Using A Company’s “Intrinsic” Value In Defending Securities Fraud Suits

A recent securities class action lawsuit filed in a Connecticut federal court charges that Achillion Pharmaceuticals, Inc., and its CEO and CFO misled investors by failing in an adequate and timely fashion to disclose clinical information and FDA actions related to sovaprevir, an Achillion drug under study for the treatment of hepatitis infections.  If the Connecticut-based pharmaceutical company’s ability to fend off the allegations of the Complaint turns on the relationship between the Company’s “disclosures” and drops in its stock price (as the plaintiff and his lawyers would like), the Company may have a problem.  However, as M&A lawyers are learning in the context of garden variety shareholder litigation and appraisal rights litigation, one available defense may lie in the Company’s ability to demonstrate the long-term “fair” or “intrinsic” value of its stock. [Read more…]