Labaton Keller Sucharow serves as co-lead counsel in a securities class action lawsuit against Catalent, Inc. (Catalent) and certain Catalent officers (collectively, Defendants). The action asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act), and U.S. Securities and Exchange Commission (SEC) Rule 10b-5 promulgated thereunder.
Catalent is a multinational corporation that manufactures and packages drugs into delivery devices fit for human consumption (i.e., pre-filled syringes, vials, pills, etc.) pursuant to long-term supply contracts with pharmaceutical companies. Catalent’s vaccine manufacturing business initially benefitted from the COVID-19 pandemic, causing its stock price to soar to record highs.
The action alleges that by mid-2021, when COVID-related work dropped off, Defendants engaged in accounting and channel stuffing schemes to pad the Company’s revenues. These schemes gave Catalent the appearance of continued growth, causing its stock price to reach record highs. Meanwhile, to support these schemes and keep pace with its lofty growth targets, Catalent was cutting corners on safety and quality control procedures at key manufacturing facilities. The action further alleges that statements made by Defendants were materially false and misleading when made because they misrepresented or failed to disclose adverse facts, which were known to Defendants or recklessly disregarded by them.
On June 28, 2024, Plaintiffs overcame Catalent’s motion to dismiss in large part as the Court sustained claims related to Catalent’s material misrepresentations and omissions about: (1) the impact of Catalent’s shutdown of its production facility in Brussels, Belgium (the Brussels Facility); (2) the condition of Catalent’s production facilities at large, including the Brussels Facility and its facilities in Bloomington, Indiana and Harmans, Maryland; (3) Catalent’s compliance with GAAP; and (4) Catalent’s ability to manage its supply chain and inventory levels and thus effectively deliver its services and products to its customers. Additionally, the Court kept all Defendants in the case and preserved the full class period.
The case is City of Warwick Retirement System v. Catalent, Inc., No. 3:23-cv-1108 in the U.S. District Court for the District of New Jersey. Labaton Keller Sucharow represents SEB Investment Management AB and the Public Employees’ Retirement System of Mississippi.
