The original complaint alleges that during the Class Period, defendants Pfizer Inc. and certain key officers and/or directors violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by making materially false and misleading statements to artificially inflate the value of Pfizer stock. Specifically, it is alleged that beginning in July 2006, the defendants repeatedly touted the safety and effectiveness of a newly-developed drug, "torcetrapib," that, in combination with Pfizer's cholesterol-reducing Lipitor, purportedly would increase a patient's "good" cholesterol, or HDL. However, unbeknownst to Pfizer shareholders, the product performed much worse than touted. These statements were false and misleading when made because the defendants failed to disclose or indicate that they knew that the torcetrapib was having adverse affects on patients' health, including knowledge that in clinical testing of 15,000 patients, 82 patients died taking torcetrapib/Lipitor combination as compared to only 51 patients taking Lipitor alone, and patients taking torcetrapib showed an increase in angina, congestive heart failure and procedures to clear clogged arteries.
Surprising the market, on December 2, 2006, a mere two days after the Company expressed optimism about prospects for torcetrapib, Pfizer suddenly announced that it was immediately suspending development of torcetrapib following clinical testing of 15,000 patients found that 82 patients taking torcetrapib/Lipitor combination died as compared to 51 patients taking Lipitor alone. These statements were false and misleading when made because the defendants failed to disclose or indicate that they knew that the option grant process was deficient and could cause the Company to restate its financial statements.
The market reacted quickly to these announcements. Pfizer's stock price plummeted to $24.90 per share from its prior trading day close of $27.86 per share, a 10.62% drop in one day, on massive volume of 289,209,504 shares, more than seven times more than the prior day's volume of 40,177,600.
On February 23, 2007, the Court entered the Pretrial Order No. 1 consolidating all related actions and further granting the motion to appoint Uniformed Sanitationmen's Association Local 831, IBT as Lead Plaintiff and granting the motion to appoint Schoengold Sporn Laitman & Lometti, P.C. as Lead Counsel. On April 2, 2007, an Amended Complaint was filed and the defendants responded by filing a motion to dismiss.
According to an article dated February 29, 2008, in a boost to Pfizer Inc., a federal judge has granted the drug giant's bid to toss the amended complaint in a securities fraud lawsuit brought by investors over the company's decision to scrap its highly anticipated cholesterol drug torcetrapib. Pfizer's knowledge that evidence of torcetrapib’s efficacy was inconclusive did not support an inference that its optimistic statements were materially misleading, Judge Lewis A. Kaplan of the U.S. District Court for the Southern District of New York said Thursday.