Philip Morris International Inc.
- Company Name
- Philip Morris International Inc.
- Stock Symbol
- Class Period
- July 26, 2016 to December 20, 2017
- Motion Deadline
- February 19, 2018
- District of New Jersey
The complaint charges Philip Morris and certain of its officers with violations of the Securities Exchange Act of 1934. Philip Morris, through its subsidiaries, manufactures and sells cigarettes and other tobacco and nicotine-containing products.
Philip Morris is currently developing a portfolio of Reduced-Risk Products (“RRP”), which do not burn tobacco and produce significantly lower levels of harmful or potentially harmful compounds found in smoke. Philip Morris has four RRP platforms in development, including a platform that uses a precisely controlled heating device that it is to be commercialized under the iQOS brand name, into which a specially designed and proprietary consumable tobacco product is inserted and heated to generate an aerosol.
The complaint alleges that throughout the Class Period, defendants made false and misleading statements and/or failed to disclose adverse information regarding Philip Morris’s business and prospects, including that there were irregularities in the clinical experiments that underpinned Philip Morris’s application to the FDA for approval of its iQOS smoking device. As a result of defendants’ false statements and/or omissions during the Class Period, the prices of Philip Morris securities were artificially inflated, with its stock trading at more than $120 per share.
Then on December 20, 2017, Reuters published an article regarding Philip Morris’s e-cigarette experiments, which stated that “[f]ormer employees and contractors [of Philip Morris] have detailed irregularities in the clinical experiments that underpin [its] application to the FDA for approval of its iQOS smoking device.” According to the article, Reuters found problems with “some of the researchers and sites contracted to carry out th[e] experiments” and “irregularities during interviews with some of the principal investigators contracted to conduct the trials for the company.” These irregularities included, among other things, one investigator who admitted to knowing “nothing about tobacco” and another who submitted “urine samples that exceeded what a human being is capable of . . . and then initially refused to acknowledge there was a problem.” Reuters’ reporting identified shortcomings in both the training and professionalism of some of the lead investigators and their knowledge of the study results, and a panel of experts recommended that the FDA “should carefully review its [previous] audits [of the trial sites used by Philip Morris] and possibly expand them.” On this news, the price of Philip Morris shares fell $3.75 per share, or more than 3%, to close at $104.37 per share on December 20, 2017.