Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 1 of 19 UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS On Behalf of All Others Similarly Situated, Plaintiffs, No. CLASS ACTION COMPLAINT v. JURY TRIAL DEMANDED ABIOMED, INC., MICHAEL R. MINOGUE and ROBERT L. BOWEN, Defendants. INTRODUCTION 1. Plaintiffs, allege upon personal knowledge as to their own acts, and upon information and belief as to all other matters, based on the investigation conducted by and through Plaintiffs counsel, which included, among other things, a review of the Defendants public documents, conference calls and announcements issued by Abiomed, Inc. ( Abiomed or the Company ), wire and press releases published by and regarding the Company, and advisories about the Company, and other information readily obtainable in the public record. I. NATURE OF THE ACTION 2. This is a class action on behalf of investors in Abiomed for violations of the federal securities laws against Abiomed and certain of its officers and/or directors. Plaintiffs bring this action on behalf of themselves and all persons or entities that purchased or acquired Abiomed securities between August 5, 2011 and October 31, 2012, inclusive (the Class Period ). This complaint seeks relief under the Securities Exchange Act of 1934 (the Exchange Act ) and alleges that the Defendants issued materially false and misleading 1
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 2 of 19 statements, and omitted from disclosure material facts, which artificially inflated the price of the Company s securities. As a direct and proximate result of this conduct described more fully below, Plaintiffs and the Class purchased Abiomed securities at artificially inflated prices and suffered losses when the truth was revealed. 3. Founded in 1981, Abiomed manufactures, markets, and sells various types of medical devices designed for circulatory support and continuum of care in heart recovery to acute heart failure patients. 4. The Company s flagship product is its Impella 2.5 Cardiac Support System ( Impella 2.5 ) for which Abiomed received clearance from the United States Food and Drug Administration ( FDA ) to market and sell in the United States in June 2008. Sales of medical devices cleared by the FDA, however, must comply with the Federal Food, Drug, and Cosmetic Act (the Act ), which prohibits selling or promoting devices for unintended uses at the time of FDA clearance. 5. The FDA sent Abiomed a letter dated January 28, 2010 informing Abiomed that its promotional and marketing materials were making claims about the Impella 2.5 that were inappropriate and not supported for its intended use. No disclosure of this letter was made to Abiomed s shareholders at the time. The FDA then sent Abiomed a formal Warning Letter on June 10, 2011 (the Warning Letter ) again informing Abiomed that it was marketing the IMPELLA [2.5] device in the United States without the required marketing clearance or approval, in violation of the Act. 6. Defendants disclosed the Warning Letter to investors in the Company s 2011 Second Quarter Form 10-Q, filed with the United States Securities and Exchange Commission ( SEC ) on August 5, 2011. Defendants sought to allay investors concerns with regard to the 2
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 3 of 19 Warning Letter stating in its 2011 Second Quarter 10-Q that [w]e have cooperated with the FDA in addressing its concerns and believe that we have resolved the matter without any penalties. In its Form 10-K for its year ending 2011, filed with the SEC on June 4, 2012, Abiomed disclosed that in April 2012 we received a follow up letter from the FDA stating that some of our promotional materials continued to market the Impella 2.5 in ways that are not compliant with FDA regulations. We are cooperating with the FDA in addressing its concerns. 7. Although Defendants sought to assure its investors that it believed that all matters were resolved with the FDA or that they were cooperating in addressing the FDA s concerns, Defendants were misleading investors. On November 1 2012, prior to the opening of the markets, Abiomed disclosed that the United States Department of Justice ( DOJ ) commenced an investigation focused on the Company s marketing and labeling of the Impella 2.5. 8. Thus, contrary to Defendants prior representations, Abiomed had not addressed the FDA s concerns and the matter was not resolved. Abiomed s stock plummeted on the news of the DOJ investigation, falling from $19.82 per share on October 31, 2012 to close at $13.61 per share on November 1, 2012, a one-day drop of 32%. This erased almost $250 million of Abiomed s market capitalization in a single day. 9. As a direct and proximate result of Defendants false and misleading statements and omissions of material facts, the Company s stock value has dropped dramatically and Plaintiffs and other Class members have suffered significant damages. II. JURISDICTION AND VENUE 10. This action arises 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 (17 C.F.R. 240.10b 5). 11. This Court has jurisdiction over the subject matter of this action pursuant to 28U.S.C. 1331 and 1307, and Section 27 of the Exchange Act (15 U.S.C. 78aa). 3
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 4 of 19 12. Venue is proper in this Judicial District pursuant to 28 U.S.C. 1391(b) and Section 27 of the Exchange Act. Abiomed has its corporate headquarters in this District, and many of the acts charged herein, including the preparation and dissemination of materially false and misleading information, occurred in substantial part in this District. III. PARTIES 13. Plaintiffs Plaintiffs purchased Abiomed securities as set forth in their certification submitted herewith and which is incorporated herein by reference, and were damaged thereby. 14. Defendant Abiomed is a Delaware corporation with principal executive offices located at 22 Cherry Hill Drive, Danvers, MA 09123. 15. Defendant Michael R. Minogue ( Minogue ) is, and at all relevant times has been, the President, CEO, and Chairman of the Board of Directors of Abiomed. Abiomed has employed Mr. Lawler since 2004. 16. Defendant Robert L. Bowen ( Bowen ) is, and at all relevant times has been, the Chief Financial Officer ( CFO ), Vice President and Treasurer of Abiomed since 2007. 17. Defendants Minogue and Bowen are referred to herein as the Individual Defendants. Abiomed and the Individual Defendants are referred to herein as Defendants. 18. During the Class Period, the Individual Defendants, as senior executive officers and/or directors of Abiomed, were privy to confidential, proprietary and material adverse non-public information concerning Abiomed, its operations, finances, financial condition and present and future business prospects via access to internal corporate documents, conversations and connections with other corporate officers and employees, attendance at management and/or board of directors meetings and committees thereof, and via reports and other information provided to them in connection therewith. Because of their possession of 4
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 5 of 19 such information, the Individual Defendants knew or recklessly disregarded that the adverse facts specified herein had not been disclosed to, and were being concealed from, the investing public. 19. The Individual Defendants are liable as direct participants in the wrongs complained of herein. In addition, the Individual Defendants, by reason of their status as senior executive officers and/or directors, were controlling persons within the meaning of 20(a) of the Exchange Act and had the power and influence to cause the Company to engage in the unlawful conduct complained of herein. Because of their positions of control, the Individual Defendants were able to and did, directly or indirectly; control the conduct of Abiomed s business. 20. Because of their positions with the Company, the Individual Defendants controlled and/or possessed the authority to control the contents of its reports, press releases and presentations to securities analysts and through them, to the investing public. The Individual Defendants were provided with copies of the Company s reports and publicly disseminated documents 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. Thus, the Individual Defendants had the opportunity to commit the fraudulent acts alleged herein. 21. As senior executive officers and/or directors and as controlling persons of a publicly traded company whose securities were, and are, registered with the SEC pursuant to the Exchange Act, and were traded on NASDAQ and governed by the federal securities laws, the Individual Defendants had a duty to disseminate promptly accurate and truthful information with respect to Abiomed s financial condition and performance, growth, 5
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 6 of 19 operations, financial statements, business, products, markets, management, earnings, and present and future business prospects, to correct any previously issued statements that had become materially misleading or untrue, so the market price of Abiomed s securities would be based on truthful and accurate information. The Individual Defendants misrepresentations and omissions during the Class Period violated these specific requirements and obligations. 22. The Individual Defendants are liable as participants in a fraudulent scheme and course of business that operated as a fraud or deceit on purchasers of Abiomed s publicly traded securities by disseminating materially false and misleading statements and/or concealing material adverse facts. IV. SUBSTANTIVE ALLEGATIONS A. Background Abiomed manufactures, markets, and sells various types of medical devices designed for circulatory support and continuum of care in heart recovery to acute heart failure patients. The Company s products are designed to enable the heart to rest, heal, and recover by enhancing blood flow and/or performing the pumping function of the heart. Abiomed produces a variety of products, including the Impella 2.5 catheter, the Impella 5.0 catheter, the Impella LD, and the AB5000 Circulatory Support System. Abiomed s products are used in the cardiac catheterization lab by interventional cardiologists and/or in the heart surgery suite by heart surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during, or after angioplasty or heart surgery procedures. While its products are sold worldwide, Abiomed focuses on the United States, Canada, Germany, France, and the United Kingdom. 23. The Impella 2.5 catheter is Abiomed s principle product. Our strategic focus and the driver of the most recent revenue growth in our business is the market penetration of our 6
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 7 of 19 Impella 2.5 product... 2011 Form 10-K at p. 1. According to Abiomed s 2011 Form 10-K [t]he Impella 2.5 catheter is a percutaneous micro heart pump with an integrated motor and sensors. The device is designed primarily for use by interventional cardiologists to support patients in the cath lab who may require assistance to maintain their circulation. Id. 24. To obtain approval to sell a medical device in the United States, a manufacturer submits a 510(k) application to the FDA and the FDA has 90 days to review it. Once the device is cleared, the FDA assigns a 510(k) number that says the FDA "[has] determined that your device is substantially equivalent to legally marketed predicate devices and you may therefore begin to market your device subject to the general controls provisions of the Food, Drug and Cosmetics Act." Once an FDA 510(k) number has been granted, it does not expire. However, a manufacturer must remain in compliance with all FDA regulations to continue selling their product in the United States. 25. In June 2008, Abiomed received 510(k) clearance from the FDA for the Impella 2.5 for use in patients for periods of up to 6 hours. The Impella 2.5 is essentially a left ventricle heart pump designed to augment cardiac output in patients with acute left ventricular failure by up to 2.5 liters per minute. B. False and Misleading Statements 26. In its 2011 Second Quarter 10-Q, filed with the SEC on August 5, 2011, Abiomed disclosed that it received the Warning Letter. The Company also disclosed for the first time that it received a prior letter from the FDA, dated January 28, 2010, informing Abiomed that the Company s marketing and promotional materials concerning the Impella 2.5 catheter were inappropriate. In the Second Quarter 10-Q, Abiomed disclosed the contents of the Warning Letter: 7
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 8 of 19 The Food and Drug Administration (FDA) has learned that your firm is marketing the IMPELLA RECOVER LP 2.5 Percutaneous Cardiac Support System (IMPELLA RECOVER LP 2.5) device in the United States without the required marketing clearance or approval, in violation of the Federal Food, Drug, and Cosmetic Act (the Act). * * * Our review of your firm s promotional materials indicate that ABIOMED is making claims that we stated were inappropriate in a January 28, 2010, letter to your firm. These claims represent a major modification to both the intended use and the indications for use of the device. The objectionable claims include the following: for An advertisement placed in the September, 2010, Cath Lab Digest (vol. 18, no.9). The advertisement shows a hand puncturing a red balloon with a pin. Printed on the balloon is text that reads, Old ideas about heart recovery. The caption below the balloon reads in part, After 40 years, there is something other than the intra-aortic balloon [pump] (IABP) for circulatory support in the Cath lab... Cardiac Power Output (CPO) is the #1 correlate to mortality for [acute myocardial infarctions] (AMI) in cardiogenic shock patients...in the latest USPELLA registry, the CPO of shock patients was observed to increase 120% from 0.5± 0.2 prior to IMPELLA to 1.1±0.2 on IMPELLA (p=0.02). As we stated in our January 28, 2010, letter, comparative statements can be interpreted as efficacy statements regarding the superiority of the IMPELLA RECOVER LP 2.5 to IABP. When we sent you the January, 2010, letter, ABIOMED had an ongoing investigational device study, G050017, and we advised your firm that the claims violated the regulations at 21 CFR 812.7(d), which prohibit the representatio n that a device is safe and effective for the purposes being studied. Although the study has since been terminated, the unsupported comparative claims violate 21 CFR 801.6. On page 9 of your firm s presentation to the 2010 Transcatheter Cardiovascular Therapeutics meeting, your firm claimed that use of the IMPELLA RECOVER LP 2.5 in AMI Shock patients improves hemodynamics, and on page 10 your firm states that the use of the IMPELLA RECOVER LP 2.5 improves cardiac output, which is then linked to lower mortality rates. Both of these indications would need to be supported with an appropriately designed clinical study performed under an Investigational Device Exemption (IDE). 8
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 9 of 19 On the ABIOMED website and in the aforementioned advertisement, your logo includes the tag line, Recovering Hearts, Saving Lives. This is another claim that would require a randomized clinical study performed under an IDE specifically to evaluate whether the device could salvage heart tissue and muscle. Statements such as the ones cited above represent a major change or modification in the intended use of your firm s device that requires a new premarket notification. 21 CFR 807.81(a)(3)(ii). Therefore, the IMPELLA RECOVER LP 2.5 device is adulterated under section 501(f)(1)(B) of the Act, 21 U.S.C.C. 351(f)(1)(B), because your firm does not have an approved application for premarket approval (PMA) in effect pursuant to section 515(a) of the Act, 21 U.S.C. 360e(a), or an approved application for an IDE under section 520(g) of the Act, 21 U.S.C. 360j(g). The device is also misbranded under section 502(o) of the Act, 21 U.S.C. 352(o), because your firm did not notify the agency of its intent to introduce it into commercial distribution for the intended uses discussed above, as required by section 510(k) of the Act, 21 U.S.C. 360(k). 27. After revealing the Warning Letter and the prior FDA letter from January 2010, Abiomed sought to reassure its shareholders and stated the following in its 2011 Second Quarter 10-Q:... In June 2011, we received a warning letter from the FDA stating that some of our promotional materials marketed the Impella 2.5 for uses that had not been approved by the FDA. We have cooperated with the FDA in addressing its concerns and believe that we have resolved the matter without any penalties. Although we believe that this issue has been resolved, if similar matters come up in the future, we may not be able to resolve them without facing significant consequences. Such matters could result in reduced demand for our products and would have a material adverse effect on our operations and prospects. 28. Abiomed made similar representations in its next two quarterly reports filed with the SEC on November 7, 2011 and February 8, 2012. 29. On June 4, 2012 Abiomed filed its Form 10-K for the year ending 2011 with the SEC. Although Abiomed revealed additional correspondence from the FDA with regard to its marketing of the Impella 2.5, the Company once again downplayed the correspondence and attempted to create the impression that the Company was cooperating and the matter was not an 9
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 10 of 19 issue: In June 2011 we received a warning letter from the FDA stating that some of our promotional materials marketed the Impella 2.5 for uses that had not been approved by the FDA. We cooperated with the FDA and made changes to our promotional materials in response to the warning letter. However, in April 2012, we received a follow up letter from the FDA stating that some of our promotional materials continued to market the Impella 2.5 in ways that are not compliant with FDA regulations. We are cooperating with the FDA in addressing its concerns. While we hope to be able to resolve this matter without incurring penalties, we may not be able to resolve it, or any similar matters that may come up in the future without facing significant consequences. Such matters could result in reduced demand for our products and would have a material adverse effect on our operations and prospects. (Emphasis added.) C. Disclosure of Adverse Information 30. Prior to the opening of the stock market on November 1, 2012, Abiomed revealed that the DOJ commenced an investigation into the Company s marketing and promotional practices regarding the Impella 2.5 catheter. On October 26, 2012, we were informed that the United States Attorney s Office for the District of Columbia is conducting an investigation that is focused on the Company s marketing and labeling of the Impella 2.5. On October 31, 2012, we accepted service of a Health Insurance Portability and Accountability Act administrative subpoena related to this investigation. The subpoena seeks documents related to the Impella 2.5 and we understand the investigation focuses primarily on marketing and labeling issues. We are in the process of responding to the subpoena and intend to cooperate fully. 31. Abiomed s stock price plunged on the news, falling from a closing price of $19.82 per share on October 31, 2012 to close at $13.61 on November 1, 2012. This 32% single day drop wiped out almost $250 million in Abiomed s market capitalization. 32. Abiomed s common stock price continues to trade below $14 per share. V. NO STATUTORY SAFE HARBOR 33. The statutory safe harbor provided for certain forward-looking statements does not apply to any of the false statements alleged in this Complaint. None of the statements 10
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 11 of 19 alleged herein are forward-looking statements and no such statement was identified as a forward-looking statement when made. Rather, the statements alleged herein to be false and misleading all relate to facts and conditions existing at the time the statements were made. Moreover, cautionary statements, if any, did not identify important factors that could cause actual results to differ materially from those in any forward-looking statements. 34. In the alternative, to the extent that the statutory safe harbor does apply to any statement pleaded herein which is deemed to be forward-looking, the Individual Defendants are liable for such false forward-looking statements because at the time each such statement was made, the speaker actually knew and/or recklessly disregarded the fact that such forward-looking statements were materially false or misleading and/or omitted facts necessary to make statements previously made not materially false and misleading, and/or that each such statement was authorized and/or approved by a director and/or executive officer of Abiomed who actually knew or recklessly disregarded the fact that each such statement was false and/or misleading when made. None of the historic or present tense statements made by the Individual Defendants was an assumption underlying or relating to any plan, projection, or statement of future economic performance, as they were not stated to be such an assumption underlying or relating to any projection or statement of future economic performance when made, nor were any of the projections or forecasts made by the Individual Defendants expressly related to or stated to be dependent on those historic or present tense statements when made. VI. LOSS CAUSATION 35. During the Class Period, the Individual Defendants engaged in a scheme to deceive the market and a course of conduct that artificially inflated Abiomed s stock price and operated as a fraud or deceit on purchasers of Abiomed common stock by misrepresenting the Company s financial condition and accounting practices. Once the Individual Defendants 11
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 12 of 19 misrepresentations and fraudulent conduct were disclosed to the market, Abiomed s stock price dropped dramatically as the artificial inflation was removed from it. As a result of their purchases of Abiomed securities during the Class Period, Plaintiffs and other members of the Class suffered economic loss. 36. The Individual Defendants false and misleading statements had the intended effect and caused Abiomed stock to trade at artificially inflated levels throughout the Class Period. 37. As investors and the market became aware of Abiomed's prior misstatements and omissions and that its financial statements could not be relied upon, Abiomed's stock price reacted negatively, damaging investors. VII. APPLICABILITY OF PRESUMPTION OF RELIANCE: FRAUD ON THE MARKET DOCTRINE 38. At all relevant times, the market for Abiomed s common stock was an efficient market for the following reasons, among others: (a) Abiomed's stock met the requirements for listing, and was listed and actively traded on the Nasdaq, a highly efficient market; (b) During the Class Period, Abiomed stock was actively traded, demonstrating a very strong presumption of an efficient market; (c) As a regulated issuer, Abiomed filed with the SEC periodic public reports during the Class Period; (d) Abiomed regularly communicated with public investors via established market communication mechanisms; (e) Abiomed was followed by several securities analysts employed by major brokerage firms who wrote reports that were distributed to the sales force and certain 12
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 13 of 19 customers of their respective brokerage firms during the Class Period. Each of these reports was publicly available and entered the public marketplace; and (f) Unexpected material news about Abiomed was rapidly reflected in and incorporated into the Company s stock price during the Class Period. 39. As a result of the foregoing, the market for Abiomed s common stock promptly digested current information regarding Abiomed from all publicly available sources and reflected such information in Abiomed s stock price. Under these circumstances, all purchasers of Abiomed s common stock during the Class Period suffered similar injury through their purchase of Abiomed s common stock at artificially inflated prices, and a presumption of reliance applies. VIII. CLASS ACTION ALLEGATIONS 40. Plaintiffs bring 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 persons who purchased common stock, call and put options of Abiomed during the Class Period and who were damaged thereby. Excluded from the Class are Defendants, the current and former officers and directors of the Company, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which Defendants have or had a controlling interest. 41. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Abiomed s securities were actively traded on the NASDAQ. As of October 26, 2012, the Company had approximately 39,670,644 shares outstanding. While the exact number of Class members is unknown to Plaintiffs at this time and can only be ascertained through appropriate discovery, Plaintiffs believe that there are at least hundreds of members in the proposed Class. Members of the Class may be identified from records maintained by Abiomed or its transfer agent and may be notified of the pendency of this action by mail, using a form of notice customarily used in securities class actions. 13
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 14 of 19 42. Plaintiffs 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. 43. Plaintiffs will fairly and adequately protect the interests of the members of the Class and have retained counsel competent and experienced in class and securities litigation. 44. 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; (b) (c) whether the misstatements alleged herein were made with scienter; whether statements made by the Individual Defendants to the investing public during the Class Period misrepresented material facts about the business, prospects, sales, operations and management of Abiomed; and (d) to what extent the members of the Class have sustained damages and the proper measure of damages. 45. 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 make it impossible for members of the Class to redress individually the wrongs done to them. There will be no difficulty in the management of this action as a class action. 14
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 15 of 19 COUNT ONE (Against All Defendants) Violation of Section 10(b) of The Exchange Act and Rule 10b-5 Promulgated Thereunder 46. Plaintiffs repeat and reallege each and every allegation contained above as if fully set forth herein. 47. During the Class Period, Defendants carried out a plan, scheme and course of conduct which was intended to, and throughout the Class Period, did: (1) deceive the investing public, including Plaintiffs and other Class members, as alleged herein; and (2) cause Plaintiffs and other members of the Class to purchase and/or sell Abiomed s securities at artificially inflated and distorted prices. In furtherance of this unlawful scheme, plan and course of conduct, Defendants, individually and as a group, took the actions set forth herein. 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 the business, operations and future prospects of Abiomed 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 Abiomed 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 omitting to state material facts necessary in order to make the statements made about Abiomed 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 course of 15
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 16 of 19 business that operated as a fraud and deceit upon the purchasers of Abiomed s securities during the Class Period. 50. Each of the Individual Defendants primary liability, and controlling person liability, arises from the following facts: (1) the Individual Defendants were high-level executives, directors, and/or agents at the Company during the Class Period and members of the Company s management team or had control thereof; (2) each of the Individual Defendants, by virtue of his 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 financial condition; (3) each of the Individual 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; (4) each of the Individual Defendants was aware of the Company s dissemination of information to the investing public that they knew or recklessly disregarded was materially false and misleading; and (5) each of the Individual Defendants culpably participated in the wrongful conduct alleged herein. 51. Defendants had actual knowledge of the misrepresentations and 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. Defendants material misrepresentations and/or omissions were done knowingly or recklessly and for the purpose and effect of concealing Abiomed s financial condition, customer relationships, and future business prospects from the investing public and supporting the artificially inflated or distorted price of its securities. As demonstrated by Defendants overstatements and misstatements of the Company s financial condition and business prospects throughout the Class 16
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 17 of 19 Period, Defendants, if they did not have actual knowledge of the misrepresentations and omissions alleged, were reckless in failing to 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 misleading information and failure to disclose material facts, as set forth above, the market price for Abiomed s securities was artificially inflated during the Class Period. In ignorance of the fact that market prices of Abiomed s publicly-traded securities were artificially inflated or distorted, and relying directly or indirectly on the false and misleading statements made by Defendants, or upon the integrity of the market in which the Company s securities trade, and/or on 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, Plaintiffs and the other members of the Class acquired and/or sold Abiomed securities during the Class Period at artificially high prices and were damaged thereby. 53. At the time of said misrepresentations and omissions, Plaintiffs and other members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiffs and the other members of the Class and the marketplace known the truth regarding Abiomed s improper marketing of the Impella 2.5 catheter and the Company s not complying with and satisfying the FDA s concerns, which were misrepresented by Defendants, Plaintiffs and other members of the Class would not have purchased or otherwise acquired Abiomed securities, or, if they had acquired such securities during the Class Period, they would not have done so at the artificially inflated prices or distorted prices at which they did. 54. By virtue of the foregoing, the Defendants have violated Section 10(b) of the Exchange Act, and Rule 10b-5 promulgated thereunder, and Plaintiffs and the other members of 17
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 18 of 19 the Class suffered damages in connection with their respective purchases and sales of the Company s securities during the Class Period. COUNT TWO (Against The Individual Defendants) Violation of Section 20(a) of The Exchange Act 55. Plaintiffs repeat and reallege each and every allegation contained above as if fully set forth herein. 56. The Individual Defendants acted as controlling persons of Abiomed within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, agency, and their ownership and contractual rights, participation in and/or awareness of the Company s operations and/or intimate knowledge of aspects of the Company s revenues and earnings and dissemination of information 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 that Plaintiffs 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 Plaintiffs 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 to cause the statements to be corrected. 57. 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. 58. As set forth above, Abiomed and the certain Individual Defendants each violated Section 10(b) and Rule 10b-5 by their acts and omissions as alleged in this Complaint. 18
Case 1:12-cv-12137-FDS Document 1 Filed 11/16/12 Page 19 of 19 59. By virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act as they culpably participated in the fraud alleged herein. As a direct and proximate result of Defendants' wrongful conduct, Plaintiffs and other members of the Class suffered damages in connection with their purchases of the Company's common stock during the Class Period. WHEREFORE. Plaintiffs pray for relief and judgment, as follows: A. Determining that this action is a proper class action, designating Plaintiffs as class representatives under Rule 23 of the Federal Rules of Civil Procedure; B. Awarding compensatory damages in favor of Plaintiffs 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 Plaintiffs 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. IX. JURY TRIAL DEMANDED Plaintiffs hereby demand a trial by jury. DATED: November 16, 2012 19