Life Sciences Companies Getting Pounded By Class Actions

Last year was a record year for securities class actions, and life sciences companies were especially hard hit. There was a 30 percent increase in these lawsuits over 2016, and a 225 percent increase compared to five years ago, according to a study from the Dechert law firm. The study looks at why life sciences companies are such attractive targets, and what they can do to reduce their risk. Three law firms accounted for more than half the filings, and the majority of the cases were filed in three circuits, according to the study. Nearly a third of claims involved “misrepresentations regarding product efficacy and safety, especially negative side effects of leading product candidates or the likelihood of FDA approval.” An eight-point risk reduction checklist includes this recommendation: Make sure that “the sometimes fine line between puffery and statements of fact is not crossed in public statements or filings, or even in extemporaneous statements during conference calls or media commentary.”