$67.5 Million Obtained for Wyeth Shareholders
After nearly five years of intense litigation, lead plaintiff Pipefitters Union Local 537 Pension Fund and Robbins Geller successfully obtained $67.5 million for Wyeth shareholders in settlement of claims that defendants misled investors about the safety and commercial viability of one of the company’s leading drug candidates, Pristiq, for the treatment of vasomotor symptoms (“VMS”) associated with menopause. On March 1, 2013, the Honorable Richard J. Sullivan of the United States District Court for the Southern District of New York approved the settlement. “This is an excellent result for the class and reflects our firm’s dedication to shareholders’ rights. No other firm was willing to take this case on, which makes the outcome even more satisfying,” said Robbins Geller attorney Laurie L. Largent, who worked on the case from the beginning.
The complaint, filed in November 2007, asserted that Wyeth (now part of pharmaceutical giant Pfizer) and certain of its officers and directors intended to market Pristiq for both the treatment of VMS and major depressive disorder. However, it was Pristiq’s use for the treatment of VMS that was essential to make the drug commercially successful and provide much-needed profits to the company. Prisitq for VMS was critical to Wyeth’s long-term financial health; its new drug pipeline was drying up and the company faced the loss of significant income from its other key drugs going off patent, including its blockbuster drug, Effexor.
Lead plaintiff alleged that before the beginning of the class period, Pristiq clinical trials showed a number of women had suffered serious adverse events while taking the drug. In particular, one of the studies, Study 315, revealed that the use of Pristiq for the treatment of VMS was associated with serious liver damage and cardiovascular side effects. In June 2006, defendants submitted a new drug application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for approval of Pristiq for VMS, which included the results of Study 315. Throughout the June 26, 2006 through July 24, 2007 class period, defendants discussed with analysts and investors the results of the Pristiq clinical trials, the purported safety and benefits of Pristiq, and the NDA, but never disclosed Study 315’s cardiovascular and hepatic side effects. When the truth about Pristiq’s negative safety profile became public through a company press release issued on July 24, 2007, announcing that the FDA had not given final approval to the NDA due to the FDA’s concerns about the potential for serious adverse cardiovascular and liver effects associated with the use of the drug, Wyeth’s stock price dropped more than 10%.
Defendants aggressively fought lead plaintiff at each stage of the litigation, beginning with a motion to dismiss the consolidated complaint and subsequent motion for reconsideration, both of which they lost. Plaintiff also successfully obtained class certification despite defendants’ challenges concerning materiality and typicality of the proposed class representative, the Pipefitters Union Local 537 Pension Fund. Unhappy with lead plaintiff’s class certification win, defendants filed an appeal with the Second Circuit Court of Appeals, which defendants ultimately withdrew when the settlement was reached. “Defendants battled us on every factual and legal issue in this case, but we were able to overcome their arguments and obtain a favorable result for the class,” commented Ms. Largent.
Based on lead plaintiff’s persistence, defendants produced over 1.3 million pages of documents, including documents relating to the Pristiq VMS clinical trials, Wyeth’s internal executive and safety meetings about the drug, defendants’ emails, and other critical documents that eventually led to the settlement of this case just two months before the fact discovery cut-off. Lead plaintiff also deposed company representatives and defendants’ market efficiency and loss causation expert.
City of Livonia Employees’ Retirement System v. Wyeth, et al., No. 07-cv-10329 (RJS) (S.D.N.Y.).