Novartis Unit Settles Shareholder Action For $30M

Novartis Unit Settles Shareholder Action For $30M - 3/11/2009

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

SETTLEMENT NEWS:

Novartis Unit Settles Shareholder Action For $30M
Christine Caulfield

Securities Law 360. March 11, 2009
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EXCERPT: A federal judge has given his final approval to a $30 million securities class action settlement between Novartis Vaccines & Diagnostic Inc. and its shareholders, bringing to a close five years of litigation over the company's failed flu vaccine. Judge Vaughn R. Walker of the U.S. District Court for the Northern District of California signed off on the settlement and dismissed the action with prejudice on Wednesday. The parties could not be reached for comment Wednesday. The class action was first filed against the Novartis unit — then known as Chiron Corp. — in October 2004, alleging the company's senior executives lied to investors about its flu vaccine to meet revenue and earnings targets. The class comprised all investors who bought shares in Chiron between July 2003 and October 2004. The suit alleged that Chiron — an Emeryville, Calif.-based biotechnology firm that was bought by Novartis AG in April 2006 — misled shareholders about the conditions of its manufacturing plant in Liverpool, England, and exaggerated the number of flu vaccines it would be able to distribute in the U.S. in 2004. According to the complaint, Chiron — which acquired the Liverpool plant from U.K.-based PowderJect Pharmaceuticals in July 2003, and with it the rights to the flu vaccine, Fluvirin — concealed from shareholders the level of bacterial contaminants found at the facility. The plaintiffs alleged that while U.S. Food and Drug Administration officials who conducted an inspection in July 2003 found “contamination at various stages” in the Fluvirin production line, Chiron presented a rosy picture to the investing public. “Despite the fact that FDA inspectors found horrific, ongoing and uncorrected conditions at the plant, John Lambert, president of Chiron Vaccines, misrepresented during the class period that the FDA's inspection 'confirmed that the facilities were really in very good order,'” the complaint stated.

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