The original complaint charges POZEN and certain of its officers and directors with violations of the Securities Exchange Act of 1934. POZEN focuses on the development of drugs to treat migraine headaches.
Specifically, the complaint alleges that the Company’s lead product candidate during the Class Period was Trexima, a combination of sumatriptan – the active ingredient in GlaxoSmithKline plc’s current blockbuster migraine drug Imitrex – and naproxen sodium, the active ingredient in many over-the-counter common pain medicines such as Aleve. POZEN was developing Trexima pursuant to an agreement with GlaxoSmithKline. If approved, GlaxoSmithKline would market Trexima and POZEN would receive royalty payments. The Company first sought regulatory approval of Trexima in August of 2005. That request was delayed in June 2006 when regulators asked for more safety information on the drug’s effect on the heart. On July 31, 2006, the start of the Class Period, defendants announced they had reached an agreement with regulators requiring only that the Company gather and produce study data defendants said they (and GlaxoSmithKline) already had which would satisfy the regulator’s limited concerns about Trexima’s cardiovascular safety. Throughout the Class Period defendants provided multiple false status updates regarding the approval process and the drug’s safety profile.
Then, on August 2, 2007, before the market opened, defendants announced that regulators would again delay approval of Trexima, now requiring that POZEN address potential safety implications indicated by the very preclinical data POZEN provided the regulators in which increased tumor/cancer risk was seen when naproxen sodium and sumatriptan were combined, but not with either component alone. Defendants also disclosed that their July 2006 “agreement” with regulators actually required additional clinical data/testing on Trexima’s effect on blood pressure. According to the complaint, the delays in regulatory approval diminished the drug’s commercial viability and POZEN’s future profitability. On news of the mandatory delay, POZEN shares – which had traded above $19 per share in recent days reflecting the market’s anticipation of imminent regulatory approval based on defendants’ false statements – fell to below $10 per share in intra-day trading, or over 45%, on volume of over 16 million shares.
On February 15, 2008, the district court granted the consent motion to appoint Gilbert Rodriguez and the Plumbers' Union Local No.12 Pension Fund as co-lead plaintiffs, finding that the class would benefit from being represented by both an individual investor and an institutional investor. Lead Plaintiffs' selection of Coughlin Stoia Geller Rudman & Robbins LLP and Dreier LLP as Co- Lead Counsel and McDaniel & Anderson LLP as Liaison Counsel was also approved. On April 25, 2008, an Amended Class Action Complaint was filed. On June 26, 2008, the defendants filed two motions to dismiss the Amended Class Action Complaint. On August 27, 2008, the plaintiffs filed a notice voluntarily dismissing the action against one of the individual defendants named in the complaint.
On February 19, 2009, the Magistrate Judge Wallace W. Dixon issued the Memorandum Opinion, Recommendation and Order recommending that the court grant the defendants’ motion to dismiss the Amended Complaint. On February 20, 2009, the Court granted the motion to substitute Bernstein Litowitz Berger & Grossmann as co-lead counsel in the place and stead of Dreier LLP. On September 29, 2009, Judge N. C. Tilley, Jr. affirmed and adopted the Magistrate Judge's rulings that the motion to dismiss the Amended Complaint filed by the defendants is granted. Judgment was entered and the action was dismissed with prejudice.