By the Order and Final Judgment entered on May 13, 2003, the settlement is approved as fair, reasonable, and adequate and the complaint is dismissed with prejudice.
According to the proposed settlement posted on the site dated March 7, 2003, a settlement of $4,500,000 in cash, with interest, was reached on December 5, 2002. A settlement fairness hearing is set for May 13, 2003 for final approval by the court.
The original complaint alleges, that during the Class Period, defendants violated federal securities laws by issuing to the investing public false and misleading statements and press releases concerning the Company's product ADCON-L, its efficacy and the integrity of the clinical data submitted in support of ADCON-L's Food and Drug Administration (“FDA”) approval process.
Further, the complaint alleges that on August 28, 2000, Gliatech, Inc., shocked the investing community by announcing that the Boards of Directors of Gliatech and Guilford agreed to a mutual termination of their Merger Agreement, due to Guilford's decision not to pursue the merger based on the FDA's issuance of inspectional observations contained in a Form 483 report, issued by the FDA to Gliatech on August 23, 2000, which identified certain items pertaining to Gliatech's methods of recording and presenting clinical data for ADCON-L submitted to the FDA. Indeed, it was revealed that doctors told Gliatech of their concerns about ADCON-L, such as inflammation and spinal-fluid leakage, as long as a year and a half ago, and the Company did not investigate the concerns and notify the FDA until March 13, 2000. These disclosures contradicted much of the information provided by defendants to the market during the Class Period and caused the Company's common stock to plummet 59% on August 29, 2000, or $15 3/16 to $10 3/16 per share.
NOTE: Gliatech was named a defendant in this Action. On May 9, 2002, Gliatech filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division, Case No. 02-15045. All actions against Gliatech have been stayed by operation of the Bankruptcy laws.