Shareholder Class Action Filed Against Eli Lilly and Company by the Law Firm of Schiffrin Barroway Topaz & Kessler, LLP
Posted on : EarthTimes.org | Mon, 02 Apr 2007
Author : Schiffrin Barroway Topaz & Kessler, LLP
RADNOR, Pa. -- The following statement was issued today by the law firm of Schiffrin Barroway Topaz & Kessler, LLP:
The Complaint charges Lilly and certain of its officers and directors with violations of the Securities Exchange Act of 1934 for disseminating false and misleading statements concerning Zyprexa, the Company's best-selling product.
More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:
(a) that they were aware of the clear link between Zyprexa and diabetes; and yet failed to warn the public at large of the serious and material risks associated with Zyprexa use;
(b) that they had engaged in an illicit scheme to offset a drop in sales that was certain to occur (and, in fact, did occur) when reports of Zyprexa's side effects surfaced, by creating a marketing plan for Zyprexa which included, as a primary component, the evaluation and pursuit of sales opportunities for the drug based on "off-label" uses;
(c) that the growth rate in Zyprexa sales would not be sustainable once information about the health risks of Zyprexa and Lilly's illegal marketing plan were disclosed publicly;
(d) that they disregarded data that undermined the "safety and effectiveness" of the drug;
(e) that their "quality-assurance procedures relating to the quality and integrity of scientific information and production" as it pertained to Zyprexa were woefully inadequate;
(f) that, by engaging in an illicit "off-label" marketing" program as to Zyprexa, they had not "enhance[d]" its policies and procedures designed to assure that its marketing and promotional practices and physician communications "compl[ied] with promotional laws and regulations;"
(g) that they failed to warn the public of the serious health risks associated with Zyprexa use and that its illicit "off-label" marketing program was a direct violation of its own code of conduct as set forth in "The Red Book;" and
(h) that their illicit scheme of concealing the side effects of Zyprexa and engaging in a massive illegal off- label marketing campaign potentially subjected Lilly to substantial regulatory fines, penalties and other legal action, thereby compromising the Company's overall financial condition and prospects.
Sales of Zyprexa grew from $3.69 billion to $4.42 billion between 2002 and 2004, and Lilly's stock price increased from $43.75 per share to $76.95 per share between July 18, 2002 and May 7, 2004. Throughout the Class Period, Lilly had internal information concerning a dangerous connection between the use of Zyprexa and extreme weight gain and diabetes.
During the Class Period, in the face of mounting independent research connecting Zyprexa to diabetes and weight gain, and the lawsuits by persons who suffered these side-effects, Lilly emphatically denied any such link. Yet, as public agencies raised warnings about the safety of Zyprexa, sales slowed and Lilly's stock price dropped from $76.95 per share to $50.34 per share between May 7, 2004 and October 25, 2004 (representing a loss of market capitalization of over $30 billion).
However, recent reports in The New York Times demonstrate that Lilly knew of the very health risks that it denied repeatedly and that the Company also purposefully marketed Zyprexa for illegal, off-label uses.
Thus, the over $30 billion dollar decline in Lilly's stock price between May 7, 2004 and October 25, 2004 was the direct result of defendants' fraudulent conduct. Articles appearing in The New York Times between December 17 and 21, 2006 publicly disclosed for the first time that (a) the Company had engaged in a decade-long effort to play down the health risks of Zyprexa; and (b) Lilly actively marketed Zyprexa for illegal off-label uses (such as to treat older patients with symptoms of dementia).
The publication of those articles caused an additional $3.49 per share decline in the Company's stock price (or 6.4 percent), and represented a further market loss of approximately $3.5 billion.
Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin Barroway Topaz & Kessler which prosecutes class actions in both state and federal courts throughout the country. Schiffrin Barroway Topaz & Kessler is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world.
If you are a member of the class described above, you may, not later than June 1, 2007, move the Court to serve as lead plaintiff of the class, if you so choose. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin Barroway Topaz & Kessler or other counsel of your choice, to serve as your counsel in this action.
Schiffrin Barroway Topaz & Kessler, LLP