Today Labaton Sucharow LLP, 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. The case was set to start trial on March 4, 2013 in federal court in New Jersey.
The allegations in the case center around the LDL (“bad”) cholesterol lowering drug product VYTORIN®, and a clinical trial known as ENHANCE. ENHANCE sought to demonstrate that VYTORIN® was more effective than another cholesterol drug product, ZOCOR®, in combating atherosclerosis (the build-up of plaque in artery walls), as measured by the thickness of patients’ carotid arteries. All patients had completed their course of treatment by April 2006, but the results were not released to the public until early 2008, shortly after the United States Congress began investigations into the delay. The ENHANCE results showed that VYTORIN® was no better than ZOCOR® in changing the thickness of patients’ arteries, despite the fact that VYTORIN® did lower patients’ cholesterol significantly more than ZOCOR®.
Schering-Plough Corporation (“Schering”) co-marketed VYTORIN® with Merck & Co., Inc. (“Merck”), and the two companies co-sponsored the ENHANCE trial. The plaintiffs in the case alleged that Schering learned that the ENHANCE trial was a failure more than a year before the results were publicly disclosed, but that Schering withheld that information from investors. During that time, Schering and several of its executives are alleged to have made a series of material misrepresentations and omissions concerning the ENHANCE trial and the commercial viability of VYTORIN®.
“We are pleased to have secured this significant recovery for investors” said Labaton Sucharow partner Christopher McDonald, co-lead counsel for the Class. “The settlement is even more gratifying because it underscores the value of private civil litigation to protect shareholder rights. Multiple federal and state agencies investigated the matter, but our case is what yielded a significant financial benefit for Schering’s investors.”
In November 2009, Schering and Merck merged, with the surviving entity keeping the Merck name. The settlement inures to the benefit of legacy Schering investors who purchased Schering securities between January 3, 2007 and March 28, 2008.
Labaton Sucharow represents co-lead plaintiff and class representative the Massachusetts Pension Reserves Investment Management Board. The other co-lead plaintiffs in the Schering action are the Arkansas Teacher Retirement System, the Public Employees’ Retirement System of Mississippi, and the Louisiana Municipal Police Employees’ Retirement System.
The defendants include Schering, certain of Schering’s former directors and officers, the underwriters that participated in public offerings of Schering stock in August 2007, and Merck/Schering-Plough Pharmaceuticals, the joint venture formed by Schering and Merck to market VYTORIN® and another anti-cholesterol drug product, ZETIA®. Both VYTORIN® and ZETIA® contain the drug ezetimibe. VYTORIN® also contains the drug simvastatin, which is the active ingredient in ZOCOR®. By comparing VYTORIN® and ZOCOR®, the ENHANCE trial sought to determine whether the additional cholesterol lowering obtained with ezetimibe would result in a biologic benefit (i.e., a reduced atherosclerotic burden) to patients.
