Vivian Oh, Et Al. V. Genzyme Corporation, Et Al. OH-Class Action

UNITED STATES DISTRICT COURT DISTRICT OF MASSACHUSETTS VIVIAN OH, Individually and on Behalf of No. All Others Similarly Situated, Plaintiff, v. GENZYME CORPORATION and HENRI A. TERMEER, Defendants. CLASS ACTION COMPLAINT AND JURY TRIAL DEMAND Plaintiff Vivian Oh, by and through her attorneys, alleges the following upon information and belief, except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge. Plaintiff's information and belief is based upon, among other things, her counsel’s investigation, which includes without limitation: (a) review and analysis of regulatory filings made by Genzyme Corporation (“Genzyme ” or the “Company”) with the United States Securities and Exchange Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and disseminated by Genzyme ; and (c) review of other publicly available information concerning Genzyme . Plaintiff believes that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a securities class action brought by Plaintiff Vivian Oh (“Plaintiff”) on behalf of all purchasers (the “Class”) of the common stock of Genzyme Corporation (“Genzyme” or the “Company”) between June 26, 2008 and July 21, 2009, inclusive (the “Class Period”) seeking to pursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”). 2. Defendant Genzyme is a leading biotechnology company based in Cambridge, Massachusetts. The Company manufactures and distributes therapeutic products for the treatment of a variety of disorders including, among other things, rare inherited disorders, kidney disease, orthopedics, transplant and immune disease. 3. Throughout the Class Period, Defendants failed to disclose serious problems and operational deficiencies at two of Genzyme’s manufacturing facilities, which caused a shortage of one of the Company’s products, Myozyme – a treatment for a rare genetic disorder – and delayed approval of a new version of Myozyme, a drug known as Lumizyme. The manufacturing problems also forced the Company to halt production of two of its top-selling products, Cerezyme and Fabrazyme, resulting from contamination at one of the facilities. 4. In the fall of 2008, after two inspections of a Genzyme manufacturing facility in Allston, Massachusetts (the “Allston facility”), the federal Food and Drug Administration (“FDA”) noted practices at the facility that deviated from the FDA’s Good Manufacturing Practices (“GMP”) standards. Genzyme failed to promptly disclose the FDA’s observations, even though Defendants knew that the FDA would not grant marketing approval for Lumizyme (the new version of Myozyme) until those problems were corrected. 5. Also in 2008, two instances of contamination at Genzyme manufacturing facilities, one in Geel, Belgium, and the other at the Allston facility, were not timely disclosed to investors even though the contamination negatively affected Genzyme’s ability to meet consumer demand for Myozyme and eventually caused a supply shortage of that product. 6. The deficient manufacturing practices at the Allston facility were not disclosed until June 2009, until after the Company received a “Warning Letter” from the FDA on February 27, even though the contamination prevented Genzyme from manufacturing sufficient quantities of Myozyme to meet demand, and prevented the Company’s first quarter 2009 earnings from meeting analysts’ expectations 7. Then, on July 22, 2009, the day after the end of the Class Period, Genzyme slashed its earnings and revenue forecasts for 2009, including its revenue projections for its leading drugs, Myozyme, Cerezyme and Fabrazyme. 8. As a result of Defendants’ fraudulent misrepresentations about Genzyme’s operations and their failure to disclose materially adverse information affecting the Company’s business, operations and prospects, Genzyme’s stock has fallen approximately 35%, from a Class Period high of over $83 per share, to the low-to-mid-$50 range after disclosure of the problems. 9. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages. JURISDICTION AND VENUE 10. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17 C.F.R. § 240.10b-5). 11. This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).. 12. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts charged herein, including the preparation and dissemination of materially false and/or misleading information, occurred in substantial part in this District. 13. In connection with the acts, transactions, and conduct alleged herein, Defendants directly and indirectly used the means and instrumentalities of interstate commerce, including the United States mail, interstate telephone communications, and the facilities of a national securities exchange. THE PARTIES 14. Plaintiff Vivian Oh purchased Genzyme common stock during the Class Period, as set forth in the attached Certification, and was damaged thereby. 15. Defendant Genzyme is a corporation organized and existing under the laws of the Commonwealth of Massachusetts, with its principal executive offices located at 500 Kendall Street, Cambridge, Massachusetts. At all relevant times, the Company’s shares traded on the Nasdaq stock exchange under the symbol “GENZ.” 16. Defendant Termeer was, at all relevant times, Chairman, President and Chief Executive Officer of Genzyme. By virtue of his high-level positions within the Company, Termeer directly participated in the management of the Company, was directly involved in the day-to-day operations of the Company at the highest levels and was privy to confidential proprietary information concerning the Company, its business, operations, finances, and financial condition. Termeer was involved in drafting, producing, reviewing, approving and/or disseminating the materially false and misleading statements and information alleged in this Complaint , knew or with extreme recklessness disregarded the fact that materially false and misleading statements were being issued regarding the Company, and approved or ratified these 4 statements, in violation of the securities laws. CLASS ACTION ALLEGATIONS 17. Plaintiff brings this action as a class action pursuant to Rules 23(a) and 23(b)(3) of the Federal Rules of Civil Procedure, on behalf of Plaintiff and a Class consisting of all those who purchased the common stock of Genzyme between June 26, 2008 and July 21, 2009, inclusive, and who were damaged thereby. Excluded from the Class are Defendants and their legal representatives, heirs, successors and assigns; those who were officers, directors or insurers of Genzyme during the Class Period; members of Termeer’s immediate family, and any entity in which any of the foregoing have or had a controlling interest. 18. The members of the Class are so numerous that joinder of all members is impracticable. Throughout the Class Period, Genzyme’s common stock was actively traded on the Nasdaq stock exchange. According to the Company’s 2008 Form 10-K, there were more than 271 million shares of Genzyme common stock outstanding as of January 31, 2009. While the exact number of Class members is unknown to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff believes that there are thousands of members in the proposed Class. Record owners and other members of the Class may be identified from records maintained by Genzyme or its transfer agent and may be notified of the pendency of this action by mail, using the form of notice similar to that customarily used in securities class actions. 19. Plaintiff s claims are typical of the claims of the members of the Class, as all members of the Class are similarly affected by Defendants’ wrongful conduct in violation of the federal securities laws. 5 20. Plaintiff will fairly and adequately protect the interests of the members of the Class and has retained counsel competent and experienced in class and securities litigation. 21. Common questions of law and fact exist as to all members of the Class and predominate over any questions solely affecting individual members of the Class. Among the questions of law and fact common to the Class are: a. whether the federal securities laws were violated by Defendants’ conduct as alleged in this Complaint; b. whether statements made by Defendants to the investing public during the Class Period misrepresented and/or omitted material facts about the business, operations and profitability of Genzyme; c. whether Defendants acted with scienter; and d. to what extent the members of the Class have sustained damages and the proper measure of damages. 22. A class action is superior to all other available methods for the fair and efficient adjudication of this controversy, as joinder of all members is impracticable. Furthermore, as the damages suffered by individual Class members may be relatively small, the expense and burden of individual litigation

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