NEW YORK (AP) -- Shares of Merck & Co. soared on heavy volume to close at their highest price in three and a half years Friday after a federal judge dismissed an investor class action lawsuit against the company over Vioxx and reports that a state judge is about to try to dispose of thousands of liability lawsuits in Texas.
Shares of the Whitehouse Station, N.J.-based drug maker surged $3.85, or 8.3 percentto close at $50.21 on the New York Stock Exchange at more than four times their average volume. The price hit a high of $50.80 earlier in the session, a price not seen since October 2003.
Merck shares dropped 41 percent to the mid-$20 range in the month following the company's withdrawal of its arthritis pain reliever Vioxx from the market on Sept. 30, 2004, after the drug became associated with an increased heart attack risk.
In a ruling Thursday, Judge Stanley Chesler of the U.S. District Court in Newark dismissed investor claims against Merck because the claims were not made before the statutes of limitations expired.
The lawsuit was dismissed with prejudice, meaning investors cannot file the suit again. Investors who had bought Merck stock between May 21, 1999, and Oct. 29, 2004, alleged the company had defrauded them by concealing information about the drug's safety risks. The earliest fraud complaint was filed in November 2003, according to court records.
In his opinion, the judge said that a Food and Drug Administration warning letter from Sept. 21, 2001, and attention from the media and financial analysts thereafter started the clock ticking on the two-year window under Sarbanes-Oxley rules that investors needed to file.
"Once the burden has been met by the defendants to demonstrate storm warnings, the burden shifts to the plaintiffs to show that they exercised reasonable due diligence but nevertheless were unable to discover their injuries," Judge Chesler wrote in his opinion. "Plaintiffs here have not argued that they conducted a diligent investigation, and nothing in the Complaint demonstrates that they were unable to uncover pertinent information during the limitations period."
Sean Coffey, co-lead attorney for the plaintiffs, said they plan to appeal, debating whether the FDA letter should have started the countdown.
"Shortly after the FDA warning letter came out, Merck was assuring investors and analysts that this was still a blockbuster drug," Coffey said. "Analysts were still very bullish."
Also, the Wall Street Journal reported that Harris County District Court Judge Randy Wilson, the overseer of all Texas Vioxx cases, told attorneys he will suspend about 1,000 liability lawsuits until the state's appeals court rules whether an FDA policy rule exempts Merck from liability on the state level. The FDA policy rule from early 2006 governs the content and format of labels for human drugs. Wilson is expected to issue a written order next week.
Merck still faces more than 27,000 liability lawsuits over Vioxx.
Separately, the company reported an outlook for the first quarter beating a Wall Street consensus estimate of 63 cents per share. The company expects 78 cents per share, or 84 cents per share excluding restructuring charges.
Goldman Sachs analyst James Kelly upgraded the company to "Neutral" from "Sell." Merck reports first-quarter results this coming Thursday.
The good news for Merck completely eclipsed a 20-to-1 FDA advisory panel vote this past Thursday recommending that the agency not approve Arcoxia, the company's successor to Vioxx.
AP Business Writer Deborah Yao in Philadelphia contributed to this report.
SOURCE : http://biz.yahoo.com/ap/070413/merck_lawsuit.html?.v=4
Shares of the Whitehouse Station, N.J.-based drug maker surged $3.85, or 8.3 percentto close at $50.21 on the New York Stock Exchange at more than four times their average volume. The price hit a high of $50.80 earlier in the session, a price not seen since October 2003.
Merck shares dropped 41 percent to the mid-$20 range in the month following the company's withdrawal of its arthritis pain reliever Vioxx from the market on Sept. 30, 2004, after the drug became associated with an increased heart attack risk.
In a ruling Thursday, Judge Stanley Chesler of the U.S. District Court in Newark dismissed investor claims against Merck because the claims were not made before the statutes of limitations expired.
The lawsuit was dismissed with prejudice, meaning investors cannot file the suit again. Investors who had bought Merck stock between May 21, 1999, and Oct. 29, 2004, alleged the company had defrauded them by concealing information about the drug's safety risks. The earliest fraud complaint was filed in November 2003, according to court records.
In his opinion, the judge said that a Food and Drug Administration warning letter from Sept. 21, 2001, and attention from the media and financial analysts thereafter started the clock ticking on the two-year window under Sarbanes-Oxley rules that investors needed to file.
"Once the burden has been met by the defendants to demonstrate storm warnings, the burden shifts to the plaintiffs to show that they exercised reasonable due diligence but nevertheless were unable to discover their injuries," Judge Chesler wrote in his opinion. "Plaintiffs here have not argued that they conducted a diligent investigation, and nothing in the Complaint demonstrates that they were unable to uncover pertinent information during the limitations period."
Sean Coffey, co-lead attorney for the plaintiffs, said they plan to appeal, debating whether the FDA letter should have started the countdown.
"Shortly after the FDA warning letter came out, Merck was assuring investors and analysts that this was still a blockbuster drug," Coffey said. "Analysts were still very bullish."
Also, the Wall Street Journal reported that Harris County District Court Judge Randy Wilson, the overseer of all Texas Vioxx cases, told attorneys he will suspend about 1,000 liability lawsuits until the state's appeals court rules whether an FDA policy rule exempts Merck from liability on the state level. The FDA policy rule from early 2006 governs the content and format of labels for human drugs. Wilson is expected to issue a written order next week.
Merck still faces more than 27,000 liability lawsuits over Vioxx.
Separately, the company reported an outlook for the first quarter beating a Wall Street consensus estimate of 63 cents per share. The company expects 78 cents per share, or 84 cents per share excluding restructuring charges.
Goldman Sachs analyst James Kelly upgraded the company to "Neutral" from "Sell." Merck reports first-quarter results this coming Thursday.
The good news for Merck completely eclipsed a 20-to-1 FDA advisory panel vote this past Thursday recommending that the agency not approve Arcoxia, the company's successor to Vioxx.
AP Business Writer Deborah Yao in Philadelphia contributed to this report.
SOURCE : http://biz.yahoo.com/ap/070413/merck_lawsuit.html?.v=4
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