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Alkermes, Inc. Conclusion: As disclosed by the Company’s Form 10-Q for the quarterly period ended September 30, 2005, on October 27, 2005, the United States District Court for the District of Massachusetts entered an order dismissing, in its entirety and with prejudice, a purported securities class action lawsuit against Alkermes and certain of its current and former officers and directors. Beginning in October 2003, the Company and certain of its current and former officers and directors were named as defendants in six purported securities class action lawsuits filed in the United States District Court for the District of Massachusetts. On May 14, 2004, the six actions were consolidated into a single action captioned: In re Alkermes Securities Litigation, Civil Action No. 03-CV-12091-RCL (D. Mass.). On July 12, 2004, a single consolidated amended complaint was filed on behalf of purchasers of the Company’s common stock during the period April 22, 1999 to July 1, 2002. The consolidated amended complaint generally alleged, among other things, that, during such period, the defendants made misstatements to the investing public relating to the manufacture and FDA approval of the Company’s Risperdal Consta product. The consolidated amended complaint sought unspecified damages. On September 10, 2004, the Company and the individual defendants filed a motion seeking dismissal of the litigation on numerous legal grounds, and the Court referred that motion to a federal magistrate judge of the United States District Court for the District of Massachusetts for issuance of a report and recommendation as to disposition of the motion to dismiss. The Court heard oral argument on the motion on January 12, 2005. On October 6, 2005, the federal magistrate judge issued a report and recommendation for dismissal, in its entirety, of the above-captioned purported securities class action litigation. After issuance of this ruling, on October 21, 2005, the lead plaintiff and the Company and the individual defendants filed a stipulation with the United States District Court for the District of Massachusetts providing for dismissal of this action, in its entirety and with prejudice. On October 27, 2005, the Court entered an order dismissing the action with prejudice as provided in such stipulation and terminating the case on the Court’s docket.
The original complaint charges Alkermes and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Alkermes is a biopharmaceutical company focused on the development of controlled-release drug delivery technologies and their application to existing or new drug therapies. The complaint alleges that during the Class Period, defendants artificially inflated the price of Alkermes shares by issuing a series of materially false and misleading statements about the Company's New Drug Application (NDA) for Risperdal Consta.
Specifically, the complaint alleges that the true facts, which were known by each of the defendants during the Class Period but were concealed from the investing public, were as follows (a) In an attempt to decrease development expenses and speed the product to market, defendants concealed the deficient nature of the manufacturing process for Medisorb polylactide-glycolide polymer used to manufacture Risperdal Consta, resulting in quality management issues and delays in the development program. (b) In order to conceal lot-to-lot variations resulting from the manufacturing process for Medisorb polymer, defendants minimized process development and validation requirements, including the establishment of specifications and analytical tests necessary to control those variations. (c) Significant quality issues for the manufacture of Risperdal Consta existed at the Wilmington, Ohio facility, impacting the ability of the Company to meet clinical development timelines for Risperdal Consta. (d) In order to avoid disclosure of the serious deficiencies of the Medisorb manufacturing process, particularly the lot-to-lot variation in molecular weight for Medisorb polymer, and in order to find a way to fix the desired molecular weight of the Risperdal Consta finished drug product, defendants patented a method to degrade the finished product to the desired molecular weight. (e) Defendants' revenue projections for Risperdal Consta were grossly inflated based on defendants' concealment of the fact that Risperdal's adverse effects and safety or tolerability issues worsen when Risperdal is formulated using Medisorb technology and used as intended. (f) Defendants concealed that due to the combined effect of the financial agreements reached with its joint venture partner, Janssen, Risperdal Consta would not be profitable unless it achieved the high end of sales projections, an unlikely outcome because of the worsening of Risperdal's adverse effects and safety or tolerability issues when the drug is formulated using Medisorb technology and used as intended. (g) The serious safety concerns for Risperdal oral and Risperdal Consta depot products, such as cerebrovascular effects in elderly patients, extrapyramidal symptoms, QT interval prolongation and diabetes, which were detected in clinical trials that went unreported to worldwide regulatory authorities for long periods, in some cases for studies completed well before the beginning of the Class Period, were negatively impacting the regulatory review process. (h) For one or more reasons related to the known but unmet manufacturing, safety or efficacy requirements for the drug, the NDA for Risperdal Consta would not be approved on July 1, 2002. (i) The failure to disclose the defective nature of the Risperdal Consta chemical and manufacturing controls, clinical program, safety and other issues preventing the Company from realizing product approval would prevent investors from learning the extent of the misrepresentations made to them during the Class Period.
The complaint further alleges that as a result of the defendants' false statements, Alkermes stock traded at inflated prices during the Class Period, increasing to as high as $70.06 on February 16, 2000, whereby the Company sold $200 million worth of its own securities. On July 1, 2002, defendants announced the receipt of a non- approvable letter for Risperdal Consta. As a result of this announcement, Alkermes' stock price dropped precipitously over the next two days to a low of $4.04, or a loss of 93% from its Class Period high of $98 per share, on total volume of 29 million shares.
INDUSTRY CLASSIFICATION:
SIC Code: 2834
Sector: Healthcare
Industry: Biotechnology & Drugs
| COMPANY/ISSUER NAME: | Alkermes, Inc. |
| COMPANY/ISSUER TICKER: | ALKS |
| COMPANY WEBSITE: | http://www.alkermes.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Bennett, et al. v. Alkermes, Inc., et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
| Complaint For Violation Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 10/21/2003 | ||
| REFERENCE COMPLAINT | |||||||||||||||||
| In Re: Alkermes Securities Litigation | |||||||||||||||||
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| DOCUMENTS FOR THE REFERENCE COMPLAINT | |||
| Complaint For Violation Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 10/29/2003 | ||
| Consolidated Complaint For Violation Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 7/12/2004 | ||
| Joint Stipulation For Dismissal With Prejudice | |||
| Type: Other | Date on the document: 10/21/2005 | ||
| Order Granting Dismissal With Prejudice | |||
| Type: Order | Date on the document: 10/27/2005 | ||
| U.S. District Court Civil Docket | |||
| Type: Docket | Date on the document: 11/16/2005 | ||
| OTHER DOCUMENTS | |||
| Case Name and/or Number: | |||
| Type: | Date on the document: | ||
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