WASHINGTON--The U.S. Supreme Court said Monday it will consider Amgen Inc.'s (AMGN) challenge to a securities lawsuit alleging the biotech company downplayed safety concerns about two drugs used to treat anemia.
The suit, brought by Connecticut pension funds on behalf of purchasers of Amgen stock, alleged the Thousand Oaks, Calif., company repeatedly reassured investors about the safety of anti-anemia drugs Aranesp and Epogen even as clinical trial data raised concerns that the drugs could harm cancer patients who were taking them. Amgen's statements led to inflated share prices, the suit alleged.
The lawsuit alleged the misrepresentations took place from April 2004 through May 10, 2007, a day when Amgen's shares dropped more than 9% after a Food and Drug Administration panel expressed concerns about the drugs and recommended new limits on patient use.
Amgen is seeking to overturn a lower-court ruling that certified the lawsuit to proceed as a class action. The company said the plaintiffs couldn't show that the alleged misrepresentations had a material effect on the price of Amgen shares. The market had readily available access to the safety information that Amgen allegedly downplayed, the company said.
At issue before the Supreme Court is whether securities plaintiffs, before being allowed to proceed with a class action lawsuit, have to demonstrate that a company's alleged misrepresentations materially affected share prices.
Amgen argued that companies need to be able to defeat weak lawsuits at early stages of the proceedings. Otherwise, companies will feel financial pressures to settle cases even when they think they have a strong defense, Amgen said.
The case is Amgen v. Connecticut Retirement Plans and Trust Funds, 11-1085. The Supreme Court is expected to hear oral arguments in the fall.
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