According to the law firm press release, the complaint charges Questcor and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Questcor is a biopharmaceutical company. The Company’s primary product is H.P. Acthar Gel (Repository Corticotropin Injection) (“Acthar”), an injectable drug that is approved by the U. S. Food and Drug Administration (“FDA”) for the treatment of 19 conditions, including multiple scelorosis (“MS”), nephrotic syndrome and infantile spasms.
The complaint alleges that throughout the Class Period, defendants violated the federal securities laws by disseminating false and misleading statements to the investing public about the effectiveness of Acthar as a treatment for MS and nephrotic syndrome, making it impossible for shareholders to gain a meaningful or realistic understanding of the drug’s prospects and market success. As a result of defendants’ false statements, Questcor’s stock traded at artificially inflated prices during the Class Period, reaching a high of $57.64 per share on July 9, 2012.
On September 19, 2012, Citron Research reported that Aetna Inc. (“Aetna”), one of the nation’s largest insurers, had recently revised its policy concerning Acthar, which would severely limit coverage of Questcor’s primary drug. Aetna had engaged in a review of the 19 indications for which the FDA had approved Acthar and determined that clinical research supported only one of the 19 indications. In Aetna’s clinical policy bulletin issued in connection with its review, Aetna reported that studies suggested that the drug is only “medically necessary” for West syndrome, a rare condition that causes infantile spasms, and not for other indications, such as MS, that are treated with steroids. On this news, Questcor’s stock plummeted $24.17 per share to close at $26.35 per share on September 19, 2012, a one-day decline of 48%. Then, on September 24, 2012, Questcor announced in a Form 8-K filed with the SEC that the U.S. government had initiated an investigation into the Company’s promotional practices. After this news, Questcor’s stock dropped $11.05 per share to close at $19.08 per share on September 24, 2012, a one-day decline of 37%.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) Questcor lacked clinical evidence to support the use of Acthar for indications other than infantile spasms; (b) Questcor had engaged in questionable tactics to promote the sale and use of Acthar in the treatment of MS and nephrotic syndrome; and (c) Questcor lacked a reasonable basis to make positive statements about the Company or its outlook, including statements about the effectiveness of and potential market growth for Acthar.
On January 4, 2013, the Court issued an Order consolidating cases, appointing lead plaintiff, and approving the selection of lead counsel. Lead Plaintiffs filed a consolidated complaint on March 5, 2013.
On October 1, 2013, the Court issued an Order granting in part and denying in part defendants' motions to dismiss.
On November 12, 2014, the Court issued an Order granting plaintiffs' motion for class certification.
On April 8, 2015, the parties entered into a Settlement Agreement. Preliminary approval was granted May 27. Final approval was granted on September 22.