A U.S. judge reinstated a lawsuit accusing Sanofi-Aventis SA of misleading investors about the likelihood of U.S. regulatory approval of its weight-loss pill Zimulti.
U.S. District Judge George Daniels in Manhattan said today that shareholders can amend their complaint and refile it. Daniels had dismissed the lawsuit Sept. 25 saying Sanofi wasn’t reckless when it interpreted the drug’s side effects to be either statistically insignificant or not severe enough to block approval. A Food and Drug Administration panel in June 2007 rejected the pill, which was linked to suicides, sending company shares to their biggest drop in three years.
Sanofi, based in Paris, was accused in the November 2007 suit of violating U.S. securities laws by failing to disclose data about Zimulti’s link to suicidal behavior. The lead plaintiff in the proposed class-action suit was the city of Edinburgh Council on behalf of the Lothian Pension Fund and New England Carpenters Guaranteed Annuity Fund.
Lawyers for the investors submitted a proposal that “cures the fatal deficiencies” in their original complaint and “adequately pleads violations of the federal securities laws,” Daniels said today in his one-page order.
France’s largest drugmaker, which once expected the medicine to generate about $3 billion in annual revenue, pulled its application for U.S. approval after a committee of FDA advisers found that Sanofi’s safety data were insufficient and that the weight lost in clinical trials didn’t justify the danger of psychiatric or neurological side effects.
The investors claimed Sanofi knowingly downplayed in public statements data showing the regulator was concerned about the drug’s safety. U.S. regulators reviewing the company’s application found that people who took the drug were twice as likely to have thoughts of suicide as those who took a placebo. Three patients taking the drug killed themselves during clinical trials.
Jean-Marc Podvin, a spokesman for Sanofi in France, didn’t immediately respond to an e-mail message seeking comment after regular business hours. There was no answer at his telephone number.
The case is In re Sanofi-Aventis Securities Litigation, 1:07-cv-10279, U.S. District Court, Southern District of New York (Manhattan).