Bristol-Myers Squibb Company Case 10/15/2007
According to a press release dated August 21, 2008, a federal judge has denied Bristol-Myers Squibb Co.’s motion to dismiss a securities class action that accuses BMS of duping shareholders and causing a stock drop when it failed to properly disclose a patent deal for a generic version of its blood-thinning drug Plavix. Judge Paul A. Crotty in the U.S. District Court for the Southern District of New York handed down the order Tuesday, denying BMS and the two former executives’ motion to dismiss an amended complaint filed jointly by the Ontario Teachers Pension Plan Board and the Minneapolis Firefighters’ Relief Association. The suit centers around a contentious deal between BMS and generic maker Apotex Corp., long under scrutiny for its impact on competition, that shareholders said misled them and subjected the agreement to a heightened risk of rejection by regulators. In its motion to dismiss, BMS claimed that its disclosures regarding settlement attempts were adequate and that the plaintiffs failed to sufficiently plead loss causation and the two former executives also moved to dismiss on the basis that the plaintiffs failed to properly plead control person liability, the order said. With regard to the adequacy of BMS’ disclosure statements, Judge Crotty wrote that BMS did not persuasively address the plaintiffs’ chief complaint, that BMS failed to disclose that it had relinquished certain legal rights that would otherwise have been available in the patent litigation. “The Court finds that the plaintiffs have pleaded their claims with sufficient particularity to survive the threshold pleading standard of a motion to dismiss, and that plaintiffs have plausibly alleged that Bristol-Myers’ silence with regard to the details of the Apotex settlement made its public statements misleading or false,” Crotty wrote.
In November 2007, the defendants filed various motions to dismiss the Amended Complaint. These motions are currently pending before the Court
The original complaint alleges violations of the federal securities laws by BMY and certain of its present and or former executives. As alleged in the Complaint, on March 22, 2006, BMY announced that it, along with Sanofi-Aventis SA, entered into a settlement agreement with Apotex, Inc. (Apotex) to resolve a patent infringement lawsuit (Apotex Settlement) related to the drug Plavix. The Complaint further alleges that throughout the Class Period, BMY failed to disclose material facts regarding the Apotex Settlement including (1) that BMY had relinquished material rights in connection with the settlement, including the right to treble damages; (2) that if the Apotex Settlement was not approved, Apotex could flood the market with its generic version of Plavix; and (3) that BMY had negotiated improper side agreements in connection with the Apotex Settlement. On July 27, 2006, BMY revealed that the Antitrust Division of the United States Department of Justice (DOJ) was conducting a criminal investigation into the Apotex Settlement and, as alleged, as a result of this disclosure, the price of BMY’s securities declined $1.95 per share, or 7.5%, to close at $24.04 per share. On August 8, 2006, BMY disclosed additional material facts regarding the Apotex Settlement. As a result of this disclosure, it is alleged that BMY’s securities declined $1.56 per share, or approximately 7%, to close at $21.21 per share. The Complaint also alleges that on May 10, 2007 BMY issued a press release disclosing that the Company agreed to plead guilty to federal charges of making false statements to a government agency in connection with the Apotex Settlement.