Judge Tosses AstraZeneca Suit Over Blood Thinner

Judge Tosses AstraZeneca Suit Over Blood Thinner - 6/5/2008

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HEADLINES \| SETTLEMENTS AND DISMISSALS \| COURT FILINGS LINKS TO OTHER NEWS \| NEWS ARCHIVE	HEADLINES ARCHIVED SETTLEMENTS AND DISMISSALS ARCHIVED

DISMISSAL NEWS:

Judge Tosses AstraZeneca Suit Over Blood Thinner
Shannon Henson

Securities Law 360. June 5, 2008
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A federal judge has dismissed a securities class action accusing AstraZeneca Plc of misleading its investors about the safety and effectiveness of Exanta, its blood thinner that failed to win the approval of the U.S. Food and Drug Administration. Judge Thomas P. Griesa of the U.S. District Court of the Southern District of New York said Tuesday that his court does not have jurisdiction over foreigners who bought AstraZeneca stock on foreign exchanges and that the plaintiffs failed to adequately allege scienter. The class, which included everyone who bought or otherwise acquired securities of AstraZeneca between April 2, 2003, and Sept. 10, 2004, accused the company and four of its officers and directors of artificially inflating the company's stock through misrepresentations about the drug. The alleged misrepresentations caused plaintiffs to suffer losses when the FDA did not recommend the drug for approval, the suit said. In its motion to dismiss, U.K.-based AstraZeneca argued that U.S. securities laws did not give the court the authority to consider the claims of foreign purchasers who bought its shares in foreign stock markets. The company also argued that the plaintiffs did not and could not plead facts giving rise to a viable securities fraud claims — particularly the facts demonstrating scienter. The individual defendants also filed an independent motion to dismiss. Exanta was the focus of four clinical trials that studied its effectiveness at preventing strokes; secondary venus thromboembolism; causes of mortality following total knee-replacement surgery; and major cardiac events in patients who had suffered heart attacks. But the company and individual defendants didn't disclose or misstated the drug's risks of liver disease and heart attack, plaintiffs said. In October 2004, the FDA denied approval of Exanta amid concern about liver injuries, heart attack and its efficacy when compared to another drug. The drug was pivotal to the company's financial success because U.S. patents on three of the company's drugs, which represented more than half of AstraZeneca's sales, were set to expire, the complaint said. More than 90% of the members of the putative class were foreigners who purchased stock on foreign exchanges, the judge said. He ruled that the complaint failed to meet a requirement of the test for jurisdiction over foreigners buying on foreign exchanges — that particular acts or culpable failures to act within the U.S. directly caused losses to foreign investors abroad. “The facts in the complaint and in documents incorporated into the complaint make clear that if fraudulent conduct occurred, it took place both within the United States and abroad,” the judge said. The judge also said that the plaintiffs did not have enough evidence to prove that the defendants had a motive to mislead investors. The plaintiffs alleged that the defendants' motives were insider trading and a secondary placement. But Judge Griesa pointed to a period where the plaintiffs alleged at least 15 misrepresentations occurred. Only four sales were made by the four named defendants during that time, he said. The judge said the plaintiffs also failed to meet a test of conscious misbehavior and recklessness on the part of the defendants. “In the long recital of information about Exanta given to the public, there is nothing whatever to indicate that the statements made did not reflect the honest belief of the authors,” the judge wrote. Laura Andracchio, a lawyer with Coughlin, Stoia, Geller, Rudman & Robbins LLP and counsel for the lead plaintiff, said, “We have concerns about the district court's ruling and we are considering an appeal.” Counsel for AstraZeneca was unavailable for comment Thursday afternoon. The plaintiffs are represented in this matter by Coughlin, Stoia, Geller, Rudman & Robbins LLP, Grant & Eisenhofer, PA and Shapiro Haber & Urmy LLP. AstraZeneca is represented in the matter by Davis Polk & Wardwell. The case is In re AstraZeneca Securities Litigation, case number 1:05-cv-02688 in the U.S. District Court for the Southern District of New York. All Content Copyright 2007, Portfolio Media, Inc.

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