Case information

None.

Case summaries are prepared by the Office of the Registrar of the Supreme Court of Canada (Law Branch). Please note that summaries are not provided to the Judges of the Court. They are placed on the Court file and website for information purposes only.

Civil procedure - Class action specific to securities field - Criteria for authorizing class action -Share-issuing company in process of obtaining authorization to market new drug - Rating agencies publishing questions or objections raised by health authorities in this context - Market reacting negatively between that press release and subsequent authorization - Some investors selling quickly at loss in meantime - Those investors applying for authorization to institute class action on basis of company’s alleged failure to reveal objections raised - Obligation to disclose any material change relied on in support - Action authorized based on its “reasonable possibility of success” - Manner in which that burden of proof should be interpreted - Whether that burden involves consideration of all evidence - Whether event external to issuing company can constitute material change in company’s business - Securities Act, R.S.Q. c. V-1.1, s. 225.4.

On May 25, 2010, the United States Food and Drug Administration, as was its practice, published information on its site about new drugs awaiting approval. In the case of tesamorelin, which had been developed by Theratechnologies, the article referred to some questions and objections raised by the FDA. The information attracted the attention of stock market rating companies like Bloomberg, Dow Jones and Thomson Reuters, which expressed their reservations in a press release. The same day, 121851 Canada sold its 190,000 shares in Theratechnologies and incurred a loss of $271,752 on their market value. After the share price fell so much that a halt in stock exchange trading in the securities was ordered, the drug was approved anyway and, on May 29, the value of the share went back to normal. 121851 Canada sought authorization to institute a class action against Theratechnologies, arguing that it had breached its obligation to disclose the objections raised by the FDA as a “material change” that could affect the value of the securities within the meaning of the Securities Act, R.S.Q. c. V-1.1. The Superior Court authorized the class action, finding, inter alia, that the action had a reasonable chance of success within the meaning of the same Act. The Court of Appeal dismissed the appeal.