Wyeth Investors Lose Out to the Pristiq Fumble

New York, NYInvestors in Wyeth, and specifically holders and owners of Wyeth stock in 401(k) retirement plans may have incurred losses due to the alleged mishandling of the company's pending blockbuster drug Pristiq during the approval process. An unexpected delay in bringing the drug to market has been tagged "a disaster" by one financial analyst.

Upon news of the delay, by at least a year, Wyeth suffered its largest one-day stock price hit in five years. The largest manufacturer of hormone treatments on the globe saw its market value drop by a whopping $7.7 billion dollars overnight.

Any such loss in the market value of Wyeth would have had an equally compelling impact on the value of shares in 401(k) retirement plans. Given the allegation that company officials knew about certain undesirable characteristic of Pristiq, but allegedly withheld those concerns from public consumption, it is alleged that Wyeth may have breached its fiduciary duties with respect to the Employee Retirement Income Securities Act of 1974 (as amended), together with potential violations of the Securities Exchange Act of 1934.

A potential class action lawsuit could see investors, and owners of 401(k) retirement plans hurt by the stock drop, recover their losses.

Here's the back-story. Wyeth had been looking ahead to 2010, when the patent for its top-selling drug Effexor expires, and the company would be facing competition from generics. The latter would take a healthy bite out of Wyeth's annual sales for the anti-depressant, which are nothing less then impressive: reported at $3.7 billion for fiscal 2006.

There is also the aging baby boomer, including the wave of menopausal women about to enter the night sweats and hot flash phase of their lives.

Anticipation began to build when Wyeth filed, on June 23rd of 2006 a New Drug Application (NDA) with the US Food and Drug Administration (FDA) for desvenlafaxine succinatea, a product that would treat moderate to severe vasomotor symptoms associated with menopause.

If approved, Wyeth would have the first, and only non-hormonal treatment indicated to address menopausal symptoms in the United States. Pristiq is a serotonin-norepinephrine reuptake inhibitor (SNRI), and is believed to work by affecting the balance of serotonin and norepinephrine. These neurotransmitters are thought to play an important role in the regulation of body temperature which, during menopause, may become imbalanced leading to hot flashes and night sweats.

One could well imagine the investors lining up to get a piece of Wyeth with regard to this extremely promising development. The manufacturer also proposed Pristiq as an indication to treat anti-depression, much in the same way as Effexor does now. Wyeth recently won approval from the FDA for the anti-depression indication and expects to bring the drug to market soon.

However, while the anti-depressant indication for Pristiq has been dismissed by some as a 'me-too' drug given its kinship to Effexor, the biggest news appeared to be linked to the indication for menopausal women.

Such lofty expectations were borne out when, on July 24th of last year, Wyeth took delivery of an 'approvable letter' from the FDA asking for additional data, and a new one-year trial surrounding concerns over the potential for serious cardiovascular and hepatic adverse effects linked to the drug.

Not only would this issue delay the drug in coming to market, but also it appeared to be the first indication that there was any degree of serious concern with Pristiq associated with that indication. Up to that point, the only common adverse affect appeared to be nausea.

To this news, the market responded with an immediate 10.2 percent drop, or $5.70 per share loss in New York Stock Exchange composite trading. Instantly, $7.7 billion in market value was gone.

It has since been alleged that Wyeth knew of, but suppressed the unfavorable data when announcing the NDA in June 2006, and therefore is alleged to have made false and misleading statements about the drug. When the concern over these potentially serious adverse effects finally surfaced in concert with the FDA approvable letter received July 24th 2007, the stock market responded accordingly in a way that could have hurt investors, and holders of retirement plans and 401(k) plans.

Investors who may have acquired Wyeth stock, or held stock from January 31st 2006 to July 24th of 2007 may wish to investigate the potential for a claim for damages.

While Wyeth can now move forward with Pristiq as an anti-depressant, there are still hurdles over its use as a treatment for menopausal women. Last week it was announced that Wyeth had withdrawn a request for approval of Pristiq from the European Medicines Agency (EMA), pending further testing. Like the FDA, the EMA took issue with concern over the potential for heart and liver issues.

In concert with the news, shares of Wyeth were reported to have fallen yet again, dropping $1 per share or 2.4 per cent to close at $40.65 on the New York Stock Exchange March 12th.

That's well below the mid-$50 plateau where the stock languished prior to July 24th of last year, when all was assumed well with Pristiq—when in actual fact, it was not.

At issue are the decisions concerning the selection and acquisition of Wyeth common stock for retirement investment plan purposes, knowing that the allegedly withheld safety concerns over Pristiq could have a negative and potentially damaging affect on not only the company, but also for investors and holders of 401(k) plans.