Roughly a year and a half after the introduction of a shareholder lawsuit, Amgen has lost its bid to toss the case accusing the California biotech giant of concealing a massive tax bill with the IRS.
New York District Judge John Cronan has rejected Amgen’s motion to dismiss the lawsuit—originally filed by a Michigan-based union pension fund—accusing the company of hiding a $10.7 billion tax bill from the public.
The suit, which names CEO Robert Bradway and Chief Financial Officer Peter Griffith alongside the company, alleges that Amgen’s act of obfuscation allowed the drugmaker’s shares to be traded at artificially high levels.
The lawsuit was filed on behalf of anyone who purchased Amgen shares between July 29, 2020, and April 27, 2022.
The larger tax fight with the IRS revolves around a dispute over costs and profits tied to the company’s Puerto Rico manufacturing outfit. The IRS argues that Amgen offloaded tens of billions of dollars in profits to its Puerto Rico subsidiary over the years, in turn dodging billions in taxes.
Amgen, for its part, did not immediately respond to Fierce Pharma’s request for comment on the latest legal development.
Given the “sheer size of the potential liability,” investors deserved a “greater degree of clarity” on the tax kerfuffle, Cronan said in the new opinion filed Monday.
Instead, Amgen hid its “enormous liability” behind a “wall of opaque adjectives like ‘significant’ and ‘substantial,’” the district judge argued.
Cronan further likened Amgen’s behavior to a child that tells his parents he had “'dessert'” while in fact eating the “'whole cake.'”
While agreeing that plaintiffs’ accusations were adequately presented, Cronan caveated that Amgen may “very well turn up an innocent explanation” for its disclosure “failure.”
Still, the case must move forward to determine the extend of Amgen’s alleged misconduct.
Following the lawsuit’s filing last March, an Amgen spokesperson told Fierce Pharma that the company believed the allegations were without merit and promised to defend itself against the case.
“We firmly believe that the IRS positions set forth in the 2010-2012 and 2013-2015 Notices are without merit,” Amgen stated in its most recent quarterly filing. The trial over those consolidated cases is set to start Nov. 4, Amgen added.