According to the Company’s FORM 10-Q For the Quarterly Period Ended June 30, 2004, on June 21, 2004, the United States District Court of the Southern District of New York issued an Order denying the plaintiffs' motion for reconsideration. The time period within which the plaintiffs could appeal the Opinion and Order dismissing the class action complaint expired on July 22, 2004. No appeal was filed by that date. QLT believes that this lawsuit has now been finally concluded.
As previously reported by the Company’s FORM 10-Q For the Quarterly Period Ended March 31, 2004, in January and February of 2001 seven proposed securities class actions were filed in the United States District Court for the Southern District of New York on behalf of purchasers of the Company's common shares between August 1, 2000 and December 14, 2000. On May 3, 2001, the court ordered consolidation of the seven actions. On March 31, 2004 the United States District Court of the Southern District of New York issued an Opinion and Order dismissing the class action complaint with prejudice. The court also found that the plaintiffs failed to state a valid claim for plaintiffs filed a motion with the same court for reconsideration of the Opinion and Order dismissing the class action complaint.
The original complaint charges defendants with violations of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by issuing materially false and misleading financial information regarding the Company's condition and prospects. Specifically, the complaint charges that during the Class Period defendants issued to the investing public false and misleading financial information, press releases, and other information concerning the demand for Visudyne, a drug made by the Company that was recently approved by the FDA to treat wet age-related macular degeneration ("AMD"), an eye disease that causes blindness in elderly people. On December 14, 2000, QLT announced that it expected to miss its sales estimates for the fourth-quarter ended December 31, 2000. QLT attributed the shortfall to slower than expected growth in demand for Visudyne due to lack of reimbursement from governmental health
administration authorities, private health insurers, and other third party payers for the cost of Visudyne treatment in Europe and the United States. QLT also lowered its sales forecasts for the year 2001. These statements contradicted prior information issued by defendants concerning the demand for Visudyne and the Company's prospects. In response, the Company's common stock price plummeted approximately 31% on extremely heavy volume, losing $12.375 per share from the prior day's close of $40.438 per share. The dissemination of this materially misleading information caused QLT's common stock to be artificially inflated throughout the Class Period. Defendants were motivated to inflate the price of QLT stock so that Company insiders could dump their own shares on unsuspecting investors. Indeed, when the price of QLT stock was at its highest level of the year, defendants Levy and Galbraith sold over 157,000 shares of QLT stock, reaping proceeds of approximately CN$18.32 million.