Supreme Court to Review Amgen Class Action
(CN) - Biotechnology company Amgen still has a chance to duck claims that it inflated stock prices with misstatements about its anemia drugs, after the Supreme Court agreed to review the case Monday.
Investors led by Connecticut Retirement Plans and Trust Funds say that Amgen promoted its products despite facing concerns from the U.S. Food and Drug Administration.
They say Amgen hid the true nature of these concerns and that the company shuttered a clinical trial when results showed that its product exacerbated tumor growth in some patients.
Amgen also allegedly misrepresented the on-label safety of the drugs and improperly promoted off-label usage, the investors claim.
U.S. District Judge Philip Gutierrez in Los Angeles certified the class after finding that the plaintiffs had reliance in common based on the "fraud-on-the-market" presumption.
The 9th Circuit affirmed in November 2011, defining this presumption as "the principle that the market price of a security traded in an efficient market reflects all public information and therefore that a buyer of the security is presumed to have relied on the truthfulness of that information in purchasing the security."
That decision also rejected Amgen's call for proof of materiality rather than mere plausible allegations among the class.
"Plaintiffs need not prove materiality to avail themselves of the fraud-on-the-market presumption of reliance at the class certification stage," Judge Barry Silverman wrote for the unanimous, three-judge panel in Pasadena. "They need only allege materiality with sufficient plausibility"
Silverman added that the proposed class had "plausibly alleged that several of the defendants' public statements about Amgen's pharmaceutical products were false and material."
"Coupled with the concession that Amgen's stock traded in an efficient market," he wrote, "this was sufficient to invoke the fraud-on-the-market presumption of reliance."