More shareholders sue Medtronic over Infuse claims
More shareholders sue Medtronic over Infuse claims (MassDevice)
Another lawsuit is lodged against Medtronic accusing its officers and directors of falsely inflating its stock value through off-label promotion of its Infuse bone growth protein.
Medtronic found itself at the center of another shareholder lawsuit accusing it of artificially boosting its stock price and forcing the company to repurchase more than $2.8 billion of its own shares at inflated rates.
In a lawsuit filed this week, a clutch of investors accuse Medtronic’s top brass of making misleading statements in filings with the SEC, calls with analysts, press releases and other public statements to conceal that it was actively promoting off-label use of its Infuse bone growth protein, which was in turn causing problems for patients, according to court documents.
“Unbeknownst to shareholders, the company was risking adverse regulatory actions, investigations, lawsuits, and declining sales,” according to the shareholders’ complaint. “The improper statements and omissions have devastated Medtronic’s credibility.”
“Under the board’s authorization, the company bought back more than $2,847,113,040 worth of its shares at a weighted average price of $50.39,” according to the complaint. “Tellingly, this weighted average price is substantially higher than Medtronic’s share price of $31.60 on November 18, 2008, when its true business health was revealed.”
The lawsuit names Medtronic directors and executives, including former CEO Bill Hawkins and current CEO Omar Ishrak.
The Infuse line has been under investigation since 2008 over concerns that the product’s sales were driven primarily by active promotion of off-label uses. The device giant settled a DOJ lawsuit in December 2011 for $23.5 million without admitting wrongdoing, but is still on the hook in a separate shareholder lawsuit also accusing it of inflating share prices using misleading statements about Infuse. In that case, the shareholders demanded confidential documents from an undisclosed witness who staunchly refused to reproduce them on the grounds that they presented “a real and appreciable danger of self-incrimination.”
The plaintiffs, led by the Minneapolis Firefighter’s Relief Assn., accused Medtronic, former CEOs Bill Hawkins and Arthur Collins Jr. and CFO Gary Ellis of making “materially false and misleading statements and omissions concerning the sale, promotion, and marketing” of Infuse, according to legal filings.
MDT shares closed 2.2% higher to $38.43 as of about 3:00 p.m. today.