According to a press release dated September 4, 2008, the U.S. District Court for the District of New Jersey granted final approval to the proposed settlement in a consolidated securities fraud class-action suit filed against Genta, Inc. An order approving the settlement on a final basis was issued on May 27, 2008, and the settlement became final on June 27, 2008, according to the company's Aug. 7, 2008 Form 10-Q filing with the U.S. Securities and Exchange Commission for the quarter ended June 30, 2008.
On January 23, 2006, the Court entered a Stay Order pending mediation. On May 26, 2006, a motion for preliminary approval of settlement was filed, and later granted in part and denied part by the Order entered on October 11, 2006.
As disclosed by the Company’s FORM 10-Q for the quarterly period ended June 30, 2006, in 2004, numerous complaints were filed in the United States District Court for the District of New Jersey against Genta and certain of its principal officers on behalf of purported classes of the Company’s shareholders who purchased its securities during several class periods. The complaints have been consolidated into a single action and allege that the Company and certain of its principal officers violated the federal securities laws by issuing materially false and misleading statements regarding Genasense® for the treatment of malignant melanoma that had the effect of artificially inflating the market price of the Company’s securities. The shareholder class action complaint in the various actions seeks monetary damages in an unspecified amount and recovery of plaintiffs’ costs and attorneys’ fees. On September 30, 2005, the court granted in part and denied in part the Company’s motion to dismiss the plaintiffs’ complaint. The court dismissed plaintiffs’ claim that the defendants engaged in a scheme or artifice to defraud plaintiffs, but allowed plaintiffs’ claims to proceed with respect to their allegations that defendants issued false and misleading public statements about Genasense®. The case has proceeded to discovery.
The original complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities. Specifically, the complaint alleges that throughout the Class Period, defendants misrepresented the safety of the Company's drug, Genasense, for the treatment of advanced melanoma, the most deadly form of skin cancer.
Further, the complaint alleges that during the Class Period, defendants falsely represented to the investing public that Genasense did not appear to be associated with serious adverse reactions in the Phase 3 clinical trial. In fact, defendants knew that the use of Genasense was associated with increased toxicity and discontinuations due to adverse events, and that U.S. Food and Drug Administration ("FDA") approval of the Genasense New Drug Application was unlikely because the increased toxicity and adverse events associated with the use of Genasense outweighed its marginal benefits.
On April 30, 2004, the staff of the Oncologic Drugs Advisory Committee (ODAC) of the FDA stated in briefing materials in advance of the May 3, 2004 ODAC meeting that the Phase 3 clinical trial of Genasense failed to demonstrate a survival benefit, which was the primary trial endpoint. However, small but unreliable benefits were seen for progression-free survival (PFS) and response rates (RR). The staff also stated: "Uncertainty also exists regarding whether an improvement in PFS and RR of this magnitude outweighs the increase in toxicity seen with the combination [of Genasense and dacarbazine.]: ... Survival was not improved and toxicity was increased." As a result of this announcement, the price of Genta shares dropped $5.83 or 40.4% to close at $8.60 on the Nasdaq market on an unusually high volume of over 30 million shares traded. On May 3, 2004, the ODAC ruled by a 13-3 vote that, in the absence of increased survival, the evidence presented did not provide substantial evidence of effectiveness to outweigh the increased toxicity of Genasense. As a result of this announcement, the price of Genta shares fell more than $3 per share, to close at $5.11 on May 3, 2004 at a high volume of over 17 million shares traded.
On November 05, 2009, an order granting Motion for Disbursement of Funds was entered into the Court’s docket.