On October 3, 2002, the plaintiffs filed an appeal but the appeal was later dismissed.
According to a press release dated September 6, 2002, Biopure Corporation announced that the U.S. District Court for the District of Massachusetts has dismissed the putative securities class action litigation brought against Biopure and the company's former chairman and chief executive officer in early 2002. On September 4, 2002, Senior District Judge Edward F. Harrington issued an order granting the company's motion to dismiss the case in its entirety with prejudice. "I'm pleased we've prevailed in this matter. Although the plaintiffs in this class action were only a few individuals, I want to assure all Biopure shareholders that the Board of Directors and senior management are dedicated to building investor confidence and shareholder value," said Biopure Chairman Dr. Charles A. Sanders. The purported class action was the consolidation of five different complaints filed against Biopure and Carl W. Rausch in the District Court between February 5, 2002 and March 15, 2002. The plaintiffs, eight individual shareholders, claimed that Biopure violated federal securities law. However, Judge Harrington found that the plaintiffs failed to state a claim under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.
The original Complaint alleges that Biopure, a leading developer, manufacturer
and marketer of a new class of pharmaceuticals it calls "oxygen
therapeutics," and the Company's Chairman and Chief Executive Officer,
violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
by issuing materially false and misleading statements concerning the
likely timing of the Company's filing with the U.S. Food and Drug
Administration ("FDA") of its Biologic License Application ("BLA") to
market Hemopure, Biopure's experimental blood substitute for patients
undergoing elective surgery. In particular, defendants led investors to
believe that the BLA was on track to be filed by year-end 2001.
As alleged in the Complaint, these statements were materially false
and misleading because, by commencement of the Class Period, defendants
knew or recklessly ignored the fact that the data collected from the
Hemopure trial (which had been completed in August 2000) was
significantly deficient and failed to demonstrate that the trial had
been conducted in an "adequate and well-controlled" manner. As such,
plaintiff asserts that the data lacked reliability, thereby making any
application unlikely to be accepted for filing, much less approved, by
the FDA. It is further alleged that defendants also knew that the FDA
would not allow a BLA to be filed where the data lacked "prima facie"
On December 6, 2001, the Company announced that it would not file the
Hemopure application until mid-2002, contrary to repeated prior
assertions that the BLA would be filed in 2001. Biopure blamed the delay
on "additional facility and process validation requirements" for its
Cambridge, Massachusetts manufacturing plant. Plaintiff asserts that
this was merely a pretext for the delay, which in fact was occasioned by
the data deficiencies that had arisen during the clinical trial. As a
result of the postponement, the price of Biopure stock fell to less than
$15 per share, well below the $20 plateau above which the stock traded
throughout most of the Class Period.