As reported by the Company’s FORM 10-Q for the quarterly period ended March 31, 2001, in June and July 2000, six class action lawsuits were filed and later combined into one. The Company and the individual defendants have filed a motion to dismiss the complaint. On May 9, 2001, the complaint was dismissed with prejudice.
The original complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between November
8, 1999, and June 9, 2000. For example, as alleged in the complaint, on
November 8, 1999, defendants reported that the Company's operating results for its third fiscal quarter improved over the comparable 1998 period, and stated that a Swiss company, Ares-Sereno, had paid $68 million to the Company for the marketing rights to the fertility drug Crinone which was manufactured by Columbia. Defendants knew, or recklessly disregarded, that the statement was false because Ares-Sereno did not have a finalized license to market the drug, and because additional profitability from Crinone could not be recognized until the second half of fiscal 2000. Defendants further represented, in the Company's March 16, 2000 Annual Report to Shareholders, that the Company was optimistic that a double blind testing of the Company's anti-AIDS spreading drug,"Advantage-S", would prove the drug's effectiveness in the fight against the spread of AIDS. In fact, the Company knew, or recklessly disregarded, that it had no basis for its optimistic statements regarding the Advantage-S study. When the Company reported, on June 12, 2000, that the Advantage-S study revealed the drug to be no more effective at stemming the spread of the AIDS virus than the placebo, the Company's stock price dropped by 55%. As an explanation, defendants stated that because the study was "double blind," they could not, and did not, know of its results until its completion.