A U.S. judge certified on Wednesday a class of investors who have filed a lawsuit accusing Sanofi of misleading them about the status of regulatory approval for a failed anti-obesity pill.
U.S. District Judge George Daniels in Manhattan said investors in Sanofi's American depositary receipts could proceed together as a group in the litigation.
Continue Reading Below
Representatives for the company, formerly known as Sanofi-Aventis, did not respond to a request for comment.
The lawsuit centers on the drug rimonabant, which was marketed as Acomplia in Europe and branded as Zimulti in the United States.
The U.S. Food and Drug Administration had questioned the drug's safety in 2006. Concerns about the possible link between the drug and suicidal thoughts resulted in an FDA advisory committee's decision to not recommend that the agency approve the drug for marketing.
Sanofi's share prices dropped following the news, according to the lawsuit. Investors sued in 2007, saying the company and two executives misled shareholders about the drug's development.
The decision Wednesday appeared to be one of the first to benefit from a U.S. Supreme Court ruling on February 27 in a case against Amgen Inc that held investors don't need to establish the materiality of alleged misinformation in order to sue as a group.
Sanofi had sought to show the alleged misstatements in its case weren't material, but withdrew that portion of its argument following the U.S. Supreme Court's 6-3 decision.
The class certified on Wednesday covers only investors in Sanofi's American depository receipts - not its common stock.
Daniels refused to allow one of the two lead plaintiffs, New England Carpenters Guaranteed Annuity Fund, from serving as a class representative as it owned only Sanofi common stock, which is traded on Euronext.
Daniels made that decision in light of the 2010 U.S. Supreme Court ruling that restricted the ability of investors to bring lawsuits in U.S. courts involving companies traded on foreign exchanges.
Sanofi had 1.3 billion common shares outstanding from February 2006 to June 2007, the time of the alleged fraud, according to the plaintiffs. It had 241.4 million ADRs, the plaintiffs said in court papers, which identified the defendant as Sanofi-Aventis, as the company was known then. In 2011, the company changed its name to Sanofi.
The other lead plaintiff, Hawaii Annuity Trust for Operating Engineers, was appointed class representative.
Daniels also named Robbins Geller Rudman & Dowd as class counsel.
Trig Smith, a lawyer for the plaintiffs at Robbins Geller, declined comment.
The case is In re Sanofi-Aventis Securities Litigation, U.S. District Court, Southern District of New York, No. 07-10279.
(Editing by Jan Paschal)