When you buy a company, you inherit its legal problems. No one knows this better than Pfizer ($PFE), which is fighting thousands of lawsuits over drugs it acquired along with Wyeth in 2009. And now, the drugmaker can add a shareholder class action to that list.
U.S. District Judge Richard Sullivan conferred class-action status on claims that Wyeth misled investors about the risks of Pristiq, the follow-up to its antidepressant blockbuster Effexor. The company didn't disclose potential safety issues, the shareholders allege. So, investors weren't prepared for the FDA's rejection of a new "hot flashes" indication for the drug on safety grounds.
The agency wouldn't approve Pristiq for that use until it could review information about its potential to trigger serious heart and liver problems, Reuters reports. After Wyeth announced that decision, the company's shares tanked, depleting its market value by $7.6 billion, the suit says. Wyeth should have revealed the adverse events sooner, the investors claim. Because it didn't, investors believed Pristiq could deliver more than $2 billion in annual sales and make up for the loss of Effexor sales to generic competition. Pristiq brought in $306 million in first-half sales, far less than the company had expected by now.
Sullivan said the shareholders--led by the Pipefitters Union Local 537 Pension Fund in Boston--showed that they had relied on Wyeth's information about the drug and that they saw Pristiq as key to Wyeth's future sales. "Under the facts currently before it, including Wyeth's drug pipeline and the looming expiration of patents concerning other Wyeth drugs, the court concludes that the plaintiffs have sufficiently demonstrated the materiality of the allegedly omitted information," the judge wrote.
Pfizer spokesman Chris Loder told Bloomberg that the court's decision "is limited to preliminary procedural issues. The opinion does not address the merits of the case."
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