According to the Company’s FORM 10-Q For the Quarterly Period Ended June 30, 2003, on April 14, 2003, John R. Blum filed a class action complaint entitled John R. Blum v. SuperGen, Inc., et al., No. C 03-1576 in the U.S. District Court for the Northern District of California, against the Company’s and its current President and Chief Executive Officer alleging violations of the Securities Exchange Act of 1934 ("Exchange Act") and seeking unspecified damages. Subsequently, as of May 21, 2003, six similar actions were filed in the same court. Each of the complaints purports to be a class action lawsuit brought on behalf of persons who purchased or otherwise acquired the Company’s common stock during the period of April 18, 2000 through March 13, 2003, inclusive (except that one complaint specified the period as between April 18, 2000 through March 14, 2003). The complaints alleged that during such period, we issued materially false and misleading statements and failed to disclose certain key information regarding Mitozytrex™ (mitomycin for injection). The complaints did not specify the amount of damages sought. Beginning in late July 2003, each of the plaintiffs elected to voluntarily dismiss their respective complaints without prejudice. Each of the dismissals has been approved and entered by the Court, thus ending all of the pending securities lawsuits against the Company.
The action charges defendants SuperGen and its CEO with violations of the federal securities laws by issuing a series of materially false and misleading statements to the market throughout the Class Period which statements had the effect of artificially inflating the market price of the Company's securities.
Specifically, the complaint alleges that during the Class Period, one of the Company's leading drug candidates was Mitozytrex, a proprietary reformulation of the approved anticancer drug Mitomycin C, which is used primarily to treat gastric and pancreatic cancers. SuperGen's reformulation is based on technology designed to improve the handling characteristics and safety profile of mitomycin and other anticancer drugs by enhancing the drug's stability in solution form and "shielding" it at the injection site. SuperGen sold millions of shares and notes for $25 million in illegal proceeds so as to provide it with ample monies to fund its operations. However, this all took place prior to revelations concerning the veracity of the Company's statements regarding Mitozytrex. The Federal Food, Drug and Cosmetic Act gives the FDA authority to disseminate information to the public regarding drugs and other products within the FDA's jurisdiction to address imminent health dangers or gross deception. To protect the public health due to the improper statements by the Company, the FDA notified the public that SuperGen's product, Mitozytrex, has not been found by the agency to have benefits that the Company claimed.
The complaint further alleges that the true facts which were actually known by each defendant were as follows: (a) That Mitozytrex caused adverse reactions such as fever, anorexia, nausea and vomiting, together with myelosuppression and hemolytic uremic syndrome; (b) That Mitozytrex was merely a bioequivalent to the innovator mitomycin. It differed from the innovator formulation only in that the Company's product contained hydroxypropyl-beta-cyclodextrin ("HPCD"). No evidence exists to support the Company's claims that Mitoyztrex is superior to the existing formulations of mitomycin; (c) That there is no existing evidence that the addition of HPCD yields any clinical advantage over the original formulation of mitomycin; (d) That SuperGen's "Extra" technology did not shield the drug at the injection site; and (e) That the so-called "advantages" of the Company's product, including increased solubility, stability and shelf-life, were non-existent.