Pfizer to face class action over alleged securities fraud by Wyeth

Global pharma behemoth Pfizer (NYSE: PFE) must face the music over allegations that Wyeth, a subsidiary if Pfizer since 2009, had committed securities fraud by misleading investors about the risk of serious side effects with its antidepressant Pristiq (desvenlafaxine), after US District Judge Richard Sullivan in Manhattan  granted class-action status to former Wyeth shareholders.

Wyeth shares lost more than $7.6 billion of market value on July 24, 2007, after the company said the US Food and Drug Administration would not approve Pristiq to treat hot flashes in post-menopausal women until it received information about potential serious heart and liver problems associated with use of the drug, noted Reuters. Shareholders said Wyeth should have revealed adverse effects associated with Pristiq sooner, and that its failure to do so caused its stock price to be inflated during the June 26, 2006 to July 24, 2007 class period.

Judge Sullivan said the shareholders had shown they had relied on Wyeth's alleged misrepresentations, and considered Pristiq particularly important to Wyeth's overall business, according to Thomson Reuter. "Under the facts currently before it, including Wyeth's drug pipeline and the looming expiration of patents concerning other Wyeth drugs, the court concludes that the plaintiffs have sufficiently demonstrated the materiality of the allegedly omitted information," he wrote.