Publicly Traded Life Sciences Companies in the United States Remain an Increasingly Popular Target of Securities Fraud Class Action Lawsuits:

The past year was particularly noteworthy with respect to the absolute and relative number of securities fraud class action lawsuits brought against publicly traded pharmaceutical, biotechnology and medical companies. In 2012, 27 different life sciences companies (along with their directors, officers and key personnel) were sued for alleged securities fraud in 28 different complaints1 — representing a sharp increase from the 17 such lawsuits filed in 2011. In terms of substance, the 2012 securities fraud lawsuits continued the trend that we observed last year of focusing on industry-specific issues (e.g., alleged misrepresentations regarding product efficacy) as compared to generalized claims of financial improprieties. Notwithstanding the significant number of new lawsuits, however, in 2012 life sciences companies continued to enjoy relative success in obtaining dismissals of the securities fraud lawsuits brought in prior years.

In this survey, we first highlight trends from the securities fraud lawsuits filed against life sciences companies in 2012, including a discussion of some of the notable allegations made in those suits. We then summarize and analyze the status of securities fraud lawsuits filed in the preceding five years. We next discuss the impact of the U.S. Supreme Court’s recent decision in Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, as well as the potential ramifications from a securities fraud standpoint of the key off-label marketing decision issued by the U.S. Court of Appeals for the Second Circuit in U.S. v. Caronia. Finally, we provide guidance that may help minimize or eliminate the risk of securities fraud class action lawsuits.