In re Schering-Plough Corporation / ENHANCE Securities Litigation
We represent lead plaintiff in this case alleging that Schering-Plough made a series of material misrepresentations and omissions concerning the commercial viability of two prescription drug products, ZETIA® and VYTORIN®.
On April 18, 2008, Labaton Sucharow was appointed co-lead counsel for the Arkansas Teacher Retirement System, the Public Employees’ Retirement System of Mississippi, the Louisiana Municipal Police Employees’ Retirement System, and the Massachusetts Pension Reserves Investment Management Board in In re Schering-Plough Corporation / ENHANCE Securities Litigation, a consolidated securities class action currently pending in federal court in New Jersey. The defendants include Schering-Plough Corporation (“Schering” or the “Company”), certain of Schering’s current and former directors and officers, the underwriters that participated in a public offering of Schering stock, and Merck/Schering-Plough Pharmaceuticals (“M/SP”), a joint venture between Schering and Merck & Co., Inc. (“Merck”).
Lead plaintiffs allege that the defendants made a series of material misrepresentations and omissions concerning the commercial viability of two prescription drug products Schering co-markets through the M/SP joint venture—ZETIA® and VYTORIN®. Both products are marketed to lower LDL or “bad” cholesterol. ZETIA® contains the drug ezetimibe; VYTORIN® is a single pill that combines ZETIA® with ZOCOR®, an anti-cholesterol agent marketed by Merck that contains the drug simvastatin.
The allegations center around a clinical trial known as ENHANCE, which sought to demonstrate that the ZETIA® + ZOCOR® combination in VYTORIN® was more effective than ZOCOR® alone in combating atherosclerosis (the build-up of plaque in artery walls, which can lead to heart attacks and strokes). ENHANCE, however, showed that adding ZETIA® to ZOCOR® produced no added benefit in the treatment of atherosclerosis. ENHANCE thus calls into question the medical rationale for prescribing ZETIA® and VYTORIN®, particularly since inexpensive generic versions of ZOCOR® have been on the market since 2006.
The ENHANCE clinical trial concluded in 2006, but Schering and M/SP did not report the results until 2008, shortly after the United States Congress began investigations into the delay. In the interim, following completion of ENHANCE but before the results were released, the Company stressed the growth potential for ZETIA® and VYTORIN® to investors, raised over $4 billion in a 2007 offering of common and preferred stock, and conducted an aggressive marketing campaign that dramatically increased its profits from the sale of ZETIA® and VYTORIN®. Combined sales of ZETIA® and VYTORIN® grew to over $5 billion annually, which accounted for over 60% of Schering’s profits. As scrutiny over ENHANCE grew between December 2007, when news of the congressional investigation became public, and March 2008, when the full ENHANCE results were released, Schering’s stock price fell by more than 52%, wiping out more than $23 billion in market capitalization.
Labaton Sucharow and co-lead counsel filed the Consolidated Class Action Complaint on behalf of lead plaintiffs on September 15, 2008. On September 2, 2009, United States District Judge Dennis M. Cavanaugh denied the defendants' motion to dismiss the Consolidated Class Action Complaint.
Lead Plaintiffs moved for class certification on February 7, 2011. On September 22, 2011, the Court issued an Order and an Opinion granting lead plaintiffs motion certifying the Class. On October 11, 2012, the Court entered an Amended Order relating to the definition of the Class.
On March 1, 2012, Schering, M/SP and the Individual Defendants moved for partial summary judgment. The Underwriter Defendants also moved for summary judgment. Following briefing on the motions, the Court entered an Order on September 25, 2012 denying both motions.
On October 9, 2012, Defendants filed two petitions in the United States Court of Appeals for the Third Circuit seeking leave to appeal the Court's rulings on class certification. On January 7, 2013, the Third Circuit denied the petitions.
Trial in the action was scheduled to begin on March 4, 2013.
On February 14, 2013, Labaton Sucharow, along with its co-counsel, announced that it reached a $473 million settlement in In re Schering-Plough Corporation / ENHANCE Securities Litigation. The recovery is the largest securities class action settlement ever against a pharmaceutical company, among the top 25 securities class action settlements of all time, and among the ten largest recoveries ever in a securities class action that did not involve a defendant company restating its earnings.