According to a news release dated September 19, 2007, Encysive Pharmaceuticals (ENCY) announces that the US District Court for the Southern District of Texas has dismissed, with prejudice, the securities class action litigation originally filed in September 2006 against the company, four of its former officers and a current officer.
In November 2006, the Court granted the motion to consolidate several related actions under the lead case, 06cv3022. On March 20, 2007, the Court granted the motion to appoint Oppenheim Pramerica Asset Management S.A.R.L. as Lead Plaintiff and Motley Rice LLC as Lead Counsel. On May 21, 2007, the plaintiff filed a Consolidated Class Action Complaint, and on July 20, 2007, the defendants responded by filing a motion to dismiss the Consolidated Class Action Complaint.
The original complaint charges Encysive and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Encysive is a biopharmaceutical company focused on the discovery, development and commercialization of different synthetic small molecule compounds for the treatment of a range of cardiovascular, vascular and related inflammatory diseases.
The complaint alleges that throughout the Class Period Encysive made false and misleading statements regarding the success of Sitaxentan, or Thelin, a drug it was developing to treat Pulmonary Arterial Hypertension ("PAH"), and stated that it had completed Phase III development of Thelin. During the Class Period, defendants led shareholders and analysts to believe that FDA approval was imminent and that such approval would make Thelin a competitor to Acetelion Ltd.'s similar drug, Tracleer (Bosentan). However, after the Company completed two successful public offerings and the individual defendants received cash/stock awards based on the apparent success of Thelin, the Company's shareholders learned that defendants had been less than forthcoming with the true prospects for Thelin. On March 27, 2006, U.S. regulators delayed approving Thelin until they could get more data. The FDA sent the Company a letter asking for information and possibly more studies to determine if Thelin was safe and effective for use in treating PAH. On this news, Encysive shares fell 49%.