(CN) - Specialty healthcare company Endo International PLC is under fire from investors who allege the company's share price fell when one of its opioid pain medications was removed from the market due to the drug's potential for user abuse.
Endo first gained approval for the original non-crush resistant formula of Opana ER, an opioid used for management of severe pain, by the U.S. Food and Drug Administration (FDA) in June 2006. In December 2011, the FDA approved a reformulated version of the drug designed to be resistant to crushing. According to the lawsuit, reformulated Opana was "purportedly resistant to accidental or intentional abuse by snorting or injecting."
The class action lawsuit, filed in the U.S. District Court for Eastern Pennsylvania, alleges that between Nov. 30, 2012 to July 6, 2017, Endo executives issued statements that failed to disclose that reformulated Opana was not resistant to crushing and carried a potential for "abuse by grinding, snorting and injecting." Endo executives also allegedly knew Opana was contributing to an opioid public health crisis, causing the drug to be pulled from the market in July 2017.
The lawsuit contends that after a series of misstatements and omissions regarding Opana during the class period, followed by a request from the FDA on July 8 that Endo voluntarily remove Opana from the market, shares of Endo fell over 19 percent to close at $11.35 on June 12, 2017.
Investors claim Endo executives knew that reformulated Opana was not safer than the original version but removed the original for commercial reasons. "The decline in Endo's share price was a direct result of the nature and extent of defendants' fraud finally being revealed to investors and the market," the lawsuit states.
Investors are seeking compensatory damages. The class is represented by Ryan M. Ernst and Daniel P. Murray of O'Kelly Ernst & Joyce, LLC in Wilmington, Del., Nicholas I. Porritt, Adam M. Apton, and Alexander A. Krot III of Levi & Korsinsky LLP in Washington, D.C.