Case 3:17-cv-00209-BRM-LHG Document 98 Filed 08/01/18 Page 1 of 2 PageID: 2402

MICHAEL R. GRIFFINGER
Director

Gibbons P.C.
One Gateway Center
Newark, New Jersey 07102-5310
Direct: (973) 596-4701 Fax: (973) 639-6294
griffinger@gibbonslaw.com

August 1, 2018

VIA ECF

The Honorable Brian R. Martinotti, U.S.D.J.

United States District Court
Clarkson S. Fisher Building and U.S. Courthouse
402 East State Street
Trenton, New Jersey 08608

Re: In Re Novo Nordisk Securities Litigation,

Case No. 3:17-cv-00209 Consolidated (BRM)(LHG)

Dear Judge Martinotti:

On behalf of Defendants in the above-referenced matter, we respectfully request that the

Court consider the following response to plaintiffs’ letter, dated July 31, 2018, which directs the
Court’s attention to Judge Arleo’s decision in Roofer’s Pension Fund v. Papa, 2018 WL
3601229 (D.N.J. July 27, 2018) (“Perrigo”).

Perrigo undercuts rather than supports plaintiffs’ claims. The court in Perrigo did not
uphold allegations that “defendants materially misled investors about the sustainability of and
reasons for the defendant pharmaceutical company’s drug pricing,” as plaintiffs suggest. (ECF
No. 97.) Rather, the court sustained in part a securities fraud claim arising out of the defendants’
alleged “failure to disclose [an] uncharged illegal” price-fixing scheme with competitors.
Perrigo, 2018 WL 3601229, at *11. The court specifically found, as a threshold matter, that
plaintiffs had adequately pleaded the existence of the illegal scheme—including by alleging that
the Department of Justice “raided Perrigo’s offices as part of a criminal price-fixing probe” (id.
at *21) and that defendants had participated with competitors in industry trade meetings that
were “used to sow the seeds for . . . illegal agreements,” according to a civil complaint filed by
the attorneys general of forty states (id. at *11). The court then concluded—after accepting
plaintiffs’ price-fixing allegations as true—that the defendants’ failure to disclose the scheme
when discussing the company’s pricing strategy qualified as a material misrepresentation or
omission. Id. at *12.

The Perrigo court was clear that pleading the existence of an illegal scheme with
particularity is required where plaintiffs’ theory of fraud “rests on the failure to disclose
uncharged illegal conduct.” Id. at *11. Plaintiffs here have not only failed to plead adequately
the existence of illegal conduct, they have expressly abandoned the position that the legality of
Novo Nordisk’s rebate and pricing practices is relevant to their claim. See Opp. at 18-19
(arguing that defendants were required to disclose the “centrality of rebates . . . regardless of
whether Novo’s [rebates] and/or lockstep price increases with its competitors were illegal”
(emphasis added)).

Newark New York Trenton Philadelphia Wilmington gibbonslaw.com

Case 3:17-cv-00209-BRM-LHG Document 98 Filed 08/01/18 Page 2 of 2 PageID: 2403

The Honorable Brian R. Martinotti, U.S.D.J.

August 1, 2018
Page 2

Perrigo also reinforces the deficiencies with respect to plaintiffs’ scienter allegations in
this case. The Perrigo court noted that the plaintiffs’ price fixing allegations only “narrowly
surpassed the bar for pleading scienter” for two (of eleven) individual defendants based on
specific allegations of the defendants’ “personal knowledge of the price fixing scheme” and the
existence of a “parallel criminal investigation.” Perrigo, 2018 WL 3601229, at *21. There are
no comparable scienter allegations in this case. Perrigo, moreover, decisively rejected plaintiffs’
rote allegations concerning Sarbanes-Oxley certifications and gave minimal, if any, weight in its
scienter analysis to allegations regarding executive departures. Id. at *16, *20.

Notably, plaintiffs’ letter also fails to point out that the Perrigo court rejected claims
relating to alleged misstatements about the company’s “ability to keep delivering organic growth
rates of 5%-10%.” Id. at *12. The Perrigo court dismissed those claims—despite allegations
that the defendants failed to disclose that the company’s growth at the time the statements were
made was not in line with expectations—because the plaintiffs failed to provide “specific
allegations of scienter related to” those statements. Id. at *13, *22. Not only is the complaint in
this case similarly devoid of specific scienter allegations related to the statements Novo Nordisk
made about its financial projections and long-term targets, but Novo Nordisk specifically
disclosed to investors that its annual operating profit goal for 2016 was less than its long-term
operating profit target of 10%. Accordingly, defendants here, unlike the defendants in Perrigo,
disclosed the belief that near-term growth would be lower than the long-term target. Also, unlike
in Perrigo, Novo Nordisk met its projected results during the two year class period,
demonstrating the absence of actual falsity.

Thank you for your attention to this matter. We are available at Your Honor’s
convenience to discuss any questions you may have or to provide any additional briefing that is
deemed warranted.

Respectfully submitted,

By: s/ Michael R. Griffinger James P. Rouhandeh, Esq.

Michael R. Griffinger, Esq. Neal A. Potischman, Esq.
Brian J. McMahon, Esq. DAVIS POLK & WARDWELL LLP
Samuel I. Portnoy, Esq. 450 Lexington Avenue
GIBBONS P.C. New York, New York 10017
One Gateway Center Attorneys for Defendants Novo
Newark, New Jersey 07102-5310 Nordisk A/S, Lars Rebien Sørensen,
Jesper Brandgaard, and Jakob Riis.

cc: All Counsel of Record