Securities Litigation Against Life Sciences Companies: 2025

Securities class actions against life sciences companies are mostly second-order problems. The first-order problem is a business or regulatory setback that, when disclosed by the company or a third party, triggers a stock price decline. Following the decline, plaintiffs’ class action attorneys search the company’s previous public statements and seek to identify inconsistencies between past positive comments and the current negative development. In most cases, plaintiffs’ attorneys then seek to show that any arguable inconsistency amounts to fraud — that is, they will claim that the earlier statement was knowingly or recklessly false or misleading. When the challenged statement appears in a public offering document (that is, a registration statement or prospectus), plaintiffs need only show that the statement was materially false or misleading, not that it was made with scienter or caused their losses.

Under the Private Securities Litigation Reform Act of 1995, securities fraud plaintiffs must meet heightened pleading standards to survive a motion to dismiss, and they are not entitled to discovery while the motion is pending. As a result, securities defendants file motions to dismiss in virtually every case. These motions are generally lengthy and complex. For the most part, federal courts consider the motions carefully and hold plaintiffs to the demanding statutory pleading requirements. In 2025, life sciences companies succeeded in 59% of the dispositive motions they filed.

Two Takeaways From New Complaints Filed in 2025

1. Number of new filings consistent with that in 2024
Plaintiffs filed 44 new class actions against publicly traded life sciences companies in 2025, the same as in 2024. This steady pace follows fluctuations of 20% or more in previous years.

New filings:

2. New filings have migrated to the Third Circuit

New filings in 2025 increased dramatically in the Third Circuit, from only three in 2024 to 12 in 2025. New filings were modestly down in the First, Second, and Fourth Circuits.

• 12 new cases in the Third Circuit, which includes New Jersey
• 8 new cases in the Second Circuit, which includes New York
• 13 new cases in the Ninth Circuit, which includes California

As in prior years, the new filings are slightly tilted toward issues with products at the pre-approval stage, as opposed to issues with mature products (or in one case, a product launch). Twenty-five cases were filed in the first category and 19 in the second.

Six Takeaways From Decisions Issued in 2025

THE NUMBERS: TWO TAKEAWAYS

1. Success rate of 59% in district courts, consistent with past trends
   District courts issued 39 new decisions on pleading-stage or summary judgment motions filed by life sciences companies. Defendants were successful in over half — 23 of 39, or 59%. That is consistent with the success rate in previous years, which has fluctuated in the 50-60% range. Companies won affirmance of dismissal in all three cases in which appellate courts issued rulings. The only published decision is Sneed v. Talphera, Inc., 147 F.4th 1123 (9th Cir. 2025), which includes helpful pro-defense analysis of both falsity and scienter.
2. Companies seeking FDA approval fared better than those with mature products
   As in most years, companies fared better in the pre-approval cases than in mature products cases. The trend appears to reflect plaintiffs’ challenges in establishing falsity and scienter in situations where the statements they attack concern inherently unknowable events — the outcome of clinical trials and the FDA approval process. Defendants won dismissal in 67% of the pre-approval cases (14 out of 21) but only 50% of the mature product cases (9 out of 18).

THE SUBSTANCE: FOUR TAKEAWAYS

1. Decisions in COVID-related cases keep coming, as companies that initially benefited from the pandemic have struggled to predict the effects of its end
   District courts issued seven decisions in cases against life sciences companies whose businesses were profoundly affected by the pandemic, including companies developing and selling tests and vaccines. Why are we seeing more decisions than ever in this area five years into the pandemic? In most cases, the answer comes from the pandemic’s unexpected ripple effects. Companies that originally benefited from the pandemic have struggled to predict when positive effects on their businesses would wane.
2. Eleven years after the Supreme Court’s Omnicare decision, courts are divided on the definition and analysis of opinion statements
   The Supreme Court set forth a framework for analyzing statements of opinion in Omnicare, Inc. v. Laborers District Council Construction Industries Pension Fund, 575 U.S. 175 (2015). More than 10 years later, district court decisions show little consistency on basic questions. What qualifies as a statement of opinion? Is it any statement touching on subjects requiring the application of scientific judgment? Or is the definition narrower? When is an opinion statement actionable under the securities laws? Is it whenever it lacks a reasonable basis? Or only when plaintiffs can identify particular kinds of omitted facts about the basis of the opinion? The answers vary widely among reported decisions.
3. Largely favorable decisions on two perennial scienter issues
   Numerous courts that addressed the issue in 2025 have stated in very clear terms that plaintiffs cannot create the required strong inference of scienter simply by showing that defendants knew some problematic fact about drug development or sales that appears contrary to the company’s positive statements on those subjects. Plaintiffs must show that defendants knew that the relevant problem could not be fixed and deliberately deceived investors about the issue. Separately, courts in 2025 have recognized the illogic in allegations that a company actively pursuing FDA approval is engaged in fraud. Rational actors do not knowingly pour resources into doomed development programs; nor do they perpetrate frauds that will inevitably be unmasked when approval is denied. In past years, courts have been receptive to plaintiffs’ counterargument that even a rational company may gamble on FDA approval and deceive investors about the risk of the investment. But the latter theory was not a success in 2025.
4. Something new in 2025: five stand-alone defense victories on loss causation
   Loss causation arguments often play second fiddle in dispositive motions, treated as follow-ons by the parties and the courts. A number of 2025 decisions mark a departure from this pattern.  In five decisions, courts dismissed cases solely on loss causation grounds, either without reaching falsity and scienter or after having determined that plaintiffs adequately alleged falsity and scienter. Disposing of a case on loss causation grounds may be an attractive shortcut for courts.

The full Securities Class Actions in the Life Sciences Sector 2025 Annual Survey can be downloaded here.

This post supersedes a version we published on May 1, 2026 and withdrew after discovering errors.

This post is as of the posting date stated above. Sidley Austin LLP assumes no duty to update this post or post about any subsequent developments having a bearing on this post.