According to a press release dated August 11, 208, an appeal court has upheld the dismissal of a consolidated securities class action against Biogen Idec Inc. for the 2005 stock drop that resulted when the drugmaker temporarily yanked its multiple sclerosis treatment from the market. A three judge panel of the U.S. Court of Appeals for the First Circuit on Thursday denied the plaintiffs' appeal, finding they had failed to show how company executives would have known about the risks associated with the drug Tysabri well before disclosing them to the public in February 2005.
On October 15, 2007, a Notice of Appeal was filed as to the Order on the motion to dismiss. The appeal is currently pending in the U.S. Court of Appeals for the First Circuit.
On November 15, 2006, the Defendants filed a motion to dismiss the Consolidated Class Action Complaint. On September 14, 2007, the Court entered the Order allowing the Defendants’ motion to dismiss.
According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2006, several actions have been consolidated with the Brown case. On October 13, 2006, the plaintiffs filed an amended consolidated complaint which, among other amendments to the allegations, adds as the Company’s Chief Financial Officer, the Company’s Chief Operating Officer, the Company’s Executive Vice President of Portfolio Strategy, and the Company’s former General Counsel.
The original complaint charges Biogen and certain of its current executives with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that TYSABRI posed serious immune-system side effects; (2) that TYSABRI, like other MS drugs, made patients susceptible to progressive multifocal leukoencephalopathy ("PML") by changing the way certain white blood cells function, thereby allowing PML, a normally dormant virus, to run rampant within the human body; (3) that defendants knew and/or recklessly disregarded documented facts that MS drugs can cause greater incidents of PML to occur; and (4) that defendants concealed these facts in order to fast track TYSABRI for FDA approval so that they could reap the financial benefits from the sales of the drug.
The complaint further alleges on or around February 28, 2005, before the market opened, Biogen announced a voluntary suspension in the marketing of TYSABRI® (natalizumab), a treatment for multiple sclerosis (MS), because of two serious adverse events that have occurred in patients treated with TYSABRI in combination with AVONEX® (Interferon beta-1a) in clinical trials. News of this shocked the market. As a result, shares of Biogen fell $28.63 per share, or 42.44 percent, to close at $38.65 on unusually high trading volume.