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Labaton Sucharow LLP Announces Securities Class Action Lawsuit Filed Against Catalent, Inc. and Certain Executives

By: Labaton Sucharow LLP via Business Wire

February 24, 2023 at 17:33 PM EST

Labaton Sucharow LLP (“Labaton Sucharow”) announces that, on February 24, 2023, it filed a securities class action lawsuit (the “Complaint”) on behalf of its client City of Warwick Retirement System against Catalent, Inc. (“Catalent” or the “Company”) (NYSE: CTLT) and certain Catalent officers (collectively, “Defendants”). The action, which is captioned City of Warwick Retirement System v. Catalent, Inc., No. 3:23-cv-1108 (D.N.J.), 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, on behalf of all persons or entities who purchased or otherwise acquired Catalent securities between August 30, 2021 and October 31, 2022, inclusive (the “Class Period”).

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 directly sells these products to pharmaceutical companies which later sell them through the supply chain to healthcare providers (i.e., hospitals, clinics, etc.), which administer them to patients, who are the end consumers. Catalent’s vaccine manufacturing business initially benefitted from the COVID-19 pandemic, causing its stock price to soar to record highs.

The Complaint 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 control procedures at key production facilities. By late 2022, Catalent reported significant sales declines and excess inventory throughout its supply chain. As a result, Catalent stock dropped to pre-COVID levels causing substantial losses to its investors as they learned that Catalent’s early-COVID revenues were never sustainable, and its Class Period revenues were the product of securities fraud.

The Complaint further alleges that statements made by Defendants throughout the Class Period were materially false and misleading when made because they misrepresented or failed to disclose the following adverse facts, which were known to Defendants or recklessly disregarded by them: (a) Catalent materially overstated its revenue and earnings by prematurely recognizing revenue in violation of U.S. Generally Accepted Accounting Principles (“GAAP”); (b) Catalent had material weaknesses in its internal control over financial reporting related to revenue recognition; (c) Catalent falsely represented demand for its products while it knowingly sold more product to its direct customers than could be sold to healthcare providers and end consumers; (d) Catalent disregarded regulatory rules at key production facilities in order to rapidly produce excess inventory that was used to pad the Company’s financial results through premature revenue recognition in violation of GAAP and/or stuffing its direct customers with this excess inventory; and (e) as a result of the foregoing, Defendants lacked a reasonable basis for their positive statements about the Company’s financial performance, outlook, and regulatory compliance during the Class Period.

If you purchased or acquired Catalent securities during the Class Period and were damaged thereby, you are a member of the “Class” and may be able to seek appointment as Lead Plaintiff. Lead Plaintiff motion papers must be filed no later than April 25, 2023. The Lead Plaintiff is a court-appointed representative for absent members of the Class. You do not need to seek appointment as Lead Plaintiff to share in any Class recovery in this action. If you are a Class member and there is a recovery for the Class, you can share in that recovery as an absent Class member. You may retain counsel of your choice to represent you in this action.

If you would like to consider serving as Lead Plaintiff or have any questions about this lawsuit, you may contact Francis P. McConville, Esq. of Labaton Sucharow, at (212) 907-0650, or via email at fmcconville@labaton.com. You can view a copy of the complaint online here.

City of Warwick Retirement System is represented by Labaton Sucharow, which represents many of the largest pension funds in the United States and internationally with combined assets under management of more than $2 trillion. Labaton Sucharow’s litigation reputation is built on its half-century of securities litigation experience, more than sixty full-time attorneys, and in-house team of investigators, financial analysts, and forensic accountants. Labaton Sucharow has been recognized for its excellence by the courts and peers, and it is consistently ranked in leading industry publications. Offices are located in New York, NY, Wilmington, DE, and Washington, D.C. More information about Labaton Sucharow is available at www.labaton.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230224005429/en/

Contacts

Francis P. McConville, Esq.

(212) 907-0650

fmcconville@labaton.com

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Labaton Sucharow LLP Announces Securities Class Action Lawsuit Filed Against Catalent, Inc. and Certain Executives

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