“(Reuters) – Merck & Co has agreed to pay $688 million to settle two U.S. class-action lawsuits by shareholders who said they lost money because the company concealed the poor results of a clinical trial of the anti-cholesterol drug Vytorin.
The federal lawsuits, led by several pension funds, alleged that Merck and Schering-Plough Corpknew more than a year in advance that the trial, known as Enhance, was a failure, but withheld that information from investors.
Shares of Merck fell nearly 15 percent and Schering fell nearly 21 percent on March 31, 2008, the first trading day after full trial results were released at the American Conference of Cardiology in Chicago. The companies merged in November 2009.
Law firms representing some of the plaintiffs said the combined settlements are among the 10 largest in a securities class-action that did not involve a restatement of financial results.
Christopher McDonald, a partner at Labaton Sucharow representing Schering investors, in a telephone interview said the settlements allow a “significant recovery” for shareholders.
He said that while the federal government has been successful in pursuing large fraud cases against some pharmaceutical companies, “it hasn’t translated into any significant uptick in settlements of securities cases.”
Merck, based in Whitehouse Station, New Jersey, said it has recorded a $493 million after-tax charge for the settlements, reducing the company’s previously reported profit per share for the 2012 fourth quarter to 30 cents from 46 cents….”
If you enjoy the content at iBankCoin, please follow us on Twitter
