Dechert Survey: Developments in Securities Fraud Class Actions Against U.S. Life Sciences Companies
Securities class action litigation on the whole remained at a steady high in 2019, and life sciences companies were, once again, popular targets of such lawsuits.
In the most recent edition of our annual survey, we analyze and discuss trends identified in last year’s filings and decisions so that prudent life sciences companies can continue to take heed of the results.
How Many Class Action Securities Lawsuits Were Filed Against Life Sciences Companies Last Year?
The overall number of securities lawsuits filed virtually remained unchanged from 2018, but the proportion of such actions brought against life sciences companies increased considerably in 2019.
Of the 404 securities fraud class action lawsuits filed, 97 were against life sciences companies. This represents a 12.8-percent increase from the previous year, and a 148.7-percent increase from five years prior.
Another filing trend that emerged in 2019 was the decrease in claims against large cap companies from the previous year. In 2019, about 51 percent of the life sciences companies named in class action securities fraud complaints had a market capitalization of US$500 million or more. This filing trend represents a decrease from 2018 filings, when the number was at about 60 percent, but it is still greater than figures that emerged in 2017.
Where Lawsuits Against Life Science Companies Were Filed
Consistent with historic trends, the majority of suits were filed in the Second, Third and Ninth Circuits, with a 45.8-percent decrease in suits filed in the Ninth Circuit. The Third Circuit, on the other hand, saw a 122.2-percent increase in filings from the previous year — from 18 in 2018 to 40 in 2019.
Significantly, the District of Delaware continued to see an increase in filings due, in part, to a rise in merger litigation filed in federal court; that district alone accounted for approximately 72.5 percent of all suits filed in the Third Circuit and about 29.9 percent of all securities class action lawsuits against life sciences companies generally.
A few law firms were associated with about two-thirds of the filings against life sciences companies. Those firms include:
- RM Law, P.C. together with Rigrodsky & Long, P.A. (26 complaints)
- Pomerantz LLP (18 complaints)
- The Rosen Law Firm (14 complaints)
Breaking Down the Lawsuits By Market Capitalizations
Companies with market capitalizations of over US$500 million continued to be popular targets of class action complaints filed against life sciences companies — with those against companies with market capitalizations over US$1 billion accounting for about 38.1 percent of the total cases filed.