Thant v. Rain Oncology Inc.

Opinion

MYO THANT, Case No. 5:23-cv-03518-EJD

Plaintiff, ORDER APPOINTING LEAD PLAINTIFF AND LEAD COUNSEL v.

RAIN ONCOLOGY INC., et al., Re: ECF Nos. 19, 22 Defendants.

The Court received two motions to appoint lead plaintiff and select lead counsel in this securities class action governed by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). After the two opening motions were filed, one movant filed a statement of non- opposition to the competing motion for appointment as lead counsel. ECF No. 25. Accordingly, there is only one unopposed movant for lead plaintiff: Dr. Myo Thant. Having reviewed the parties’ submissions, the Court GRANTS Dr. Thant’s Motion for Appointment as Lead Plaintiff and Approval of its Selection of Lead Counsel. All other competing motions for appointment of lead plaintiff are DENIED. A. Factual Background Defendant Rain Oncology, Inc. (“Rain”) is a biopharmaceutical company that develops oncology therapeutics, specifically an oral small-molecule inhibitor known as milademetan or RAIN-32. Compl. ¶ 19. Defendant Avanish Vellanki is Rain’s founder, chairman, and chief executive officer. Id. ¶ 11. Defendant Richard Bryce is Rain’s executive vice president and chief medical officer. Id. ¶ 12. Around September 2020, Rain represented that Phase 1 clinical trial results indicated that milademetan demonstrated meaningful anti-tumor activity for certain solid tumors. Based on the Phase 1 data, Rain skipped additional clinical testing and proceeded to a Phase 3 MANTRA trial, which began on July 20, 2021. Id. ¶¶ 20–21, 24. Rain frequently announced the benefits of proceeding directly to a Phase 3 trial in a short period of time. Id. ¶¶ 21, 26–36. On May 22, 2023, Rain announced that milademetan had failed to meet its primary endpoint of progress-free survival in the MANTRA study and that the dosing schedule had not been optimized before commencing the study. Id. ¶¶ 22, 37. When the news was announced, Rain’s price dropped from $9.93 to $1.22 over the course of the next trading day. Id. ¶¶ 23, 41. B. Procedural History On July 14, 2023, Plaintiff Myo Thant brought this first-filed action for violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78j(b) and 78t(a). ECF No. 1. On the same day, Dr. Thant’s counsel, Levi & Korsinsky, also published a notice on Globe Newswire announcing that a securities class action had been initiated against Defendants. See Decl. Adam M. Apton (“Apton”), Ex. C, ECF No. 19-4. On September 12, 2023, the Court received two motions to appoint lead plaintiff and lead counsel—one from Dr. Thant and one from Mr. Tony Serrano. ECF Nos. 19, 22. On September 26, 2023, Mr. Serrano filed a statement of non-opposition to competing motions for lead plaintiff. ECF No. 25. The Court subsequently took the motions for lead plaintiff under submission without oral argument. ECF No. 30. Pursuant to the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4(a)(3)(B)(ii), the Court “shall appoint the most adequate plaintiff as lead plaintiff” in a consolidated action. There is a rebuttable presumption that the most adequate plaintiff is a person or group of persons who: aa. has either filed the complaint or made a motion in response to a notice under subparagraph (A)(i); bb. in the determination of the court, has the largest financial interest in the relief sought by the class; and cc. otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I). Accordingly, there is a “simple three-step process” to identify a lead plaintiff. In re Cavanaugh, 306 F.3d 726, 729 (9th Cir. 2002). “The first step consists of publicizing the pendency of the action, the claims made and the purported class period.” Id. Next, the Court considers which plaintiff has the highest financial stake. Id. at 729–30. Finally, “[t]he third step of the process is to give other plaintiffs an opportunity to rebut the presumptive lead plaintiff's showing that it satisfies Rule 23’s typicality and adequacy requirements.” Id. at 730. The presumption may be rebutted only upon proof that the most adequate plaintiff “will not fairly and adequately protect the interests of the class” or “is subject to unique defenses that render such plaintiff incapable of adequately representing the class.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II). Given that Dr. Thant’s motion is the only unopposed motion in this matter, the Court will limit its analyses primarily to Dr. Thant’s motion. A. Lead Plaintiff As the only unopposed movant in this case, Dr. Thant satisfies the foregoing criteria for appointment as the lead plaintiff. First, Dr. Thant timely filed the instant motion and submitted the requisite sworn certification. ECF Nos. 19, 19-2. Second, Dr. Thant alleges that he purchased about 258,538 net shares and lost almost $2 million. Apton Decl., Ex. B (“Loss Chart”). This was the highest financial stake of any movant by a significant margin. See ECF No. 22-3 (documenting loss of approximately $9,595 from Plaintiff Serrano). Third, Dr. Thant satisfies the requirements of Federal Rule of Civil Procedure 23, specifically the typicality and adequacy requirements. In re Cavanaugh, 306 F.3d at 730. Dr. Thant represents that his securities claims are typical of—and indeed identical to—those of the class, and his interests are also aligned with those of the proposed class. Decl. Myo Thant ¶¶ 2–3, ECF No. 19-5. 1 Accordingly, Dr. Thant has satisfied the preliminary showing under the PSLRA and is 2 entitled to the presumption as the most adequate plaintiff in this PSLRA action. The Court has 3 also received no opposition or attempts to rebut this presumption. Accordingly, the Court 4 GRANTS Dr. Thant’s Motion for Appointment as Lead Plaintiff. 5 B. Lead Counsel 6 Pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v), the “most adequate plaintiff shall, subject to the 7 approval of the court, select and retain counsel to represent the class.” A court generally will 8 accept the lead plaintiff's choice of counsel unless it appears necessary to appoint different 9 counsel to “protect the interests of the class.” Kim v. Advanced Micro Devices, Inc., 2018 WL 10 2866666, at *2 (N.D. Cal. June 11, 2018). 11 No parties have objected to Dr. Thant’s selection of Levi & Korsinsky, LLP as lead 12 counsel for the putative class, nor is the Court aware of any need to appoint different counsel to 13 || protect the interests of the class. The Court has reviewed the firm’s and attorneys’ resumes and 1s 14 satisfied with Dr. Thant’s selection of counsel. See ECF No. 19-6. Accordingly, the Court 3 15 || APPROVES Dr. Thant’s selection of Levi & Korsinsky as Lead Counsel. 16 Iv. CONCLUSION 3 17 Based on the foregoing reasons, the Court GRANTS Dr. Myo Thant’s Motion as follows: 18 1. Dr. Myo Thant is APPOINTED as Lead Plaintiff; 19 2. Levi & Korsinsky, LLP is APPOINTED as Lead Counsel; and 20 3. All other Motions to Appoint Lead Plaintiff and Select Lead Counsel are DENIED. 21 Additionally, the Court INCORPORATES into this Order the obligations set forth in 22 Plaintiff Thant’s proposed order, attached as a supplement to this Order. 24 Dated: November 1, 2023 25

EDWARD J. DAVILA 27 United States District Judge 28 Case No.: 5:23-cv-03518-EJD ORDER APPOINTING LEAD PLAINTIFF AND LEAD COUNSEL