Alexion Will Face Securities Class Action Over Soliris Sales

Alexion Pharmaceuticals Inc. must face a securities class action related to the sales of its lone commercial drug and the suit will be championed by an investment company and retirement plan, a federal court said.

Alexion specializes in drugs used to treat illnesses that affect less than 200,000 people. Its drug, Soliris, is used to reduce symptoms of paroxysmal nocturnal hemoglobinuria, a blood disease, and atypical hemolytic uremic syndrome, a kidney disease.

The suit alleged that, between January 2014 and May 2017, Alexion’s growth of the Soliris market in other countries was obtained through illegal and unethical sales practices. It also alleged that once the practices were disclosed, Alexion’s share price fell by over 30%.

Erste-Sparinvest Kapitalanlagegesellschaft mbH and the Public Employee Retirement System of Idaho sought to certify a class of all Alexion stock purchasers between Jan. 20, 2014, and May 26, 2017, and to be named class representatives. Judge Alvin W. Thompson of the US District Court for the District of Connecticut granted the requests Thursday.

There were more than 197.8 million Alexion shares outstanding during the proposed class period, and the alleged damages arose out of the same misstatements and omissions in Alexion’s filings with the Securities and Exchange Commission, the court said.

PERSI and Erste will also make adequate class representatives, the court said, rejecting Alexion’s contention that they would be subject to unique defenses that would threaten the focus on the litigation as a whole.

For example, Alexion alleged that three Erste funds bought and sold Alexion stock after Alexion had taken corrective measures and after Erst concluded that Alexion had committed securities fraud. Alexion also said that PERSI both purchased and sold its stock during the class period.

But the court said the allegation won’t become a focus of the case, because Alexion allegedly only made partial disclosures during the class period and continued to mislead investors. Also, the alleged purchases weren’t significantly large and the allegation doesn’t go to the heart of the case, the court said.

Alexion also challenged Erste’s standing because the funds it managed, not Erste, were the ones that suffered any alleged injury. But the court said that investment companies and managers have exclusive authority to sue on behalf of their funds.

Nor did Alexion show that any discovery disputes with Erste or PERSI’s alleged lack of knowledge of the suit will affect their ability to protect the interests of the class, the court said.

Erste and PERSI also showed that questions of law and fact that apply to the class predominate over any of their individual matters and that a class action is the most efficient way to adjudicate the controversy, the court said.

Class certification was granted and Erste and PERSI’s lawyers were appointed class counsel. Labaton Sucharow LLP and Motley Rice LLC represented Erste and PERSI.

Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wiggin & Dana LLP represented Alexion.

The case is Bos. Ret. Sys. v. Alexion Pharms., Inc., 2023 BL 125035, D. Conn., No. 3:16-cv-2127 (AWT), 4/13/23.