NEW YORK, Nov. 21, 2023 (GLOBE NEWSWIRE) — Pomerantz LLP announces that a class action lawsuit has been filed against Kenvue, Inc. (“Kenvue” or the “Company”) (NYSE: KVUE) and certain officers. The class action, filed in the United States District Court for the District of New Jersey, and docketed under 23-cv-22435, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Kenvue securities pursuant and/or traceable to the registration statement and related prospectus (collectively, the “Registration Statement”) issued in connection with Kenvue’s initial public offering (the “IPO” or “Offering”) and suffered compensable damages caused by Defendants’ violations of the Securities Act of 1933 (the “Securities Act”).
If you are a shareholder who purchased or otherwise acquired Kenvue securities pursuant and/or traceable to the registration statement and the IPO, you have until December 8, 2023 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Robert S. Willoughby at newaction@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Kenvue was previously the consumer health division of Johnson & Johnson (“J&J”), and the IPO of that division as a standalone company was predicated on it and its products being viable. However, the Registration Statement did not warn about the commercial viability of products containing phenylephrine (“phenylephrine” or “PE”), which was being investigated by the U.S. Food and Drug Administration (the “FDA”) over the purported inefficacy of PE. Soon after the IPO, an FDA panel unanimously voted to declare oral formulations of PE ineffective for relieving nasal congestion and published its findings in a document called “Efficacy of Oral Phenylephrine as a Nasal Decongestant” (the “FDA Findings” or the “Findings”).
In May 2023, Defendants held the IPO, offering approximately 171,812,560 shares of Kenvue common stock to the investing public at $22.00 per share.
Prior to the IPO, Kenvue was the consumer healthcare division of Johnson & Johnson. In November 2021, J&J announced that it would spin off its consumer health division as a separate company, as a result of fundamental differences between J&J’s other products and those of the consumer health division. As such, both the investing and general public were already largely familiar with many of Kenvue’s products, including those mentioned above, and relied on statements about the safety and efficacy of those products from J&J, as the prior owner of those brands and products.
Defendant Johnson & Johnson and its subsidiaries design, produce, and sell a broad range of products in the healthcare field. As mentioned, Kenvue was formerly the consumer healthcare division of J&J. As of the closing of the IPO, J&J owned approximately 89.6% of the total outstanding shares of Kenvue common stock. As Kenvue disclosed, the “net proceeds will be paid to Johnson & Johnson as partial connection for the consumer health businesses that Johnson & Johnson transferred to Kenvue in connection with the IPO.” As the Registration Statement disclosed, J&J would “continue to control the direction of our business” following the IPO, and that following the completion of the IPO, that Kenvue would be a “controlled company” as defined under the corporate governance rules of the NYSE.
The Complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: Specifically, the Registration Statement contained false and/or misleading statements and/or failed to disclose that: (1) Kenvue faced potential headwinds as a result of confirmed concerns about the efficacy of phenylephrine, which it knew or should have known; (2) Kenvue did not discuss risks relating to the efficacy of PE in its IPO, the utility of which had been questioned since at least 2007; (3) while the Company disclosed risks relating to litigation, it did not disclose specific risk relating to potential litigation arising from adverse findings on the efficacy of phenylephrine; and (4) as a result, Defendants’ public statements were materially false and misleading at all relevant times and negligently prepared.
On or around September 12, 2023, the FDA published its Findings. In the Findings, the FDA stated that it was convening an advisory committee to “discuss the adequacy of efficacy data available for orally administered phenylephrine as a nasal decongestant and whether the oral nasal decongestants phenylephrine hydrochloride and phenylephrine bitartrate should be reclassified as not Generally Recognized as Safe and Effective (GRASE) due to lack of efficacy.”
The effectiveness standard for an over-the-counter drug is set forth in 21 CFR § 330.10(a)(4)(ii), which defined effectiveness as “a reasonable expectation that, in a significant proportion of the target population, the pharmacological effect of the drug, when used under adequate directions for use and warnings against unsafe use, will provide clinically significant relief of the type claims.”
The commercial implications of a product being relabeled to no longer be Generally Recognized as Safe and Effective (“GRASE”) are substantial. The FDA stated in its findings that it understood a “significant impact on industry” would be “inevitable” if it took an action “regarding the GRASE status of oral phenylephrine” (i.e., removed the GRASE designation).
The FDA disclosed that it had been evaluating data on the efficacy of oral PE since December of 2007 as a result of data submitted as part of a 2007 Citizen Petition (the “2007 CP”) and a later 2015 Citizen Petition (the “2015 CP”, and collectively, the “Petitions”).
In the Findings, the FDA stated that, since 2007, it had “continued to re-evaluate the scientific support for use of oral PE as a nasal decongestant” and that it had “now completed a thorough review of all those data.” The review was also based on “significant new data” that wasn’t available when the original GRASE decision was made.
The resulting unanimous find that the FDA advisory panel came to confirm the arguments in the Petitions. While there were no safety issues with orally administered PE, the FDA panel found that “orally administered PE is not effective as a nasal decongestant [. . .].”
On the news that PE is not effective, Kenvue stock declined by $1.01 per share, or 4.58%, to close at $21.06 on September 12, 2023, from a prior closing price of $22.07 on September 11, 2023. It has not gone above the $22.00 IPO price since.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
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CONTACT:
Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
888-476-6529 ext. 7980
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