Northfield Laboratories, Inc. ("Northfield" or the Company) is developing PolyHeme, a universally compatible hemoglobin product to be used as an alternative to transfused blood to treat acute blood loss.
The Complaint alleges that on or around February 22, 2006, a story in The Wall Street Journal reported that the data available to Defendants from the ANH clinical trial, but not to the public, revealed that ten of 81 patients who received PolyHeme suffered a heart attack within seven days, and two of those died. The data further showed that none of the 71 patients in the ANH clinical trial who received real blood were found to have suffered a heart attack. In the aftermath of receiving this data, Defendants shut down the ANH clinical study in 2000 and kept this highly adverse data hidden from public view. Defendants in a press release on February 22, 2006, responding to The Wall Street Journal article, did not dispute the data concerning the patient heart attacks and deaths from the ANH clinical trial. Rather, Defendants admitted that they did not publish the data concerning patient heart attacks and deaths, and Defendant Gould stated in the press release that "(w)e believe that publishing the full data upon closing the study, would have shown that PolyHeme could not be isolated as the cause of the observed serious adverse events." The Complaint charges Defendants Northfield and its Chairman and CEO with violations of the Securities Exchange Act of 1934 and Securities Act of 1933.
The Complaint further alleges that the market was stunned by the disclosure of the secret, adverse data from the long-closed ANH clinical trial and the market price of Northfield's common stock fell with the belated disclosures. On February 21, 2006, the day before the disclosure by The Wall Street Journal, Northfield's common stock closed at a price of $12.23 per share. On February 22, 2006, on extraordinary volume of more that 4.1 million shares, Northfield's common stock closed at a price of $11.64 per share. The price continued to drop as the market absorbed all of the news, including the announcement on February 24, 2006, by United States Senator Charles E. Grassley, Chairman of the U.S. Senate Finance Committee, that he has begun an inquiry into the matter.
On June 19, 2006, U.S. District Judge George M. Marovich approved the motion to consolidate cases and the motion to approve lead Plaintiff and lead Counsel. On July 17, 2006, the same day the Amended Complaint was filed, the lead Plaintiff filed a motion to withdraw as lead Plaintiff. On August 24, 2006 the Judge Marovich entered his order consolidating all related cases, appointing the Shield Plan as lead Plaintiff and approving the Rosen Law Firm as lead Counsel. The Plaintiffs did not delay in filing a Consolidated Amended Class Action Complaint on September 8, 2006. On November 20, 2006, Defendants filed their motions to dismiss. On September 25, 2007, Judge Marovich granted the Defendants’ motions to dismiss without prejudice and with leave to amend. On November 20, 2007, the lead Plaintiff filed a Consolidated Second Amended Class Action Complaint. On January 22, 2008, the Defendants filed motions to dismiss the Consolidated Second Amended Class Action Complaint.
On September 23, 2008, Judge George M. Marovich denied the Defendants' two motions to dismiss. The parties soon after engaged in discovery proceedings. On April 1, 2009, the movant filed a motion to certify the class. On September 25, 2009, the movant also filed a motion to transfer the case, which was denied on November 10, 2009. On May 18, 2010, the motion to certify the class was denied.
On May 4, 2011, a movant filed a renewed motion to certify the class. The motion was withdrawn on August 23, 2011. A status hearing was set for October 11, 2011.
On September 13, 2011, an unopposed motion for preliminary approval of settlement and conditional certification of a class was filed. The proposed settlement is in the amount of $1,500,000 in cash.
