Securities fraud class action filed in the District of Massachusetts against Genzyme Corporation (“Genzyme” or the “Company”), its chief executive officer, Henri Termeer, and several other Company executives (collectively, “Defendants”), alleging, inter alia, that Defendants made false and misleading public statements concerning Genzyme’s manufacturing practices and processes. In particular, the action arises from the Defendants’ alleged failure to disclose the true nature and extent of Company’s non-compliance with current Good Manufacturing Practices (“CGMP”) issued by the U.S. Food and Drug Administration (“FDA”) in connection with the manufacture of the Company’s enzyme replacement medicines, including Cerezyme, Myozyme, and Fabryzyme, which accounted for a very large percentage of the Company’s total revenues. Defendants’ alleged failures to disclose the truth concerning (inter alia) the depth and seriousness of Genzyme’s compliance problems, as well as their falsely reassuring statements to investors during the relevant time period, also had the effect of misleading investors with respect to the Company’s pending application for approval from the FDA for Genzyme’s highly touted new enzyme treatment, Lumizyme, because FDA approval of Lumizyme was contingent upon the Company’s compliance with CGMP. Defendants’ false and misleading statements concerning the seriousness and pervasiveness of the Company’s CGMP (non)compliance problems—especially at its flagship facility located in Allston, Massachusetts—caused the Company’s securities to trade at artificially inflated levels. Ultimately, the Company’s myriad and highly material compliance violations (which are detailed at length in Plaintiffs’ Consolidated Class Action Complaint, filed March 1, 2010 (the “Complaint”)), led, among other things, to multiple viral contamination outbreaks at the Company’s Allston plant, the FDA’s denial of the Company’s Lumizyme application, and the discovery of dangerous metal fragments and other particles in the Company’s biologic drug products.
As further alleged in the Complaint, Defendants were fully aware of (or, at a minimum, recklessly disregarded) the true condition of Genzyme’s drug manufacturing facilities, but concealed the truth from the investing public. Accordingly, it was not until a series of corrective partial disclosures beginning in March 2009 that the truth concerning the seriousness and pervasiveness of the Company’s non-compliance with CGMP gradually began to be disclosed. In response to these corrective disclosures, the price of the Company’s publicly traded securities declined as the earlier artificial inflation in the price of Genzyme’s securities was eliminated, causing significant harm to investors. The Defendants’ belated corrective disclosures included, among other things (a) a March 2009 disclosure of a warning letter from the FDA (which followed up on a previously undisclosed negative post-inspection report of the Allston plant by the FDA), (b) a June 2009 announcement of viral contamination outbreaks at the Allston plant (and the resulting shutdown of the facility); and (c) a November 2009 disclosure that the FDA had identified dangerous foreign substances in the products produced in Allston.
On November 13, 2009 the Hon. George A. O’Toole, U.S. District Judge for the District of Massachusetts, issued an Order consolidating all related actions, and appointing Deka International S.A. Luxembourg, the City of Edinburgh Council as Administering Authority of the Lothian Pension Fund, and the Government of Guam Retirement Fund as Lead Plaintiffs. The Court’s Order also appointed BLB&G as Co-Lead Counsel in this Action.
Lead Plaintiffs filed their Consolidated Class Action Complaint on March 1, 2010. The Complaint seeks to recover losses on behalf of the Lead Plaintiffs and all other similarly situated Class members who purchased shares of Genzyme common stock during the period from October 24, 2007 through November 13, 2009, inclusive (the “Class Period”).
