In my year-end securities litigation survey, I noted that while a number of new trends emerged during 2010, one securities lawsuit filing trend had remained constant during the year – that is, life sciences companies remained a favored securities class action lawsuit target. The heightened exposure that life sciences companies face is fully detailed in a March 2011 memo from David Kotler and Kathleen O”Connor  of the Dechert law firm entitled “Survey of Securities Fraud Class Actions Brought Against Life Sciences Companies.” A copy of the memo can be found here.


According to the memo, 29 different life sciences companies and their directors and officers were the subject of class action securities lawsuit filings in 2010, representing about 16.5% of all2010 securities lawsuit filings. Both the absolute filing numbers and the relative percentages of all filings are up from recent years. The 29 life sciences securities suits were up substantially from the 19 filed in 2009 (representing 10% of all securities suits that year) and from the 23% filed in 2008 (representing 10% of all securities suits).


It is worth noting that the count of 29 suits involving life sciences companies  does not include lawsuits involving allegations relating to mergers and acquisitions. If the merger objections suits were included, at least seven more suits would be added to the count.


The 2010 life sciences securities suits as a group do reflect certain distinctive characteristics. First, the 2010 lawsuits were more heavily weighted towards life sciences companies with larger market capitalizations. 28% of the 2010 lawsuits were brought against life sciences companies with market capitalizations over $10 billion, by contrast to only 5% in 2009.


The 2010 life sciences securities suits  also involved a significant number of lawsuits based not on such industry specific issues as FDA approvals or safety recalls. Consistent with the patterns of securities suit filings against life sciences companies in recent years, more than half of the filings involved allegations of financial improprieties, such as misstated or misleading financial reports or accounting mistakes or mismanagement.


To be sure, many of the 2010 did involve more industry specific allegations such as prospects or timing of FDA approval (9 of the 29 2010 lawsuits); allegations involving product efficacy (8); product safety (7); marketing practices (4); and manufacturing processes (2). Another five involved insider trading allegations.


The memo’s authors have been tracking the life sciences cases since 2007, and while the filings from those earlier years have not yet fully developed, there is some growing evidence to suggest that though life sciences companies may be sued more frequently than other cases, the cases may be dismissed more frequently than are cases in the larger universe of securities class action lawsuits.


The authors note that the SEC and the DoJ have made a priority of Foreign Corrupt Practices Act (FCPA) enforcement regarding life sciences companies and in at least one case (involving SciClone Pharmaceuticals), the FCPA enforcement has resulted in a follow-on securities class action lawsuit.


The authors also include a discussion of the U.S. Supreme Court’s recent decision in the Matrixx Initiatives case (about which refer here). They note that “by rejecting statistical significance as setting a minimal threshold for disclosure, Matrixx will require life sciences companies to assess … disclosures and investor impact more holistically, and on a case by case basis.” The authors also note that “life sciences companies are now faced with heavily fact-specific questions of where to draw the disclosure line in the absence of a bright-line standard.”


The authors conclude with a number of practical suggestions for life sciences companies to take to minimize the risk of, and impact from, securities fraud class actions.


Share the Road: The April 2, 2011 Wall Street Journal carried a rant entitled “Dear Urban Cyclists: Go Play in the Traffic” (here), written by alleged humorist P.J. O’Rourke. O’Rourke apparently is incensed by what he perceives as the increasing preference of traffic planners for urban bicycle lanes. His essay contains a lot of statements like “ bike lanes violate fundamental principles of democracy.” Some might say that Mr. O’Rourke’s comments want proportionality.


My own perspective on urban cycling took a completely unexpected turn during a recent visit to London. Owing to historically unprecedented weather conditions – it was sunny and pleasant six straight days in a row while I was there – I had occasion to try out the new Barclays Bicycle Hire arrangement. The way this arrangement works is that you pay a fee for bicycle access (one pound for a single day, five pounds for a week), and then you pay a one pound an hour usage fee. (There are other arrangements for longer term users.) The best part of the arrangement is that once you have paid the access fee, you can pick up or drop off a bike at any of the numerous bike racks around the city.


What this means is that you can rent a bike and tool around the city without having to cycle all the way back to the place where you first rented it. You can also drop the bike off at a rack if you just want to stop and get a snack or go in a store. The first day I tried the system, I picked up a bike in Green Park and cycled all the way around Hyde Park; dropped the bike off and took the tube to Trafalgar Square  and then biked down Whitehall, past Parliament, across Lambeth Bridge to Lambeth Park; then I dropped the bike off in Vauxhall and took the tube to Regent’s Park, picked up another bike at the tennis courts there and cycled around the Park.


The second time I tried it, I ran a relay of bicycles all across the west end into Kensington, Notting Hill and Bayswater, stopping and starting for meals and shopping, all the while traveling through and exploring parts of the city I have never seen before.


According to Wikipedia (here) , there are over 5,000 bicycles and 317 docking stations available in central London. The docking stations were first installed in London in July 2010, but the heavy, three-speed bicycles themselves are already ubiquitous (particularly on kind of bright, sunshiny days I enjoyed there last week).


There are downsides. Among other things, the rental does not include a helmet. In addition, the left hand lane rule of the road that prevails in London led to intermittent tense moments for me, particularly with respect to other cyclists whose behavior was not always predictable. Also, it takes a certain kind of courage to try to ride a bike through, say, Piccadilly Circus.


All of those concerns notwithstanding, I have to say that I found this bicycle hire scheme absolutely marvelous. One of the docking stations is located just outside the hotel I favor when I visit London, and now that I am comfortable with the scheme, I intend to take advantage of the arrangement on future visits. It is a convenient and enjoyable way to get around the city.


As for Mr. O’Rourke and his dyspeptic vision of urban bicycling, I can only surmise that he had not given the new London bicycle hire arrangement a chance. I think a cruise around Hyde Park on a sunny afternoon would do him a world of good, and might entirely alter his views about urban bicycling and democracy.