Sanofi agreed to pay $40 million to settle a lawsuit by investors who alleged they were misled about the likelihood that the company’s Zimulti weight-loss drug would win regulatory approval.
The money will go to investors who bought the French drugmaker’s American depositary receipts from Feb. 24, 2006, to June 13, 2007, according to the settlement agreement filed yesterday in federal court in Manhattan. Sanofi didn’t admit any wrongdoing as part of the settlement.
Sanofi, based in Paris, was accused in the November 2007 complaint of violating U.S. securities laws by failing to disclose data about Zimulti’s link to suicidal behavior. A Food and Drug Administration panel in June 2007 rejected the pill, sending company shares to their biggest drop in three years.
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 case is In re Sanofi-Aventis Securities Litigation, 1:07-cv-10279, U.S. District Court, Southern District of New York (Manhattan).