A class action complaint was filed on Nov. 16 in the United States District Court for the District of Massachusetts by Karse Simon and Arlene Simon, on behalf of themselves and persons or entities that purchased or acquired Abiomed's securities between Aug. 5, 2011, and Oct. 31, 2012, against Abiomed, Michael R. Minogue, Abiomed's chairman, president and CEO, and Robert L. Bowen, Abiomed's chief financial officer.
The complaint claims that Abiomed, Minogue and Bowen violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 in connection with alleged disclosures related to the FDA and the marketing and labeling of Abiomed's Impella 2.5 product. The plaintiffs are seeking a jury trial.
The complaint speaks to an FDA warning letter sent to Abiomed on June 10, 2011, informing the company that it was “marketing the Impella [2.5] device in the United States without the required marketing clearance or approval, in violation of” the act.
“Although defendants sought to assure its investors that it believed that all matters were resolved with the FDA or that they were cooperating in addressing the FDA’s concerns, defendants were misleading investors,” the complaint stated. On Nov. 1, Abiomed disclosed that the U. S. Department of Justice (DOJ) commenced an investigation “focused on the company’s marketing and labeling of the Impella 2.5.”
The complaint suggested that, “contrary to defendants’ prior representations, Abiomed had not ‘addressed the FDA’s concerns’ and the matter was not resolved.” To further reinforce their point, the complaint stated that Abiomed’s stock dropped on the news of the DOJ investigation, falling from $19.82 per share on Oct. 31, 2012 to close at $13.61 per share on Nov. 1, 2012, a one-day drop of 32 percent.
“This erased almost $250 million of Abiomed’s market capitalization in a single day,” according to the complaint. “As a direct and proximate result of defendants’ false and misleading statements and omissions of material facts, the company’s stock value has dropped dramatically and plaintiffs and other Class members have suffered significant damages.”
Danvers, Mass.-based Abiomed announced in a press release that it has reviewed the complaint and believes that the allegations are without merit. Abiomed plans to “vigorously defend itself against the allegations.” However, the company stated its policy not to discuss pending litigation.