Sanofi ($SNY) now faces an investor class action over its weight-loss drug Zimulti. And it may have Amgen ($AMGN) investors to thank. A few weeks after the U.S. Supreme Court cleared Amgen shareholders to ask for class-action status, U.S. District Judge George Daniels said Sanofi's investors could band together for their legal fight.
Zimulti, once sold as Acomplia in Europe, was never cleared for sale in the States. The FDA rejected it in 2006, citing worries about suicidal thoughts in some patients. And the drug's European tenure proved rather short. Sanofi withdrew it there after regulators determined its psychiatric risks outweighed its weight-loss benefits. The series of disappointments prompted shareholders to sue, claiming Sanofi had misled them.
That lawsuit has a stop-and-go history. Filed in 2007, it was dismissed in 2009. But Judge Daniels reinstated the suit in July 2010 after shareholders came back with new claims.
As Reuters reports, Sanofi since tried to show that its alleged misstatements weren't material. But the company pulled that portion of its argument after the Supreme Court's ruling in the Amgen ($AMGN) case. Amgen had used the materiality argument in its fight against shareholder claims, but the high court didn't buy it. The 6-3 decision allows investors to sue as a group without proving that misinformation was, in fact, material.
So, Sanofi investors can now proceed with their suit. Some of them, anyway; Daniels' ruling allows holders of the French drugmaker's American depositary receipts to sue as a class. Common stockholders are left out, Daniels said, because investors are restricted from suing in U.S. court over securities traded on foreign exchanges, Reuters notes.
- see the Reuters news