San Francisco, CA – August 21, 2025 – Latham & Watkins LLP has achieved a significant victory by securing the dismissal with prejudice of a securities class action lawsuit against Akero Therapeutics, Inc., a pioneering biotechnology company focused on liver disease treatments, and certain of its executives. The case, decided in the Northern District of California, marks a notable win for Latham’s securities litigation practice and reinforces the firm’s reputation for handling high-stakes disputes in the life sciences sector. This development, alongside other recent legal milestones, such as Kirkland & Ellis’ dismissal of a children’s privacy case in the EdTech industry, highlights the critical role of strategic defense in complex litigation.
Latham’s Defense Victory for Akero Therapeutics
The securities class action, filed in 2023, alleged that Akero Therapeutics misled investors about the patient population in a Phase 2b clinical trial for its lead drug candidate, efruxifermin, designed to treat non-alcoholic steatohepatitis (NASH), a severe liver disease. Plaintiffs claimed that Akero’s disclosures about the trial’s patient demographics caused a stock price drop when clarified, violating Sections 10(b) and 20(a) of the Securities Exchange Act. Represented by a cross-office Latham litigation team, including partners Michele D. Johnson, Global Chair of the Litigation & Trial Department, and John C. Browne, Akero successfully moved for dismissal.
On August 18, 2025, U.S. District Judge Trina L. Thompson granted the dismissal with prejudice, ruling that the plaintiffs failed to allege a “strong inference of scienter,” a critical element requiring intent or recklessness in misleading investors. The court’s opinion extensively quoted Latham’s arguments, noting that plaintiffs did not fill the “logical gaps” in explaining why Akero would intentionally conceal information it was bound to disclose later. “The court found no plausible motive for the alleged misrepresentations, especially since Akero voluntarily disclosed the patient data before any regulatory requirement,” the ruling stated. This decisive victory prevents the plaintiffs from amending their complaint, effectively ending the case.
Context: Securities Litigation in Biotech
The dismissal comes amid a surge in securities class actions targeting biotechnology companies, particularly those in clinical-stage development where stock volatility is common due to trial outcomes and regulatory scrutiny. Akero, a San Francisco-based firm listed on NASDAQ (AKRO), faced heightened investor expectations for efruxifermin, a potential first-in-class treatment for NASH, which affects millions globally. Similar lawsuits have targeted firms like Puma Biotechnology and Athenex, with Latham previously defending a biotech company in a rare securities trial in 2019. The Akero case underscores the importance of precise disclosures in clinical trials, where misinterpretations can trigger litigation.
Latham’s success leveraged its deep expertise in securities law, drawing on a team with former SEC and DOJ officials who navigate complex regulatory landscapes. The firm’s strategy focused on dismantling the plaintiffs’ scienter claims by highlighting Akero’s transparency and the lack of economic motive for fraud, a tactic that aligns with Latham’s track record of securing dismissals in cases like GoodRx (2022) and The Metals Company (2023).
Broader Legal Landscape
This victory parallels other recent developments in high-stakes litigation. Kirkland & Ellis recently secured the first dismissal of a children’s privacy class action against Illuminate Education, setting a precedent for EdTech companies facing COPPA claims. Similarly, the SEC’s shift under Chair Paul Atkins to classify most crypto tokens as non-securities reflects a broader trend of recalibrating regulatory and litigation approaches to support innovation. In California, law firms continue to manage the financial burdens of wildfire litigation through contingency fees and consortiums, illustrating the legal industry’s adaptability to resource-intensive cases. (from prior context)
Implications for Biotech and Securities Law
The Akero dismissal strengthens the threshold for scienter in securities fraud cases, potentially deterring speculative lawsuits against biotech firms navigating complex clinical trials. For companies like Akero, the ruling affirms the importance of proactive disclosures to mitigate litigation risks. Latham’s win also highlights the value of experienced counsel in high-stakes disputes, with the firm’s securities practice earning recognition as a 2024 Law360 Practice Group of the Year for its track record in dismissals and settlements.
For biotech companies and investors, the case underscores the need for clear communication during clinical development. Stakeholders can access resources on securities compliance through Latham’s “Words of Wisdom” guide on U.S. securities laws or the SEC’s website (sec.gov). As the life sciences sector faces ongoing regulatory and litigation challenges, Latham’s expertise positions it as a leader in defending innovation-driven companies.