UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF PENNSYLVANIA 

In re VICURON PHARMACEUTICALS, INC. 

SECURITIES LITIGATION 

This Document Relates To: 

ALL ACTIONS. 

) 

) 

) 

) 

) 

) 

) 

) 

Civ. Action No. 04-CV-2627 

MEMORANDUM OF LAW IN SUPPORT 

OF LEAD PLAINTIFFS’ MOTION FOR 

FINAL APPROVAL OF CLASS ACTION 

SETTLEMENT AND PLAN OF 

ALLOCATION 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 1 of 26
TABLE OF CONTENTS 

Page 

- i - 

I. INTRODUCTION ...............................................................................................................1

II. FACTS .................................................................................................................................3 

III. THE STANDARDS FOR JUDICIAL APPROVAL OF CLASS ACTION 

SETTLEMENTS..................................................................................................................3 

IV. THE SETTLEMENT IS PRESUMPTIVELY FAIR BECAUSE IT IS THE 

PRODUCT OF ARM’S-LENGTH NEGOTIATIONS AND IS SUPPORTED BY 

COUNSEL ...........................................................................................................................5 

V. AN ANALYSIS OF THE GIRSH FACTORS CONFIRMS THAT THE 

SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE ........................................6 

A. The Complexity, Expense and Duration of This Litigation Warrant 

Approval of the Settlement ......................................................................................6 

B. The Absence of Objections Is Evidence of the Reasonableness of the 

Settlement ................................................................................................................7 

C. The Stage of the Proceedings Weighs in Favor of Approval...................................8 

D. The Risks of Establishing Liability Weigh in Favor of Approval...........................9 

E. The Risks of Establishing Loss Causation and Damages .....................................11 

F. The Risks of Maintaining the Class Action Through Trial Weigh in Favor 

of Approval ............................................................................................................12 

G. The Settlement Is Reasonable in Light of the Ability of Defendants to 

Withstand a Judgment............................................................................................12 

H. The Settlement Is Reasonable in Light of All the Attendant Risks of 

Litigation................................................................................................................12 

VI. THE COURT SHOULD APPROVE THE PLAN OF ALLOCATION............................13 

VII. CONCLUSION..................................................................................................................15 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 2 of 26
TABLE OF AUTHORITIES 

Page 

- ii - 

Anixter v. Home-Stake Prod. Co., 

77 F.3d 1215 (10th Cir. 1996) ...........................................................................................13 

Armstrong v. Bd. of Sch. Dirs., 

616 F.2d 305 (7th Cir. 1980) ...............................................................................................6 

Backman v. Polaroid Corp., 

910 F.2d 10 (1st Cir. 1990)................................................................................................13 

Berkey Photo, Inc. v. Eastman Kodak Co., 

603 F.2d 263 (2d Cir. 1979)...............................................................................................13 

Bryan v. Pittsburgh Plate Glass Co., 

494 F.2d 799 (3d Cir. 1974).................................................................................................4 

Carson v. Am. Brands, Inc., 

450 U.S. 79 (1981)...............................................................................................................4 

Cotton v. Hinton, 

559 F.2d 1326 (5th Cir. 1977) .............................................................................................6 

Dura Pharm., Inc. v. Broudo, 

544 U.S. 336 (2005)...........................................................................................................11 

Eichenholtz v. Brennan, 

52 F.3d 478 (3d Cir. 1995)...................................................................................................5 

Fickinger v. C.I. Planning Corp., 

646 F. Supp. 622 (E.D. Pa. 1986) ........................................................................................4 

Fisher Bros., Inc. v. Mueller Brass Co., 

630 F. Supp. 493 (E.D. Pa. 1985) ........................................................................................4 

Fisher Bros. v. Phelps Dodge Indus., Inc., 

604 F. Supp. 446 (E.D. Pa. 1985) ........................................................................................4 

Girsh v. Jepson, 

521 F.2d 153 (3d Cir. 1975)...................................................................................... passim 

In re AT&T Corp. Sec. Litig., 

455 F.3d 160 (3d Cir. 2006).................................................................................................5 

In re AremisSoft Corp. Sec. Litig., 

210 F.R.D. 109 (D.N.J. 2002)..............................................................................................8 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 3 of 26
Page 

- iii - 

In re Cendant Corp. Litig., 

264 F.3d 201 (3d Cir. 2001)...................................................................................4, 5, 6, 13 

In re Chambers Dev. Sec. Litig., 

912 F. Supp. 822 (W.D. Pa. 1995).......................................................................................7 

In re Computron Software, 

6 F. Supp. 2d 313 (D.N.J. 1998) ........................................................................................12 

In re Corel Corp. Inc. Sec. Litig., 

293 F. Supp. 2d 484 (E.D. Pa. 2003) .................................................................................14 

In re GMC Pick-Up Truck Fuel Tank Prods. Liab. Litig., 

55 F.3d 768 (3d Cir. 1995)...........................................................................................3, 4, 5 

In re Gen. Pub. Utils. Sec. Litig., 

No. 79-1420, 1983 WL 22362 (D.N.J. Nov. 16, 1983) .......................................................8 

In re IKON Office Solutions, Inc., 

277 F.3d 658 (3d Cir. 2002).................................................................................................9 

In re Ikon Office Solutions, Inc., Sec. Litig., 

194 F.R.D. 166 (E.D. Pa. 2000).........................................................................................13 

In re Lucent Techs., Inc. Sec. Litig., 

307 F. Supp. 2d 633 (D.N.J. 2004) ....................................................................................14 

In re Remeron End-Payor Antitrust Litig., 

No. 02-2007(FSH), 2005 U.S. Dist. LEXIS 27011 

(D.N.J. Sept. 13, 2005) ........................................................................................................5 

In re Rent-Way Sec. Litig., 

305 F. Supp. 2d 491 (W.D. Pa. 2003)......................................................................6, 7, 8, 9 

In re SmithKline Beckman Corp. Sec. Litig., 

751 F. Supp. 525 (E.D. Pa. 1990) ........................................................................................8 

In re Warfarin Sodium Antitrust Litig., 

391 F.3d 516 (3d Cir. 2004)...................................................................................3, 4, 7, 12 

In re Warner Commc'ns Sec. Litig., 

618 F. Supp. 735 (S.D.N.Y. 1985), 

aff'd, 798 F.2d 35 (2d Cir. 1986) .......................................................................................11 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 4 of 26
Page 

- iv - 

Meijer, Inc. v. 3M, 

No. 04-5871, 2006 U.S. Dist. LEXIS 56744 

(E.D. Pa. Aug. 15, 2006)......................................................................................................7 

Protective Comm. for Indep. Stockholders of 

TMT Trailer Ferry v. Anderson, 

390 U.S. 414 (1968).............................................................................................................4 

Robbins v. Koger Props., 

116 F.3d 1441 (11th Cir. 1997) .........................................................................................13 

Semerenko v. Cendant Corp., 

223 F.3d 165 (3d Cir. 2000)...............................................................................................11 

Smith v. Dominion Bridge Corp., 

No. 96-7580, 2007 U.S. Dist. LEXIS 26903 

(E.D. Pa. Apr. 11, 2007) ....................................................................................................14 

Stoetzner v. U.S. Steel Corp., 

897 F.2d 115 (3d Cir. 1990).............................................................................................5, 8 

Walsh v. Great Atl. & Pac. Tea Co., 

96 F.R.D. 632 (D.N.J.), aff'd, 726 F.2d 956 (3d Cir. 1983).................................................4 

Williams v. First Nat'l Bank, 

216 U.S. 582 (1910).............................................................................................................3 

STATUTES, RULES AND REGULATIONS

15 U.S.C. 

 §77k............................................................................................................................7, 9, 11 

 §78j(b)........................................................................................................................7, 9, 11 

Federal Rules of Civil Procedure 

 Rule 23...............................................................................................................................13 

 Rule 23(e)...............................................................................................................1, 3, 5, 12 

SECONDARY AUTHORITIES

7B Wright, Miller & Kane, 

Federal Practice and Procedure: Civil 2d (1986) 

 §1797....................................................................................................................................5 

 §1839....................................................................................................................................5 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 5 of 26
- 1- 

 

I. INTRODUCTION 

Pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, Lead Plaintiffs, 

Massachusetts State Guaranteed Annuity Fund, Massachusetts State Carpenters’ Pension Fund and 

the Greater Pennsylvania Carpenters’ Pension Fund, respectfully submit this memorandum in 

support of their motion for final approval of the settlement of this class action for $12.75 million in 

cash and approval of the Plan of Allocation of settlement proceeds. The terms of the settlement are 

set forth in the Stipulation of Settlement dated as of January 5, 2007 (the “Stipulation”).1 The 

settlement, which was reached after a substantial litigation efforts by counsel for the Lead Plaintiffs, 

and with the assistance of an experienced mediator, is an outstanding result and merits the approval 

of the Court. 

This case has been vigorously litigated for nearly three years. At every stage of the litigation, 

counsel for Defendants asserted aggressive defenses and expressed their belief that Lead Plaintiffs 

would not prevail on the claims asserted. By the time the settlement was reached, Lead Plaintiffs’ 

counsel had briefed and argued a motion to dismiss, reviewed and analyzed over four hundred 

thousand pages of documents produced by Defendants and third parties, successfully obtained class 

certification, interviewed witnesses, and consulted with experts in the fields of medicine, FDA 

approval processes, materiality, loss causation and damages. 

As discussed herein and in the accompanying Declaration of Laura Andracchio in Support of 

Final Approval of Class Action Settlement and Plan of Allocation, and Award of Attorneys’ Fees 

1

 Unless otherwise defined herein, capitalized terms should have the meaning ascribed to them 

in the Stipulation. The Stipulation was previously provided to the Court in connection with Lead 

Plaintiff’s Memorandum of Law in Support of Motion for Preliminary Approval of Settlement. 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 6 of 26
- 2- 

 

and Reimbursement of Expenses (“Andracchio Declaration”), Lead Plaintiffs faced significant risks 

in obtaining a favorable outcome but have, nonetheless, obtained an excellent result.2

Lead Plaintiffs were faced with the formidable task of proving that Defendants knew that 

their statements regarding the potency of the Company’s esophageal candidiasis drug and its relapse 

rates were materially misleading and caused the Company’s stock to trade at artificially inflated 

prices. Defendants vehemently denied any and all liability, asserting that their statements were not 

misleading and were, in any event, not material. Defendants also maintained that they did not act 

with scienter. In addition, Defendants claimed that their public statements regarding the prospects 

for approval of its product were at the heart of the case, and those statements were forward looking, 

requiring Lead Plaintiffs to prove that Defendants knew the statements were false at the time they 

were made. 

Lead Plaintiffs also faced significant risks in establishing loss causation and the amount (if 

any) of damages suffered by the Class. Defendants claimed that Lead Plaintiffs could not 

demonstrate “loss causation,” i.e., that Lead Plaintiffs and the Class did not suffer any “economic 

loss” and any loss was caused by circumstances other than Defendants’ misstatements and 

omissions. 

In short, Lead Plaintiffs faced numerous obstacles in proving both liability and damages. 

There was no certainty, given Defendants’ vigorously asserted defenses, that Lead Plaintiffs and the 

Class would prevail on either liability or damages. The proposed settlement eliminates these and 

many other risks of continued litigation. 

2

 The Andracchio Declaration contains a detailed description of the history of the litigation, 

including the claims asserted, the proceedings during the course of the litigation, the investigation 

and discovery undertaken, the settlement negotiations and the substantial risks of continued 

litigation. 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 7 of 26
- 3- 

Lead Counsel, who are well-respected in the field and have extensive experience in 

prosecuting securities class actions, have concluded that the settlement is an excellent result and 

clearly in the best interests of the Class. This conclusion is based on, among other things, an 

analysis of the evidence, the legal and factual issues presented, and the risk that a jury would find 

favor with Defendants’ arguments and absolve them of liability. Significantly, the Lead Plaintiffs 

who were appointed by the Court and actively involved in this litigation support Lead Counsel’s 

conclusion and believe the settlement represents an outstanding recovery on behalf of the Class. For 

reasons set forth herein, it is respectfully submitted that the settlement is eminently fair, reasonable 

and adequate to the Class and should be approved by the Court. Moreover, the Plan of Allocation of 

settlement proceeds is based on a reasonable theory of damages and is necessarily fair, reasonable 

and adequate. 

II. FACTS 

The Court is respectfully referred to the Andracchio Declaration for a detailed description of 

the history of the litigation, the claims asserted, the motion practice, the investigation and discovery 

undertaken, the negotiation and substance of the settlement, and the substantial risks and 

uncertainties presented by and overcome in this action, and the risks of continued litigation. 

III. THE STANDARDS FOR JUDICIAL APPROVAL OF CLASS ACTION 

SETTLEMENTS 

It is well settled that “[c]ompromises of disputed claims are favored by the courts.” Williams 

v. First Nat’l Bank, 216 U.S. 582, 595 (1910); In re Warfarin Sodium Antitrust Litig., 391 F.3d 516, 

535 (3d Cir. 2004) (“[T]here is an overriding public interest in settling class action litigation, and it 

should . . . be encouraged.”). Settlement spares the litigants the uncertainty, delay and expense of a 

trial and appeals while simultaneously reducing the burden on judicial resources. 

Federal Rule of Civil Procedure 23(e) provides that a class action shall not be dismissed or 

compromised without the approval of the court. See also In re GMC Pick-Up Truck Fuel Tank 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 8 of 26
- 4- 

Prods. Liab. Litig., 55 F.3d 768, 785 (3d Cir. 1995) (“GMC Trucks”). In a class action, the “court 

plays the important role of protector of the [absent members’] interests, in a sort of fiduciary 

capacity.” Id. at 784. See also Warfarin, 391 F.3d at 534 (same). The ultimate determination 

whether a proposed class action settlement warrants approval resides in the court’s discretion. 

Protective Comm. for Indep. Stockholders of TMT Trailer Ferry v. Anderson, 390 U.S. 414, 424-25 

(1968). 

While this Court has discretion in determining whether to approve the settlement, it should be 

hesitant to substitute its judgment for that of the parties who negotiated the settlement. Fisher Bros. 

v. Phelps Dodge Indus., Inc., 604 F. Supp. 446, 452 (E.D. Pa. 1985). “Courts judge the fairness of a 

proposed compromise by weighing the plaintiff’s likelihood of success on the merits against the 

amount and form of the relief offered in the settlement. They do not decide the merits of the case or 

resolve unsettled legal questions.” Carson v. Am. Brands, Inc., 450 U.S. 79, 88 n.14 (1981) (citation 

omitted); Walsh v. Great Atl. & Pac. Tea Co., 96 F.R.D. 632, 642-43 (D.N.J.), aff’d, 726 F.2d 956 

(3d Cir. 1983). The court may rely on the judgment of experienced counsel and should avoid 

transforming the hearing on the settlement into a trial on the merits. Bryan v. Pittsburgh Plate Glass 

Co., 494 F.2d 799, 804 (3d Cir. 1974); Walsh, 96 F.R.D. at 642. 

In determining the adequacy of a proposed settlement, the court should ascertain whether the 

settlement is within a range that responsible and experienced attorneys could accept, considering all 

relevant risks. Fickinger v. C.I. Planning Corp., 646 F. Supp. 622, 630 (E.D. Pa. 1986). That 

analysis “‘recognizes the uncertainties of law and fact in any particular case and the concomitant 

risks and costs necessarily inherent in taking any litigation to completion.’” Fisher Bros., Inc. v. 

Mueller Brass Co., 630 F. Supp. 493, 499 (E.D. Pa. 1985) (citation omitted). The court must 

therefore consider whether the proposed settlement is “fair, reasonable, and adequate.” In re 

Cendant Corp. Litig., 264 F.3d 201, 231 (3d Cir. 2001). In Girsh v. Jepson, 521 F.2d 153, 157 (3d 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 9 of 26
- 5- 

Cir. 1975), the Third Circuit advised district courts to consider the following factors in deciding 

whether to approve a proposed settlement of a class action under Rule 23(e): 

“(1) the complexity, expense and likely duration of the litigation . . . ; (2) the reaction 

of the class to the settlement . . . ; (3) the stage of the proceedings and the amount of 

discovery completed . . . ; (4) the risks of establishing liability . . . ; (5) the risks of 

establishing damages . . . ; (6) the risks of maintaining the class action through the 

trial . . . ; (7) the ability of the defendants to withstand a greater judgment; (8) the 

range of reasonableness of the settlement fund in light of the best possible recovery . 

. . ; (9) the range of reasonableness of the settlement fund to a possible recovery in 

light of all the attendant risks of litigation . . . . ” 

Id. at 157 (citation omitted). See also In re AT&T Corp. Sec. Litig., 455 F.3d 160, 164-65 (3d Cir. 

2006); GMC Trucks, 55 F.3d at 782; Eichenholtz v. Brennan, 52 F.3d 478, 488 (3d Cir. 1995); 

Stoetzner v. U.S. Steel Corp., 897 F.2d 115, 118 (3d Cir. 1990); 7B Wright, Miller & Kane, Federal 

Practice and Procedure: Civil 2d §1797 (1986); 7C Wright, Miller & Kane, Federal Practice and 

Procedure: Civil 2d §1839 (1986). 

As set forth below and in the Andracchio Declaration, the settlement is an excellent result, is 

presumptively fair, and clearly satisfies the Girsh factors. Substantial doubt exists as to whether any 

greater recovery could have been obtained against Defendants in the absence of the settlement, 

especially in light of the difficulty of proving Defendants’ knowledge of the falsity of their 

statements regarding FDA approval of its drug, materiality and loss causation. Accordingly, the 

settlement is superior to another very real possibility – little or no recovery whatsoever. 

IV. THE SETTLEMENT IS PRESUMPTIVELY FAIR BECAUSE IT IS THE 

PRODUCT OF ARM’S-LENGTH NEGOTIATIONS AND IS SUPPORTED 

BY COUNSEL 

The Third Circuit “affords an initial presumption of fairness for a settlement ‘if the court 

finds that: (1) the negotiations occurred at arm’s length; (2) there was sufficient discovery; (3) the 

proponents of the settlement are experienced in similar litigation; and (4) only a small fraction of the 

class objected.’” In re Remeron End-Payor Antitrust Litig., No. 02-2007(FSH), 2005 U.S. Dist. 

LEXIS 27011, at *44 (D.N.J. Sept. 13, 2005) (quoting Cendant, 264 F.3d at 233 n.18). Each of 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 10 of 26
- 6- 

these factors weighs in favor of the presumption of fairness of this settlement. This action was 

litigated for more than two years before an agreement-in-principle to resolve the action was reached. 

The settlement resulted from arm’s-length negotiations between highly experienced and capable 

counsel, with the assistance of a well-respected mediator of complex litigation, after significant 

discovery. Lead Plaintiffs negotiated vigorously to benefit the Class with a firm understanding of 

the strengths and weaknesses of Lead Plaintiffs’ claims and the significant risks of proceeding with a 

trial. 

“[T]he court is [also] entitled to rely heavily on the opinion of competent counsel.” 

Armstrong v. Bd. of Sch. Dirs., 616 F.2d 305, 325 (7th Cir. 1980). Plaintiffs’ counsel’s “assessment 

of the settlement as fair and reasonable is entitled to considerable weight.” In re Rent-Way Sec. 

Litig., 305 F. Supp. 2d 491, 509 (W.D. Pa. 2003). Lead Counsel, who have extensive experience 

prosecuting securities class actions, believe that the settlement is an excellent result and in the best 

interest of the Class. In reaching this conclusion, Lead Counsel considered the strength of Lead 

Plaintiffs’ claims, the risks of establishing liability and damages in light of the evidence, as well as 

the risks that a jury may have ruled in favor of Defendants on some or all of the major issues, 

resulting in no recovery for the Class. 

V. AN ANALYSIS OF THE GIRSH FACTORS CONFIRMS THAT THE 

SETTLEMENT IS FAIR, REASONABLE AND ADEQUATE 

A. The Complexity, Expense and Duration of This Litigation Warrant 

Approval of the Settlement 

This factor “captures ‘the probable costs, in both time and money, of continued litigation.’” 

Cendant, 264 F.3d at 233 (citation omitted). The Court must balance this settlement against the time 

and expense of achieving a potentially more favorable result through further litigation. There is no 

doubt that this litigation, like all securities class actions, is complex. Cotton v. Hinton, 559 F.2d 

1326, 1331 (5th Cir. 1977) (“class action suits have a well deserved reputation as being most 

complex”). The result of a trial of this action might well have turned on close questions of law, 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 11 of 26
- 7- 

evidence and fact. As discussed herein and in the Andracchio Declaration, there clearly were 

substantial risks to Lead Plaintiffs obtaining a favorable judgment. With respect to their claims 

brought under §11 of the Securities Act of 1933, Lead Plaintiffs would have to establish that the 

Registration Statement for Vicuron’s July 2003 secondary offering was materially false or 

misleading. As to their §10(b) claims brought under the Securities Exchange Act of 1934, Lead 

Plaintiffs must prove that Defendants’ alleged misrepresentations were material or that they were 

made with knowledge or reckless disregard for their truth or falsity. Moreover, Lead Plaintiffs 

would have to establish that Defendants’ alleged securities violations caused harm to the Class and 

the amount of damages that the Class suffered. These issues involve complicated theories and 

statistical models and competing experts. 

While Lead Plaintiffs have already expended substantial amounts of time and money to reach 

the point of the settlement, further significant time and expenses would be incurred to complete pretrial proceedings and conduct a trial. Moreover, even if the jury returned a favorable verdict after 

trial, there is no question that any verdict would be the subject of numerous post-trial motions and a 

complex multi-year appellate process. Thus, “[i]t is safe to say, in a case of this complexity, the end 

of that road might be miles and years away.” In re Chambers Dev. Sec. Litig., 912 F. Supp. 822, 837 

(W.D. Pa. 1995). As a result, the settlement secures a substantial recovery for the Class 

undiminished by further expenses and without the delays, risks and uncertainties of continued 

litigation. See also Rent-Way, 305 F. Supp. 2d at 501. 

B. The Absence of Objections Is Evidence of the Reasonableness of the 

Settlement 

This Girsh factor “‘attempts to gauge whether members of the class support the settlement.’” 

Warfarin, 391 F.3d at 536 (citation omitted). It is well settled that the absence of objections to a 

proposed class settlement is strong evidence that the settlement is fair and reasonable. See Meijer, 

Inc. v. 3M, No. 04-5871, 2006 U.S. Dist. LEXIS 56744, at *43 (E.D. Pa. Aug. 15, 2006) (“Th[e] 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 12 of 26
- 8- 

total absence of objections, coupled with such a low opt-out rate, argues in favor of the proposed 

Settlement.”); In re AremisSoft Corp. Sec. Litig., 210 F.R.D. 109, 124 (D.N.J. 2002). See also 

Stoetzner, 897 F.2d at 118-19 (concluding that, when “only” 29 members of a class of 281 objected, 

the response of the class as a whole “strongly favors settlement”); In re SmithKline Beckman Corp. 

Sec. Litig., 751 F. Supp. 525, 530 (E.D. Pa. 1990); In re Gen. Pub. Utils. Sec. Litig., No. 79-1420, 

1983 WL 22362, at *8 (D.N.J. Nov. 16, 1983). 

In accordance with the Court’s Order of February 1, 2007, the Court-appointed settlement 

administrator, Gilardi & Co. LLC (“Gilardi”), has mailed copies of the Notice of Pendency and 

Proposed Settlement of Class Action, Motion for Attorneys’ Fees and Settlement Fairness Hearing 

(“Notice”) to over 26,000 potential Class Members, published a summary notice of the settlement 

and hearing in Investor’s Business Daily and posted the relevant documents on Gilardi’s website. 

The Notice informed potential Class Members of their right to object to any aspect of the settlement. 

The time for objecting expired on April 20, 2007. That date has now passed, and no Class Members 

have filed objections, and only two have requested exclusion from the Class. 

C. The Stage of the Proceedings Weighs in Favor of Approval 

The third Girsh factor requires the Court “to consider the degree to which the litigation has 

developed prior to settlement.” Rent-Way, 305 F. Supp. 2d at 502. “The goal here is to determine 

‘whether counsel had an adequate appreciation of the merits of the case before negotiating.’” Id.

(quoting Cendant, 264 F.3d at 235). Here, counsel unquestionably had a firm understanding of the 

merits of the case at the time the settlement was reached. 

This case has been vigorously litigated from start to finish for more than two years. At every 

stage of the litigation, Defendants have asserted aggressive defenses and expressed their belief that 

the Class would not prevail on the claims asserted. By the time the settlement was reached, Lead 

Plaintiffs had conducted significant discovery, reviewed and analyzed hundreds of thousands of 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 13 of 26
- 9- 

pages of documents produced by Defendants and third parties, interviewed witnesses, engaged in 

extensive motion practice and consulted with experts. This substantial discovery, motion practice 

and expert consultation gave Lead Plaintiffs’ counsel an understanding of the strengths and 

weaknesses of the Class’s claims, as well as the difficulties they would face in obtaining a favorable 

jury verdict. Having sufficient information to fairly evaluate the strengths and weaknesses of the 

Class’s claims, Lead Plaintiffs’ counsel have managed to settle this litigation on terms very favorable 

to the Class. 

D. The Risks of Establishing Liability Weigh in Favor of Approval 

Lead Plaintiffs believe that they had a strong case as to liability. As in every complex case of 

this kind, however, the Class faced formidable obstacles to proving Defendants’ liability. This Girsh

factor requires an attempt to balance the likelihood of success at trial against the benefits of 

immediate settlement. Rent-Way, 305 F. Supp. 2d at 504. In order to establish a prima facie §10(b) 

claim, Lead Plaintiffs must prove that Defendants: (1) made a misstatement or an omission of a 

material fact; (2) with scienter; (3) in connection with the purchase or sale of a security; (4) upon 

which the plaintiffs reasonably relied; and (5) that proximately caused their injuries. In re IKON 

Office Solutions, Inc., 277 F.3d 658, 667 (3d Cir. 2002). In order to establish a prima facie case 

under §11, Lead Plaintiffs are only required to show that the Registration Statement issued in 

connection with the offering contained a material misstatement or omission. While liability for a 

false or misleading statement is virtually absolute against Vicuron, even if the misstatements or 

omissions were innocent, all of the Defendants had a “market decline” defense to damages in that 

they could not be held responsible for declines in Vicuron’s stock price that were due to extraneous, 

or market factors, Moreover, if the Registration Statement contained adequate risk disclosures, any 

misstatement or omission might be rendered immaterial. 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 14 of 26
- 10- 

After reviewing over four hundred thousand pages of documents produced by Defendants 

and third parties, and conducting substantive witness interviews, Lead Plaintiffs believed that they 

were well on their way to developing evidence to sustain the heart of the allegations in this case, but 

realized they also faced considerable risks and defenses. 

Whether Lead Plaintiffs would have been able to establish liability was a very real 

uncertainty in this case. Lead Plaintiffs were faced with the formidable task of proving that 

Defendants’ alleged misrepresentations were false, misleading and material. There was a real risk 

that a jury could have found that Defendants accurately reported the relapse rates from the clinical 

studies, and that their statements regarding the significance of the relapse rates from the clinical 

studies could not have materially misled investors. In addition, Defendants’ statements about 

anidulafungin’s competitive advantages could be found by a jury to be unimportant or immaterial to 

a reasonable investor’s decision to buy Vicuron stock. Moreover, a jury might find that Defendants’ 

statements about the drug’s “in vitro” potency were technically true and therefore not misleading. A 

jury might also determine that the difference between “in vivo” and “in vitro” potency would have 

been understood by a reasonable investor, so that Defendants’ statements about the drug’s “in vitro” 

potency would not mislead investors. 

Scienter would likewise not be easy to establish in this case, especially with no insider 

trading in Vicuron stock by Defendants. Moreover, if the ultimate fact finder found Defendants’ 

statements regarding the prospects for FDA approval of anidulafungin were forward looking, then 

Lead Plaintiffs’ standard for proving scienter on those statements would be raised to actual 

knowledge of falsity. Given the anticipated disagreement on the interpretation of the evidence, most 

likely presented by experts for each side, it is impossible to predict what the fact finder would decide 

if the litigation continued to verdict. Establishing liability at trial was by no means a foregone 

conclusion and involved significant risks. 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 15 of 26
- 11- 

E. The Risks of Establishing Loss Causation and Damages 

Even if Lead Plaintiffs were successful in establishing liability, Lead Plaintiffs faced 

substantial risks in proving loss causation and damages. The determination of damages is a 

complicated and uncertain process, involving the analysis of many subjective factors. Damages in a 

§10(b) action are measured by “the difference between the purchase price and the ‘true value’ of the 

security [i.e., value absent the fraud] at the time of purchase.” Semerenko v. Cendant Corp., 223 

F.3d 165, 184 (3d Cir. 2000). With respect to both §10(b) and §11, Lead Plaintiffs must also show 

that the alleged false statements or omissions caused the damages. Defendants consistently argued 

that Lead Plaintiffs could not demonstrate “loss causation” – that Lead Plaintiffs or the Class 

suffered an actual economic loss and that Defendants’ misrepresentations or omissions proximately 

caused the loss. Because of the complex nature of damages and loss causation in §10(b) and §11 

actions, expert testimony is almost always necessary to establish the amount – and indeed the 

existence – of actual damages. Here, the loss causation and damage assessments of the parties’ 

respective experts who would testify at trial would be at polar opposites and the determination of the 

amount, if any, of damages suffered by the Class at the trial would have become a “battle of the 

experts.” Under the Supreme Court ruling in Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 338 

(2005), a “private plaintiff who claims securities fraud must prove that the defendant’s fraud caused 

an economic loss.” 

Given the differing conclusions reached by the parties regarding damages, it is impossible to 

predict how a jury would react to the evidence presented. See, e.g., In re Warner Commc’ns Sec. 

Litig., 618 F. Supp. 735, 744-45 (S.D.N.Y. 1985) (“it is virtually impossible to predict with any 

certainty which [experts’] testimony would be credited, and ultimately, which damages would be 

found to have been caused by actionable, rather than the myriad nonactionable factors such as 

general market conditions”), aff’d, 798 F.2d 35 (2d Cir. 1986). Lead Plaintiffs realized that in the 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 16 of 26
- 12- 

“battle of experts” it was certainly possible that a jury would have sided with Defendants’ damage 

experts and found no damages or only a fraction of the damages Lead Plaintiffs claimed. See In re 

Computron Software, 6 F. Supp. 2d 313, 320 (D.N.J. 1998). 

F. The Risks of Maintaining the Class Action Through Trial Weigh in 

Favor of Approval 

Federal Rule of Civil Procedure 23(c)(1) provides that a class certification order may be 

altered or amended any time before a decision on the merits. Thus, in any class action suit, even if a 

class is initially certified, as this one was, there is always a risk that a class will be modified or 

decertified prior to a decision on the merits. 

In short, although the Court had certified the Class, there was no guarantee that class 

certification would be maintained. 

G. The Settlement Is Reasonable in Light of the Ability of Defendants to 

Withstand a Judgment 

The ability of defendants to pay more money does not render a settlement unreasonable. See

Warfarin, 391 F.3d at 538 (“[T]he fact that DuPont could afford to pay any more does not mean that 

it is obligated to pay more than what the . . . class members are entitled to under the theories of 

liability that existed at the time the settlement was reached.”). That Defendants could have paid 

more does not render this settlement unreasonable. This Girsh factor is neutral here. 

H. The Settlement Is Reasonable in Light of All the Attendant Risks of 

Litigation 

The settlement must be balanced against all the risks of continued litigation. Here, the 

settlement was entered into after the parties had conducted significant discovery and motion practice 

and had retained and consulted with experts on key issues relating to drug approval, medicine, 

scienter, loss causation and damages. As discussed herein and in the Andracchio Declaration, there 

were significant risks in establishing materiality and falsity. Lead Plaintiffs also faced considerable 

risks in proving loss causation and damages and Defendants were prepared to, and did, argue that 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 17 of 26
- 13- 

even if liability was established, the Class did not suffer any damages. Lead Plaintiffs recognized 

the possibility that a jury could find favor with Defendants’ arguments at trial and find that no 

liability existed or even if liability was established, there were no damages. 

Moreover, many securities cases have been lost at trial, on post-trial motion, or on appeal. 

For example, in Robbins v. Koger Props., 116 F.3d 1441, 1449 (11th Cir. 1997), the Eleventh Circuit 

overturned an $81 million jury verdict for the plaintiff class on loss causation grounds and ordered 

the entire litigation dismissed. In another action, the class won a $38 million jury verdict (exclusive 

of prejudgment interest) and a motion for judgment n.o.v. was denied. However, on appeal, the 

judgment was reversed and the case dismissed, a total loss after ten years of active litigation. 

Backman v. Polaroid Corp., 910 F.2d 10, 18 (1st Cir. 1990). See also Anixter v. Home-Stake Prod. 

Co., 77 F.3d 1215, 1233 (10th Cir. 1996) (overturning plaintiffs’ verdict obtained after two decades 

of litigation); Berkey Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 309 (2d Cir. 1979) (reversing 

$87 million judgment after trial). 

In sum, this settlement meets all the requirements for approval, and the Lead Plaintiffs urge 

the Court to so find. 

VI. THE COURT SHOULD APPROVE THE PLAN OF ALLOCATION 

The Plan of Allocation establishes the method by which the Net Settlement Fund will be 

distributed to Class Members submitting acceptable Proofs of Claim. This plan – contained in the 

Notice mailed to Class Members – was created by Lead Counsel based on calculations by, and 

discussions with, their damage consultants. 

Approval of a plan of allocation of settlement proceeds in a class action under Rule 23 is 

governed by the same standards of review applicable to approval of the settlement as a whole: The 

plan must be fair, adequate and reasonable. Cendant, 264 F.3d at 231; In re Ikon Office Solutions, 

Inc., Sec. Litig., 194 F.R.D. 166, 184 (E.D. Pa. 2000). Here, the Plan of Allocation reflects a 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 18 of 26
- 14- 

reasonable estimation of the amount of inflation of Vicuron securities during the Class Period. 

Accordingly, the plan is based on a reasonable estimation of losses of Class Members, which in turn 

depends on the date the stock was purchased and whether the stock was sold during the Class Period 

or held through the end of the Class Period. See In re Lucent Techs., Inc. Sec. Litig., 307 F. Supp. 2d 

633, 649 (D.N.J. 2004) (“A plan of allocation that reimburses class members based on the type and 

extent of their injuries is generally reasonable.”); Smith v. Dominion Bridge Corp., No. 96-7580, 

2007 U.S. Dist. LEXIS 26903, at *22 (E.D. Pa. Apr. 11, 2007) (same); In re Corel Corp. Inc. Sec. 

Litig., 293 F. Supp. 2d 484, 493 (E.D. Pa. 2003) (same). 

Upon approval of the Plan of Allocation by the Court, the settlement administrator will 

determine each Authorized Claimant’s pro rata share of the Net Settlement Fund based upon each 

Authorized Claimant’s “Allowed Loss” as calculated in accordance with the formula set forth in the 

Plan of Allocation. Each Authorized Claimant will be allocated a pro rata share of the Net 

Settlement Fund based on his, her or its Allowed Loss as compared to the total Allowed Loss of all 

Authorized Claimants. 

The favorable reaction of the Class also supports approval of the proposed Plan of 

Allocation. To date, no Class Member has objected to the Plan of Allocation, although Notices have 

been distributed to over 26,000 Class Members. The proposed Plan of Allocation is a fair, 

reasonable, and adequate method for allocating the Net Settlement Fund among the various 

Members of the Class and should be approved by the Court. 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 19 of 26
- 15- 

VII. CONCLUSION 

For the foregoing reasons, Lead Plaintiffs respectfully request that the Court approve the 

settlement and the Plan of Allocation as fair, reasonable and adequate and in the best interests of the 

Class. 

DATED: May 2, 2007 Respectfully submitted, 

LAW OFFICES OF MARC S. HENZEL 

MARC S. HENZEL (MSH 2062) 

273 Montgomery Avenue, Suite 202 

Bala Cynwyd, PA 19004 

Telephone: 610/660-8000 

610/660-8080 (fax) 

Liaison Counsel 

LERACH COUGHLIN STOIA GELLER 

 RUDMAN & ROBBINS LLP 

WILLIAM S. LERACH 

LAURA M. ANDRACCHIO 

ELLEN GUSIKOFF STEWART 

s/ Ellen Gusikoff Stewart 

ELLEN GUSIKOFF STEWART 

655 West Broadway, Suite 1900 

San Diego, CA 92101 

Telephone: 619/231-1058 

619/231-7423 (fax) 

LERACH COUGHLIN STOIA GELLER 

 RUDMAN & ROBBINS LLP 

SAMUEL H. RUDMAN 

ROBERT M. ROTHMAN 

DAVID A. ROSENFELD 

58 South Service Road, Suite 200 

Melville, NY 11747 

Telephone: 631/367-7100 

631/367-1173 (fax) 

Lead Counsel for Plaintiffs 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 20 of 26
- 16- 

O’REILLY GROSSO & GROSS, P.C. 

JAMES F. GROSSO 

1671 Worcester Road, Suite 205 

Framingham, MA 01701-5400 

Telephone: 508/620-0055 

508/620-7655 (fax) 

Additional Counsel for Plaintiffs 

S:\Settlement\Vicuron Pharm.set\BRF SETTLEMENT 00041388.doc 

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 21 of 26
CERTIFICATE OF SERVICE

I hereby certify that on May 2, 2007, I electronically filed the foregoing with the Clerk of the 

Court using the CM/ECF system which will send notification of such filing to the e-mail addresses 

denoted on the attached Electronic Mail Notice List, and I hereby certify that I have mailed the 

foregoing document or paper via the United States Postal Service to the non-CM/ECF participants 

indicated on the attached Manual Notice List. 

I certify under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct. Executed on May 2, 2007. 

s/ Ellen Gusikoff Stewart 

ELLEN GUSIKOFF STEWART 

LERACH COUGHLIN STOIA GELLER 

 RUDMAN & ROBBINS LLP 

655 West Broadway, Suite 1900 

San Diego, CA 92101 

Telephone: 619/231-1058 

619/231-7423 (fax) 

E-mail:EllenG@lerachlaw.com

Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 22 of 26
Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 23 of 26
Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 24 of 26
Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 25 of 26
Case 2:04-cv-02627-HB Document 106 Filed 05/02/2007 Page 26 of 26