dystrophy (“DMD”) drug candidates, including its lead product candidate, eteplirsen, for which

the Company is in process of conducting or starting several studies. These include an ongoing

open label extension study following completion of its initial Phase IIb clinical trials, several

clinical trials in Exon 51 amenable genotypes, including a confirmatory study in ambulatory

patients, studies on participants with early stage and advanced stage DMD and a placebo-

controlled confirmatory study with one or more of the Company’s follow-on DMD exon-

skipping drug candidates. Additionally, the Company is working on a Phase I/IIa clinical trial

for an Exon 53 skipping product candidate in the European Union and has an open


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investigational new drug (“IND”) application for its Exon 45 skipping product candidate for

which it plans to begin a clinical trial early next year. The Company is also developing

therapeutics for the treatment of infectious diseases.

4. On October 27, 2014, the Company revealed that it had received an update from

the Food and Drug Administration (“FDA”) regarding its planned New Drug Application

(“NDA”) submission for eteplirsen for the treatment of DMD. The FDA guidance indicated that

additional information was required for the NDA submission, including the results from an

independent assessment of dystrophin images and the 168-week clinical data from study 202, as

well as more specific data, including a minimum duration of safety in new patients exposed to

eteplirsen, patient-level natural history data to be obtained by Sarepta from independent

academic institutions, and MRI data from a recent study conducted by an independent academic

group. According to the Company, Sarepta plans to submit an NDA by mid-year 2015, pending

any additional requests from further discussions with the FDA.

5. On this news, shares of Sarepta declined $7.65 per share, over 32%, to close on

October 27, 2014, at $15.91 per share, on unusually heavy volume.

6. Throughout the Class Period, Defendants made false and/or misleading

statements, as well as failed to disclose material adverse facts about the Company’s business,

operations, and prospects. Specifically, Defendants made false and/or misleading statements

and/or failed to disclose: (1) that the Company failed to provide sufficient data for its NDA

submission; (2) that, as a result, the Company’s NDA for eteplirsen would likely be filed mid-

2015 instead of by the end of 2014; and (3) that, as a result of the foregoing, the Company’s

statements about its business, operations, and prospects, including statements about eteplirsen’s


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prospects for FDA approval in the treatment of DMD, were materially false and misleading

and/or lacked a reasonable basis.

7. As a result of Defendants’ wrongful acts and omissions, and the precipitous

decline in the market value of the Company’s securities, Plaintiff and other Class members have

suffered significant losses and damages.

JURISDICTION AND VENUE

8. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange

Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17

C.F.R. § 240.10b-5).

9. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).

10. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and

Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the

alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts

charged herein, including the preparation and dissemination of materially false and/or misleading

information, occurred in substantial part in this Judicial District. Additionally, Sarepta’s

principal executive offices are located within this Judicial District.

11. In connection with the acts, transactions, and conduct alleged herein, Defendants

directly and indirectly used the means and instrumentalities of interstate commerce, including the

United States mail, interstate telephone communications, and the facilities of a national securities

exchange.

PARTIES


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12. Plaintiff, as set forth in the accompanying certification, incorporated by reference

herein, purchased Sarepta common stock during the Class Period, and suffered damages as a

result of the federal securities law violations and false and/or misleading statements and/or

material omissions alleged herein.

13. Defendant Sarepta is a Delaware corporation with its principal executive offices

located at 215 First Street, Suite 415, Cambridge, Massachusetts 02142.

14. Defendant Christopher Garabedian (“Garabedian”) was, at all relevant times,

Chief Executive Officer (“CEO”) and a director of Sarepta.

15. Defendant Sandesh Mahatme (“Mahatme”) was, at all relevant times, Chief

Financial Officer (“CFO”) of Sarepta.

16. Defendants Garabedian and Mahatme are collectively referred to hereinafter as

the “Individual Defendants.” The Individual Defendants, because of their positions with the

Company, possessed the power and authority to control the contents of Sarepta’s reports to the

SEC, press releases and presentations to securities analysts, money and portfolio managers and

institutional investors, i.e., the market. Each defendant was provided with copies of the

Company’s reports and press releases alleged herein to be misleading prior to, or shortly after,

their issuance and had the ability and opportunity to prevent their issuance or cause them to be

corrected. Because of their positions and access to material non-public information available to

them, each of these defendants knew that the adverse facts specified herein had not been

disclosed to, and were being concealed from, the public, and that the positive representations

which were being made were then materially false and/or misleading. The Individual

Defendants are liable for the false statements pleaded herein, as those statements were each

“group-published” information, the result of the collective actions of the Individual Defendants.


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SUBSTANTIVE ALLEGATIONS

Background

17. Sarepta is a biopharmaceutical company focused on the discovery and

development of unique RNA-based therapeutics for the treatment of rare and infectious diseases.

Materially False and Misleading

Statements Issued During the Class Period

18. The Class Period begins on April 21, 2014. On this day, the Company issued a

press release entitled, “Sarepta Therapeutics Announces Plans to Submit New Drug Application

to FDA for Eteplirsen for the Treatment of Duchenne Muscular Dystrophy by Year End 2014.”

Therein, the Company, in relevant part, stated:

— FDA provides updated guidance on potential early approval pathway for

eteplirsen;

— Agreement reached with the Agency on eteplirsen open-label confirmatory

studies

with enrollment of a broader base of DMD patients later this year;

— FDA provides initial guidance on development of follow-on DMD drug

candidates;

— Company to hold teleconference at 8:00 a.m. EDT

Sarepta Therapeutics, Inc. (NASDAQ: SRPT), a developer of innovative RNA-

based therapeutics, today announced it plans to submit a New Drug Application

(NDA) to the U.S. Food and Drug Administration (FDA) by the end of 2014 for

the approval of eteplirsen for the treatment of Duchenne muscular dystrophy

(DMD). Eteplirsen is Sarepta’s lead exon-skipping drug candidate in development

for the treatment of patients with DMD who have a genotype amenable to

skipping of exon 51.

The plan to submit an NDA for eteplirsen by the end of 2014 is based on a

guidance letter from the Agency that proposed a strategy regarding the

submission of an NDA for eteplirsen under a potential Accelerated Approval

pathway and served as the final meeting minutes for four meetings that took place

between November, 2013 and March, 2014. The Agency stated that “with

additional data to support the efficacy and safety of eteplirsen for the treatment of


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DMD, an NDA should be fileable,” and outlined examples of additional data and

analysis that, if positive, will be important to enhance the acceptability of an NDA

filing by addressing areas of ongoing concern in the existing dataset.

Additionally, the Agency provided clear guidance on an open-label, historically

controlled confirmatory study of eteplirsen, as well as initial guidance on a

placebo-controlled study of one or more follow-on DMD drug candidates, which,

like the open-label study, could also be considered an acceptable confirmatory

study to verify the clinical benefit of eteplirsen in the event of an accelerated

approval.

“As we announce our plan to submit an eteplirsen NDA by the end of 2014, we

are very pleased with the detailed guidance that the FDA has provided us on a

potential eteplirsen approval pathway and their support of a historically controlled

eteplirsen confirmatory study,” said Chris Garabedian, president and chief

executive officer of Sarepta Therapeutics. “We also appreciate that the FDA

shares our urgency in dosing a broader base of eteplirsen patients and has

encouraged us to begin the clinical program with our follow-on exon-skipping

drugs as soon as possible.”

Based on the Agency’s guidance, Sarepta plans to initiate several additional

clinical studies with eteplirsen later this year in exon-51 amenable genotypes.

These studies will include a clinical trial with predefined efficacy endpoints for

ambulatory patients between the ages of 7 to 16 years who can walk a minimum

distance, and two additional clinical trials that will evaluate safety and biomarkers

in DMD patients younger than 7 years and DMD patients who have advanced in

their disease progression to a point they cannot walk a minimum distance or have

become non-ambulant. Additionally, Sarepta plans to initiate a placebo-controlled

study with one or more of its follow-on DMD exon-skipping drug candidates by

the end of the year.

“We are excited to have guidance from the FDA that allows us to move quickly

into additional clinical trials with eteplirsen to confirm our current understanding

of eteplirsen’s safety profile, its effect on dystrophin production, and its impact on

clinical outcomes in DMD patients,” said Edward Kaye, M.D., senior vice

president and chief medical officer of Sarepta Therapeutics. “We are particularly

pleased that the FDA shares our interest in accelerating the clinical development

of our follow-on exon-skipping drugs and we expect to initiate enrollment in this

trial later this year.”

Sarepta plans to immediately take steps to initiate the additional eteplirsen clinical

studies with the goal of beginning dosing in the confirmatory study in the third

quarter, with dosing in the additional trials (i.e., younger and more advanced

DMD patients) to begin later this year. Once available, detailed study eligibility

criteria and clinical site information will be posted on www.ClinicalTrials.gov

and Let’s Skip Ahead, an online resource center from Sarepta for the DMD

community available at www.SkipAhead.com.


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Excerpts from the FDA’s letter on an NDA filing included:

“…with additional data to support the efficacy and safety of eteplirsen for the

treatment of DMD, described below, an NDA should be fileable (assuming other

aspects of the submitted application meet applicable standards). As we are sure

you appreciate, however, our willingness to consider an application for filing

cannot be taken to suggest the outcome of our review. We also note that if the

application is filed, you should expect public discussion of the NDA at an

Advisory Committee meeting.”

The FDA outlined two potential pathways to accelerated approval:

“1. The clinical data from Study 201/202 [Phase IIb clinical trial program] on 6-

minute walk could be considered a finding on an intermediate clinical endpoint

that could have the potential to support accelerated approval.”

Related to this first pathway to Accelerated Approval, the Agency stated that they

have “significant concerns regarding our ability to draw valid conclusions based

on the Study 201/202 data with respect to walking performance and other data,”

and identified areas relating to the interpretation of the existing data set that will

be addressed as part of an NDA review once the NDA is filed.

“2. We have discussed the possibility of using a number of modalities to quantify

dystrophin in muscle biopsies, and discussed how these biomarkers might be used

as a surrogate endpoint(s) to support accelerated approval.”

In evaluating this pathway, the FDA expressed concerns about methodological

problems in the assessments of dystrophin and, “remain skeptical about the

persuasiveness of the (dystrophin) data” and, as a result, the Agency is “uncertain

whether the existing dystrophin biomarker data will be persuasive enough to serve

as a surrogate endpoint that is reasonably likely to predict clinical benefit.”

However, the Agency further states that if they “were to find the biomarker data

to be adequate upon detailed review, however, they would have the potential to

support accelerated approval.” To that end, the Agency proposed “a collaborative

effort in which we will work to better understand the methods and analyses used

for the existing biomarker data,” and “also work together on methods for the

collection of additional data that could be more reliable.”

Furthermore, the Agency suggested that “another approach to demonstrating an

effect of eteplirsen on dystrophin protein production would be to obtain a fourth

muscle biopsy in patients who are continuing in Study 202,” which could serve to

enhance the acceptability of an NDA filing and accelerated approval.

Under either potential application of the Accelerated Approval pathway, the

FDA’s letter included comments expressing both a desire for more eteplirsen


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safety and efficacy data and a willingness to consider supplemental data in an

NDA filing or during an NDA review (following the NDA filing) from the

ongoing Study 202 and early safety and biomarker data from a confirmatory

eteplirsen study. The Agency also encouraged Sarepta to collect safety and

biomarker data with eteplirsen in a broader population of patients, including

DMD patients who were younger, older and non-ambulant, and previously treated

with drisapersen.

Additional excerpts from the FDA’s letter on the eteplirsen and follow-on exon-

skipping drug confirmatory studies:

“…any accelerated approval [of eteplirsen] would necessitate confirmatory

studies to verify the clinical benefit. Confirmatory studies should be underway at

the time of approval.”

The FDA outlined two approaches for confirmatory trials and urged Sarepta to

“initiate both of these trials as soon as possible.”

“1. A historically-controlled trial might be acceptable to confirm clinical benefit

following accelerated approval.”

“2. A randomized, placebo-controlled trial of another PMO [phosphorodiamidate

morpholino oligomer] with a similar mechanism of action, directed at a different

exon (e.g., SRP-4053 or SRP-4045), with a demonstration of a correlation

between dystrophin production and definitive clinical benefit on 6-minute walk or

another measure, could provide confirmatory evidence of eteplirsen’s clinical

benefit if approval were based on a surrogate endpoint.”

19. On or about April 24, 2014, the Company filed a prospectus with the SEC on

Form 424B5. The Company held an underwritten public offering of an aggregate of 2,650,000

shares of its common stock, excluding an over-allotment option, at a price to the public of $38.00

per share.

20. On May 8, 2014, the Company issued a press release entitled, “Sarepta

Therapeutics Announces First Quarter 2014 Financial Results and Recent Corporate

Developments.” Therein, the Company, in relevant part, stated:

New Drug Application for eteplirsen planned for submission to FDA by year end;

Multiple eteplirsen clinical studies in broader population of DMD patients to

begin dosing later this year;


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Investigational New Drug applications for two additional DMD drug candidates

targeting different genetic subpopulations to be submitted to FDA in third

quarter;

Well capitalized with $233.1 million in cash and other investments at quarter end,

with an additional $94.5 million raised post-quarter end


based therapeutics, today reported financial results for the three months ended

March 31, 2014, and provided an update of recent corporate developments.

“The path toward an NDA filing and a potential accelerated approval of eteplirsen

has been laid out for us and we are busy preparing for the important clinical and

regulatory milestones toward achieving this goal,” said Chris Garabedian,

president and chief executive officer of Sarepta. “We are also preparing to

advance our broader DMD program beyond eteplirsen in the U.S., and will begin

the global clinical development program on our next exon-skipping drugs, as well

as seek EMA guidance on requirements for a potential eteplirsen submission in

the EU, later this year.”

Financial Results

For the first quarter of 2014, Sarepta reported a non-GAAP net loss of $20.7

million, or $0.55 per share, compared to a non-GAAP net loss of $13.0 million for

the first quarter of 2013, or $0.41 per share. The incremental loss is primarily the

result of an increase of $9.1 million in non-GAAP operating expenses due to

corporate growth, offset by an increase of $1.6 million in contract revenue.

On a GAAP basis, the net loss for the first quarter of 2014 was $28.3 million, or

$0.75 per share (including $4.4 million of stock-based compensation and

restructuring expenses), compared with a net loss of $42.1 million for the first

quarter of 2013, or $1.32 per share (including $2.1 million of stock-based

compensation and restructuring expenses). The decrease in net loss is primarily

due to a decrease of $23.7 million in loss on change in warrant valuation and an

increase of $1.6 million in contract revenue offset by an increase of $11.3 million

in operating expenses. The fluctuation in the fair value of the Company’s

outstanding warrant liability is primarily affected by the fluctuation of the

Company’s stock price during each financial reporting period.

Revenue for the first quarter of 2014 was $6.1 million, up from $4.5 million for

the first quarter of 2013. The $1.6 million increase was primarily due to the

timing of activities in connection with the Marburg portion of the July 2010 U.S.

government contract. Revenue from the Company’s European Union SKIP-NMD

agreement supporting development of an exon 53 skipping therapeutic and the

Company’s Children’s National Medical Center agreement also increased in the


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first quarter of 2014. These increases were partially offset by a decrease in

revenue from the August 2012 intramuscular agreement with the U.S.

government, which was completed in the third quarter of 2013.

Non-GAAP research and development expenses were $19.0 million for the first

quarter of 2014, compared to $13.0 million for the first quarter of 2013, an

increase of $6.0 million. GAAP research and development expenses were $20.9

million for the first quarter of 2014 (including $1.9 million of stock-based

compensation and restructuring expenses), compared to $13.8 million for the first

quarter of 2013 (including $0.8 million of stock-based compensation and

restructuring expenses), an increase of $7.1 million.

Non-GAAP general and administrative expenses were $7.8 million for the first

quarter of 2014, compared to $4.8 million for the first quarter of 2013, an increase

of $3.0 million. GAAP general and administrative expenses were $10.3 million

for the first quarter of 2014 (including $2.5 million of stock-based compensation

expense), compared to $6.1 million for the first quarter of 2013 (including $1.3

million of stock-based compensation and restructuring expenses), an increase of

$4.2 million.

The increased operating expenses were primarily caused by corporate growth as

the Company continues the development of its programs in Duchenne muscular

dystrophy (DMD).

The Company had cash, cash equivalents, short-term investments and restricted

investments related to its letters of credit of $233.1 million as of March 31, 2014

compared to $264.9 million as of December 31, 2013, a decrease of $31.8 million.

The decrease was primarily driven by the use of cash to fund the Company’s

ongoing operations in the first quarter of 2014.

In addition to the GAAP financial measures set forth in this press release, the

Company has included certain non-GAAP measurements: non-GAAP research

and development expenses, non-GAAP general and administrative expenses, non-

GAAP operating expenses, non-GAAP net loss, and non-GAAP basic and diluted

net loss per share, which present operating results on a basis adjusted for certain

items. The Company uses these non-GAAP measures as key performance

measures for the purpose of evaluating performance internally. The Company also

believes these non-GAAP measures provide the Company’s investors with useful

information regarding the Company’s historical operating results. These non-

GAAP measures are not intended to replace the presentation of the Company’s

financial results in accordance with GAAP. Use of the terms non-GAAP research



net loss per share may differ from similar measures reported by other companies.

All relevant non-GAAP measures are reconciled from their respective GAAP

measures in the attached table "Reconciliation of GAAP to non-GAAP Net Loss."


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Recent Corporate Developments

Duchenne Muscular Dystrophy Program

-- Based on new guidance from the U.S. Food and Drug Administration (FDA),

announced plans to submit a New Drug Application (NDA) to the FDA with

additional safety and efficacy data and analysis by the end of 2014 for the

approval of eteplirsen for the treatment of patients with DMD who have a

genotype amenable to skipping of exon 51.

-- Announced plans to initiate several clinical studies of eteplirsen based on the

new FDA guidance. Planned studies with eteplirsen in exon-51 amenable

genotypes include a historically controlled clinical trial with predefined efficacy

endpoints for ambulatory patients between the ages of 7 to 16 years who can walk

a minimum distance, and two additional clinical trials that will evaluate safety and

biomarkers in DMD patients younger than 7 years and DMD patients who have

advanced in their disease progression to a point where they cannot walk a

minimum distance or have become non-ambulant.

-- Additionally, announced plans to initiate a placebo-controlled study with one or

more of the Company’s follow-on DMD exon-skipping drug candidates by the

end of the year.

-- Presented clinical data through Week 120 from the Phase IIb open-label

extension study of eteplirsen in patients with DMD at the Muscular Dystrophy

Association Clinical Conference and the American Academy of Neurology

Annual Meeting.

Corporate Updates

-- Announced the company priced an underwritten public offering of an aggregate

of 2,650,000 shares of its common stock at a price to the public of $38.00 per

share. In addition, Sarepta has granted the underwriters a 30-day option to

purchase up to an additional 397,500 shares of common stock on the same terms

and conditions as the initial shares sold to the underwriters. The aggregate net

proceeds from the offering to the company was approximately $94.5 million, after

deducting the underwriting discount and estimated offering expenses payable by

Sarepta, but excluding any exercise of the underwriters’ option. The offering

closed on April 29, 2014.

21. On May 8, 2014, Sarepta filed its Quarterly Report with the SEC on Form 10-Q

for the 2014 fiscal first quarter. The Company’s Form 10-Q was signed by Defendants

Garabedian and Mahatme, and affirmed the results previously announced that day.


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22. On July 10, 2014, the Company issued a press release entitled, “Sarepta

Therapeutics Reports Long-Term Outcomes Through 144 Weeks from Phase IIb Study of

Eteplirsen in Duchenne Muscular Dystrophy.” Therein, the Company, in relevant part, stated:

Sarepta Therapeutics, Inc. (NASDAQ:SRPT), a developer of innovative RNA-

based therapeutics, today announced data through Week 144 from Study 202, a

Phase IIb open-label extension study of eteplirsen in patients with Duchenne

muscular dystrophy (DMD). After nearly three years of follow up, results on the

6-minute walk test (6MWT) showed a decline in walking ability at a rate slower

than would be expected based on available DMD natural history data. In addition,

a continued stabilization of respiratory muscle function was observed, as assessed

by pulmonary function tests. As previously reported, Study 202 met its primary

endpoint of increased novel dystrophin as assessed by muscle biopsy at Week 48

and is now in the long-term extension phase in which patients continue to be

followed for safety and clinical outcomes.

At Week 144, patients in the 30 mg/kg and 50 mg/kg eteplirsen cohorts who were

able to perform the 6MWT (modified Intent-to-Treat or mITT population; n=6)

experienced a decline of 33.2 meters, or about 8.5 percent, from baseline in

walking ability. A statistically significant treatment benefit of 75.1 meters

(p≤0.004) was observed for the mITT population compared with the

placebo/delayed-treatment cohort (n=4), which initiated treatment at Week 25

following 24 weeks of placebo. After experiencing a substantial decline of 68.4

meters from baseline to Week 36, the placebo/delayed-treatment cohort

demonstrated a decline of 39.0 meters in walking ability from Week 36 through

Week 144, the period from which meaningful levels of dystrophin were likely

produced. These analyses were based on the maximum 6MWT score when the

test was performed on two consecutive days.

“The long-term clinical data for eteplirsen showing a slowing in the decline of

walking ability in a population now on average 12 years old are very encouraging,

particularly when compared with the growing body of DMD natural history data

which clearly show that similarly aged patients typically experience an

increasingly rapid decline in walking ability and lose ambulation in their early

teen years,” said Jerry Mendell, M.D., director of the Centers for Gene Therapy

and Muscular Dystrophy at Nationwide Children's Hospital and principal

investigator of the Phase IIb study.

“We now have nearly three years of treatment experience with eteplirsen from our

Phase IIb clinical study program and, based on guidance from the U.S. Food and

Drug Administration earlier this year, we plan to submit these results along with

additional data and analysis as part of a New Drug Application for eteplirsen by

year-end,” said Chris Garabedian, president and chief executive officer of Sarepta

Therapeutics.


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Respiratory muscle function from baseline through Week 144 in the Intent-to-

Treat population (n=12), as measured by maximum inspiratory and expiratory

pressure (MIP and MEP), showed a 14.7 percent mean increase in MIP and a 12.8

percent mean increase in MEP. Analyses of MIP percent predicted (MIP adjusted

for weight) and MEP percent predicted (MEP adjusted for age) demonstrated a

mean change from 91.7 percent at baseline to 93.9 percent at Week 144 in MIP

percent predicted, and a mean change from 79.3 percent at baseline to 75.7

percent at Week 144 in MEP percent predicted. In addition, there was a mean

increase in forced vital capacity (FVC), a measure of lung volume, of 11.0

percent. FVC percent predicted (FVC adjusted for age and height) was maintained

above a mean of 90 percent at Week 144, with 101.3 percent at baseline and 90.9

percent at Week 144.

“We are encouraged to see continued stability on measures of respiratory muscle

function in patients treated with eteplirsen for nearly three years, particularly as

declines in MIP and MEP are often the first signs of pulmonary dysfunction in

DMD,” said Edward Kaye, M.D., senior vice president and chief medical officer

of Sarepta Therapeutics. “As we prepare to submit a New Drug Application for

eteplirsen including these data, we are also on track to initiate in the coming

months several new clinical studies of eteplirsen in a broader patient population to

further characterize the drug’s safety and efficacy profile.”

Through 144 weeks, eteplirsen was well tolerated and there were no reported

clinically significant treatment-related adverse events and no treatment-related

serious adverse events. In addition, there were no treatment-related

hospitalizations or discontinuations.

23. On August 7, 2014, the Company issued a press release entitled, “Sarepta

Therapeutics Announces Second Quarter 2014 Financial Results and Recent Corporate

Developments.” Therein, the Company, in relevant part, stated:

Progress achieved across eteplirsen clinical studies with patient screening

expected to begin this month

On track to submit New Drug Application for eteplirsen by year-end

Follow-on exon-skipping drugs targeting exons 45 and 53 advancing toward

clinical testing

Well capitalized with $284.2 million in cash and other investments at quarter end


14


based therapeutics, today reported financial results for the three and six months

ended June 30, 2014, and provided an update of recent corporate developments.

“We’ve made tremendous progress in advancing our eteplirsen clinical trials and

are ready to begin our confirmatory ambulatory study this month, the first of three

new studies with eteplirsen,” said President and Chief Executive Office Chris

Garabedian. “We continue to work on preparing our NDA submissions, while

making progress on both our additional studies with eteplirsen and studies with

follow-on exon-skipping drug candidates for Duchenne muscular dystrophy

patients with other genotypes.”

Financial Results

For the second quarter of 2014, Sarepta reported a non-GAAP net loss of $24.5

million, or $0.61 per share, compared to a non-GAAP net loss of $14.6 million for

the second quarter of 2013, or $0.46 per share. The incremental loss of $9.9

million was primarily the result of increased research and development and

general and administrative expenses as a result of corporate growth.

On a GAAP basis, the net loss for the second quarter of 2014 was $33.9 million,

or $0.85 per share (including $5.6 million of stock-based compensation and

restructuring expenses), compared to a net loss of $19.1 million, or $0.60 per

share (including $2.5 million of stock-based compensation and restructuring

expenses) for the second quarter of 2013. The increase in net loss is primarily due

to an increase of $12.8 million in operating expenses, an increase of $1.8 million

in loss on change in warrant valuation and a decrease of $0.4 million in contract

revenue.

Revenue for the second quarter of 2014 was $2.6 million, down from $3.0 million

for the second quarter of 2013. The $0.4 million decrease was primarily due to

decreases in revenue from the Company’s government contracts.

Non-GAAP research and development expenses were $18.3 million for the

second quarter of 2014, compared to $12.2 million for the second quarter of 2013,

an increase of $6.1 million. GAAP research and development expenses were

$20.6 million for the second quarter of 2014 (including $2.3 million of stock-

based compensation and restructuring expenses), compared to $13.0 million for

the second quarter of 2013 (including $0.8 million of stock-based compensation

and restructuring expenses), an increase of $7.6 million.

Non-GAAP general and administrative expenses were $9.0 million for the second

quarter of 2014, compared to $5.3 million for the second quarter of 2013, an

increase of $3.7 million. GAAP general and administrative expenses were $12.2

million for the second quarter of 2014 (including $3.2 million of stock-based

compensation expense), compared to $7.1 million for the second quarter of 2013


15

(including $1.7 million of stock-based compensation and restructuring expenses),

an increase of $5.1 million.

The increase in operating expenses was primarily caused by corporate growth,

including an expansion of manufacturing, pre-commercial and medical affairs

activities as the Company prepares for the possibility of a product approval next

year. The company also continues to expand clinical and regulatory activities in

support of the development of its programs in Duchenne muscular dystrophy

(DMD).

The Company had cash, cash equivalents, short-term investments and restricted

investments related to a letter of credit of $284.2 million as of June 30, 2014

compared to $264.9 million as of December 31, 2013, an increase of $19.3

million. The increase was primarily driven by the net proceeds received from the

Company’s public offering in April 2014, offset by the use of cash to fund the

Company’s ongoing operations in the first half of 2014.

In addition to the GAAP financial measures set forth in this press release, the

Company has included certain non-GAAP measurements: non-GAAP research



net loss per share, which present operating results on a basis adjusted for certain

items. The Company uses these non-GAAP measures as key performance

measures for the purpose of evaluating performance internally. The Company also

believes these non-GAAP measures provide the Company’s investors with useful

information regarding the Company’s historical operating results. These non-

GAAP measures are not intended to replace the presentation of the Company’s

financial results in accordance with GAAP. Use of the terms non-GAAP research



net loss per share may differ from similar measures reported by other companies.

All relevant non-GAAP measures are reconciled from their respective GAAP

measures in the attached table "Reconciliation of GAAP to Non-GAAP Net

Loss."

2014 Guidance

The Company now expects that Non-GAAP loss from operations will range from

$135 to $145 million, as compared with its previous guidance of $110 to $120

million. In addition, The Company is anticipating capital investments of

approximately $25 million for the remainder of 2014 in connection with its

manufacturing facility in Andover and 2015 inventory commitments. The

Company is not able to provide a reconciliation of this Non-GAAP guidance to its

relevant GAAP measure because full year loss from operations could include

incremental stock compensation expense related to the achievement of certain

criteria for performance awards.


16

Recent Corporate Developments

Duchenne Muscular Dystrophy Program

-- Announced updated data from Study 202, a Phase IIb open-label extension

study of eteplirsen in patients with DMD. Results on the 6-minute walk test

(6MWT) at 144 weeks showed a decline in walking ability at a rate slower than

would be expected based on available DMD natural history data. In addition, a

continued stabilization of respiratory muscle function was observed. As

previously reported, Study 202 met its primary endpoint of increased novel

dystrophin as assessed by muscle biopsy at week 48 and is now in the long-term

extension phase in which patients continue to be followed for safety and clinical

outcomes.

Corporate Updates

-- Acquisition of the multifunctional manufacturing facility on 26 acres of land in

Andover, Massachusetts supports large-scale manufacturing needs.

-- John Hodgman was named interim chairman of the board of directors.

24. On August 7, 2014, Sarepta filed its Quarterly Report with the SEC on Form 10-Q

for the 2014 fiscal second quarter. The Company’s Form 10-Q was signed by Defendants

Garabedian and Mahatme, and affirmed the results previously announced that day.

25. The statements contained in ¶¶__-__ were materially false and/or misleading

when made because defendants failed to disclose or indicate the following: (1) that the Company

failed to provide sufficient data for its NDA submission; (2) that, as a result, the Company’s

NDA for eteplirsen would likely be filed mid-2015 instead of by the end of 2014; and (3) that, as

a result of the foregoing, the Company’s statements about its business, operations, and prospects,

including statements about eteplirsen’s prospects for FDA approval in the treatment of DMD,

were materially false and misleading and/or lacked a reasonable basis.

Disclosures at the End of the Class Period


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26. On October 27, 2014, the Company issued a press release entitled, “Sarepta

Therapeutics Announces Regulatory Update on Eteplirsen.” Therein, the Company, in relevant

part, stated:

Updated and additional guidance received from FDA on specific data

requirements for NDA;

FDA states further discussion needed to determine what constitutes a

“complete” NDA submission;

NDA submission planned for mid-year 2015;

Company to hold teleconference today at 8:00 a.m. EDT

Sarepta Therapeutics, Inc. (NASDAQ:SRPT), a developer of innovative RNA-

based therapeutics, today provided an update on its discussions with the U.S.

Food and Drug Administration (FDA) regarding its planned New Drug

Application (NDA) submission for the approval of eteplirsen for the treatment of

Duchenne muscular dystrophy (DMD).

In meeting minutes received last week from a Type B Pre-NDA meeting that took

place in September 2014, the FDA provided updated guidance regarding the

specific data to be included as part of, or at the time of, Sarepta’s NDA

submission. The guidance states that additional data are now required as part of

the NDA submission, including the results from an independent assessment of

dystrophin images and the 168-week clinical data from study 202. Additionally,

the guidance requests more specific data including a minimum duration of safety

in new patients exposed to eteplirsen, patient-level natural history data to be

obtained by Sarepta from independent academic institutions, and MRI data from a

recent study conducted by an independent academic group. The FDA indicated

that further discussion with Sarepta “will be necessary to determine what would

constitute a complete NDA.” Based on these requests, Sarepta plans to submit an

NDA by mid-year 2015, pending any additional requests from further discussions

with the FDA.

"We are committed to satisfying the FDA’s updated requests for these specific

data to be included as part of an NDA submission and will continue to work with

the Agency toward the goal of a complete and acceptable NDA filing," said Chris

Garabedian, president and chief executive officer of Sarepta Therapeutics. "We

believe all of the data requests and additional FDA discussions that have currently

been outlined can be completed in time for an NDA submission by mid-year

2015. Obtaining an FDA approval of eteplirsen for the DMD patients who may

benefit from the drug continues to be our highest priority.”


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Excerpts from the Pre-NDA Meeting Minutes related to information that the FDA

is requesting as part of an NDA submission included:

"The sponsor should include 3-month data from at least 12 to 24 newly exposed

patients at the time the NDA is submitted."

"Available data from the other patients enrolled in the new eteplirsen studies

(studies 301, 203, 204) should also be included at the time the NDA is submitted,

even if exposure is less than 3 months in duration."

"Additional data from later time points and from newly enrolled patients should

be submitted in the 120-Day Safety Update."

"FDA strongly advises the sponsor to obtain and submit patient-level natural

history data. FDA is prepared to appeal to the academic groups holding the data

to allow the sponsor a means to acquire the data."

"The study 201/202 clinical site inspection conducted in May, 2014, after the

issuance of the April 15, 2014, guidance letter, uncovered marked disparities in

the immunohistochemistry methodology and concerns about the reproducibility of

the data. The lack of confirmation of robust dystrophin measurement during the

site visit necessitates including the independent assessment of dystrophin-positive

fibers and 168-week efficacy data from study 201/202 in the NDA."

“FDA strongly urged the sponsor to submit the MRI data with appropriate

natural history controls.”

The FDA also stated that “[a]dditional discussion between the sponsor and the

FDA will be necessary to determine what would constitute a complete NDA.”

27. On this news, shares of Sarepta declined $7.65 per share, over 32%, to close on

October 27, 2014, at $15.91 per share, on unusually heavy volume.

CLASS ACTION ALLEGATIONS

28. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a class, consisting of all those who purchased Sarepta’s

securities between April 21, 2014 and October 27, 2014, inclusive (the “Class Period”) and who

were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and

directors of the Company, at all relevant times, members of their immediate families and their


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legal representatives, heirs, successors or assigns and any entity in which Defendants have or had

a controlling interest.

29. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Sarepta’s securities were actively traded on the

Nasdaq Stock Market (the “NASDAQ”). While the exact number of Class members is unknown

to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff

believes that there are hundreds or thousands of members in the proposed Class. Millions of

Sarepta shares were traded publicly during the Class Period on the NASDAQ. As of July 31,

2014, Sarepta had 40,923,746 shares of common stock outstanding. Record owners and other

members of the Class may be identified from records maintained by Sarepta or its transfer agent

and may be notified of the pendency of this action by mail, using the form of notice similar to

that customarily used in securities class actions.

30. Plaintiff’s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by Defendants’ wrongful conduct in violation of

federal law that is complained of herein.

31. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

32. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants’ acts as

alleged herein;


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(b) whether statements made by Defendants to the investing public during the

Class Period omitted and/or misrepresented material facts about the business, operations, and

prospects of Sarepta; and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

33. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation makes it impossible for members of the Class to individually

redress the wrongs done to them. There will be no difficulty in the management of this action as

a class action.

UNDISCLOSED ADVERSE FACTS

34. The market for Sarepta’s securities was open, well-developed and efficient at all

relevant times. As a result of these materially false and/or misleading statements, and/or failures

to disclose, Sarepta’s securities traded at artificially inflated prices during the Class Period.

Plaintiff and other members of the Class purchased or otherwise acquired Sarepta’s securities

relying upon the integrity of the market price of the Company’s securities and market

information relating to Sarepta, and have been damaged thereby.

35. During the Class Period, Defendants materially misled the investing public,

thereby inflating the price of Sarepta’s securities, by publicly issuing false and/or misleading

statements and/or omitting to disclose material facts necessary to make Defendants’ statements,

as set forth herein, not false and/or misleading. Said statements and omissions were materially


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false and/or misleading in that they failed to disclose material adverse information and/or

misrepresented the truth about Sarepta’s business, operations, and prospects as alleged herein.

36. At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or

misleading statements about Sarepta’s financial well-being and prospects. These material

misstatements and/or omissions had the cause and effect of creating in the market an

unrealistically positive assessment of the Company and its financial well-being and prospects,

thus causing the Company’s securities to be overvalued and artificially inflated at all relevant

times. Defendants’ materially false and/or misleading statements during the Class Period

resulted in Plaintiff and other members of the Class purchasing the Company’s securities at

artificially inflated prices, thus causing the damages complained of herein.

LOSS CAUSATION

37. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused

the economic loss suffered by Plaintiff and the Class.

38. During the Class Period, Plaintiff and the Class purchased Sarepta’s securities at

artificially inflated prices and were damaged thereby. The price of the Company’s securities

significantly declined when the misrepresentations made to the market, and/or the information

alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,

causing investors’ losses.

SCIENTER ALLEGATIONS


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39. As alleged herein, Defendants acted with scienter in that Defendants knew that

the public documents and statements issued or disseminated in the name of the Company were

materially false and/or misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced

in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their

receipt of information reflecting the true facts regarding Sarepta, his/her control over, and/or

receipt and/or modification of Sarepta’s allegedly materially misleading misstatements and/or

their associations with the Company which made them privy to confidential proprietary

information concerning Sarepta, participated in the fraudulent scheme alleged herein.

APPLICABILITY OF PRESUMPTION OF RELIANCE

(FRAUD-ON-THE-MARKET DOCTRINE)

40. The market for Sarepta’s securities was open, well-developed and efficient at all

relevant times. As a result of the materially false and/or misleading statements and/or failures to

disclose, Sarepta’s securities traded at artificially inflated prices during the Class Period. On

April 23, 2014, the Company’s stock closed at a Class Period high of $38.91 per share. Plaintiff

and other members of the Class purchased or otherwise acquired the Company’s securities

relying upon the integrity of the market price of Sarepta’s securities and market information

relating to Sarepta, and have been damaged thereby.

41. During the Class Period, the artificial inflation of Sarepta’s stock was caused by

the material misrepresentations and/or omissions particularized in this Complaint causing the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or

misleading statements about Sarepta’s business, prospects, and operations. These material


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misstatements and/or omissions created an unrealistically positive assessment of Sarepta and its

business, operations, and prospects, thus causing the price of the Company’s securities to be

artificially inflated at all relevant times, and when disclosed, negatively affected the value of the

Company stock. Defendants’ materially false and/or misleading statements during the Class

Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities

at such artificially inflated prices, and each of them has been damaged as a result.

42. At all relevant times, the market for Sarepta’s securities was an efficient market

for the following reasons, among others:

(a) Sarepta stock met the requirements for listing, and was listed and actively

traded on the NASDAQ, a highly efficient and automated market;

(b) As a regulated issuer, Sarepta filed periodic public reports with the SEC

and/or the NASDAQ;

(c) Sarepta regularly communicated with public investors via established

market communication mechanisms, including through regular dissemination of press releases

on the national circuits of major newswire services and through other wide-ranging public

disclosures, such as communications with the financial press and other similar reporting services;

and/or

(d) Sarepta was followed by securities analysts employed by brokerage firms

who wrote reports about the Company, and these reports were distributed to the sales force and

certain customers of their respective brokerage firms. Each of these reports was publicly

available and entered the public marketplace.

43. As a result of the foregoing, the market for Sarepta’s securities promptly digested

current information regarding Sarepta from all publicly available sources and reflected such


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information in Sarepta’s stock price. Under these circumstances, all purchasers of Sarepta’s

securities during the Class Period suffered similar injury through their purchase of Sarepta’s

securities at artificially inflated prices and a presumption of reliance applies.

NO SAFE HARBOR

44. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint.

The statements alleged to be false and misleading herein all relate to then-existing facts and

conditions. In addition, to the extent certain of the statements alleged to be false may be

characterized as forward looking, they were not identified as “forward-looking statements” when

made and there were no meaningful cautionary statements identifying important factors that

could cause actual results to differ materially from those in the purportedly forward-looking

statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to

any forward-looking statements pleaded herein, Defendants are liable for those false forward-

looking statements because at the time each of those forward-looking statements was made, the

speaker had actual knowledge that the forward-looking statement was materially false or

misleading, and/or the forward-looking statement was authorized or approved by an executive

officer of Sarepta who knew that the statement was false when made.

FIRST CLAIM

Violation of Section 10(b) of

The Exchange Act and Rule 10b-5

Promulgated Thereunder Against All Defendants

45. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

46. During the Class Period, Defendants carried out a plan, scheme and course of

conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing


25

public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and

other members of the Class to purchase Sarepta’s securities at artificially inflated prices. In

furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them,

took the actions set forth herein.

47. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made

untrue statements of material fact and/or omitted to state material facts necessary to make the

statements not misleading; and (iii) engaged in acts, practices, and a course of business which

operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to

maintain artificially high market prices for Sarepta’s securities in violation of Section 10(b) of

the Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the

wrongful and illegal conduct charged herein or as controlling persons as alleged below.

48. Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about Sarepta’s financial

well-being and prospects, as specified herein.

49. These defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure investors of Sarepta’s value and

performance and continued substantial growth, which included the making of, or the

participation in the making of, untrue statements of material facts and/or omitting to state

material facts necessary in order to make the statements made about Sarepta and its business

operations and future prospects in light of the circumstances under which they were made, not

misleading, as set forth more particularly herein, and engaged in transactions, practices and a


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course of business which operated as a fraud and deceit upon the purchasers of the Company’s

securities during the Class Period.

50. Each of the Individual Defendants’ primary liability, and controlling person

liability, arises from the following facts: (i) the Individual Defendants were high-level executives

and/or directors at the Company during the Class Period and members of the Company’s

management team or had control thereof; (ii) each of these defendants, by virtue of their

responsibilities and activities as a senior officer and/or director of the Company, was privy to and

participated in the creation, development and reporting of the Company’s internal budgets, plans,

projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and

familiarity with the other defendants and was advised of, and had access to, other members of the

Company’s management team, internal reports and other data and information about the

Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants

was aware of the Company’s dissemination of information to the investing public which they

knew and/or recklessly disregarded was materially false and misleading.

51. The defendants had actual knowledge of the misrepresentations and/or omissions

of material facts set forth herein, or acted with reckless disregard for the truth in that they failed

to ascertain and to disclose such facts, even though such facts were available to them. Such

defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and

for the purpose and effect of concealing Sarepta’s financial well-being and prospects from the

investing public and supporting the artificially inflated price of its securities. As demonstrated

by Defendants’ overstatements and/or misstatements of the Company’s business, operations,

financial well-being, and prospects throughout the Class Period, Defendants, if they did not have

actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to


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obtain such knowledge by deliberately refraining from taking those steps necessary to discover

whether those statements were false or misleading.

52. As a result of the dissemination of the materially false and/or misleading

information and/or failure to disclose material facts, as set forth above, the market price of

Sarepta’s securities was artificially inflated during the Class Period. In ignorance of the fact that

market prices of the Company’s securities were artificially inflated, and relying directly or

indirectly on the false and misleading statements made by Defendants, or upon the integrity of

the market in which the securities trades, and/or in the absence of material adverse information

that was known to or recklessly disregarded by Defendants, but not disclosed in public

statements by Defendants during the Class Period, Plaintiff and the other members of the Class

acquired Sarepta’s securities during the Class Period at artificially high prices and were damaged

thereby.

53. At the time of said misrepresentations and/or omissions, Plaintiff and other

members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff

and the other members of the Class and the marketplace known the truth regarding the problems

that Sarepta was experiencing, which were not disclosed by Defendants, Plaintiff and other

members of the Class would not have purchased or otherwise acquired their Sarepta securities,

or, if they had acquired such securities during the Class Period, they would not have done so at

the artificially inflated prices which they paid.

54. By virtue of the foregoing, Defendants have violated Section 10(b) of the

Exchange Act and Rule 10b-5 promulgated thereunder.


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55. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and

the other members of the Class suffered damages in connection with their respective purchases

and sales of the Company’s securities during the Class Period.

SECOND CLAIM

Violation of Section 20(a) of

The Exchange Act Against the Individual Defendants

56. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

57. The Individual Defendants acted as controlling persons of Sarepta within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company’s operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had

the power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements which Plaintiff contends are false and misleading. The Individual Defendants were

provided with or had unlimited access to copies of the Company’s reports, press releases, public

filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after

these statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

58. In particular, each of these Defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.


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59. As set forth above, Sarepta and the Individual Defendants each violated Section

10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of

their positions as controlling persons, the Individual Defendants are liable pursuant to Section

20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct,

Plaintiff and other members of the Class suffered damages in connection with their purchases of

the Company’s securities during the Class Period.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

(a) Determining that this action is a proper class action under Rule 23 of the Federal

Rules of Civil Procedure;

(b) Awarding compensatory damages in favor of Plaintiff and the other Class

members against all defendants, jointly and severally, for all damages sustained as a result of

Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;

(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees; and

(d) Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

DATED:

By:___DRAFT________________

GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy

Michael Goldberg

Robert V. Prongay

Casey E. Sadler


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1925 Century Park East, Suite 2100

Los Angeles, CA 90067

Telephone: (310) 201-9150

Facsimile: (310) 201-9160

LAW OFFICES OF HOWARD G. SMITH Howard G. Smith

3070 Bristol Pike, Suite 112

Bensalem, PA 19020

Telephone: (215) 638-4847

Facsimile: (215) 638-4867

Attorneys for Plaintiff

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