According to a press release dated June 9, 2006, Cell Therapeutics (CTI) reports that US District Judge Ricardo S. Martinez has granted CTI's motion to dismiss a private securities fraud class-action lawsuit alleging false statements by company officers. The Judge's decision was issued May 4 but went into permanent effect on June 8.
The original complaint charges CTI and certain of its officers with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that contrary to the defendant's express and repeated representations the results of STELLAR 3 trial were not encouraging; (2) that XYOTAX failed to boost survival for non-small cell lung cancer: (3) that XYOTAX failed to show greater survival benefit than Taxol, the leading drug on the market; and (4) that based on the results of the trial the Company would not be able to begin pre-launch activities and to position itself to submit a new drug application for XYOTAX.
The complaint further alleges that on or around March 7, 2005, prior to the opening of the market, CTI announced that a phase III study of XYOTAX in combination with carboplatin, known as STELLAR 3, missed its primary endpoint. News of this shocked the market. Shares fell $4.75 per share or 47.5 percent, on March 7, 2005, to close at $5.25 per share, on unusually high volume.