Case Page

 

Case Status:    SETTLED
On or around 12/07/2010 (Date of order of final judgment)

Filing Date: June 06, 2007

The original complaint charges Telik and certain of its officers and directors and its underwriters for the Offerings with violations of the Securities Exchange Act of 1934 and the Securities Act of 1933. Telik is a biopharmaceutical company engaged in the discovery, development, and commercialization of small molecule drugs for the treatment of cancer and inflammatory diseases. Telik’s lead product candidate during the Class Period was TELCYTA, a small molecule cancer drug product designed to be activated in cancer cells.

Specifically, the complaint alleges that during the Class Period, defendants made false and misleading statements about the Company’s business and prospects, including that they were on track to obtain FDA approval for the use of TELCYTA in the treatment of platinum-resistant or refractory ovarian cancer and small-cell lung cancer, and that TELCYTA was safe and effective for public use and the Company had conducted sufficient clinical studies to prove it. The complaint futher alleges that, unbeknownst to the investing public, subjects in the TELCYTA trials were dying at alarming rates and doctors were pulling other subjects out early, compromising the data being gathered. As a result of defendants’ false and misleading Class Period statements and omissions, Telik’s stock traded at inflated levels during the Class Period, trading as high as $29.04 per share by April 2004, whereby the Company sold over $322 million worth of Telik stock in the Offerings. The Registration Statements and Prospectuses issued in connection with the Offerings were also false and misleading as they misstated the known safety and integrity flaws in the TELCYTA clinical trials.

The complaint further alleges that on December 26, 2006, the Company announced that TELCYTA had failed in three arms of its final clinical testing – showing no efficacy in two of the three arms and unreliable clinical data in two of the three arms. The Company’s stock plunged 70% in a single trading session – falling from over $16 per share to below $5 per share. The Company’s stock price fell by another 20% on June 4, 2007, following disclosure of just how badly the ovarian cancer arm of the TELCYTA trials had failed, and then nearly 30% to $3.42 per share on June 5, 2007, after the Company disclosed that the FDA had ordered Telik to immediately halt all TELCYTA clinical trials due to the alarming number of fatalities.

As summarized by the Company’s Form 10-K for the Fiscal Year Ended December 31, 2008, beginning on June 6, 2007, a series of putative securities class action lawsuits were commenced in the United States District Courts for the Southern District of New York and the Northern District of California, naming as defendants Telik, Inc. and certain of our current officers, one of whom is also a director. The complaints filed in the Southern District of New York, which were consolidated and amended in 2007, also name as defendants the underwriters of our November 2003 and/or January 2005 stock offerings. Plaintiffs in the Northern District of California subsequently voluntarily dismissed their complaints without prejudice. The complaints alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 arising out of the issuance of allegedly false and misleading statements about our business and prospects, including the efficacy, safety and likelihood of success of our product candidate TELCYTA. The allegations of the consolidated amended complaint were similar, but more narrow than the original complaints. Plaintiffs sought unspecified damages and injunctive relief on behalf of purchasers of our common stock during the period between March 27, 2003 and June 4, 2007, including purchasers in the January 2005 stock offering. In January 2008, the parties to the securities class action reached an agreement in principle to settle the claims, the settlement to be funded primarily by proceeds from insurance. In October 2008, the court entered a final judgment approving the [$5 million cash] settlement and resolving all class claims.

On September 29, 2008, an objector filed a notice of appeal from the order approving the settlement. On October 9, 2008, an amended notice of appeal was filed in the Second Circuit Court of Appeals. On December 7, 2010, the U.S. Court of Appeals affirmed the judgment of the district court.

COMPANY INFORMATION:

Sector: Healthcare
Industry: Biotechnology & Drugs
Headquarters: United States

SECURITIES INFORMATION:

Ticker Symbol: TELK
Company Market: NASDAQ
Market Status: Public (Listed)

About the Company & Securities Data


"Company" information provides the industry and sector classification and headquarters state for the primary company-defendant in the litigation. In general, "Securities" information provides the ticker symbol, market, and market status for the underlying securities at issue in the litigation.

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COURT: S.D. New York
DOCKET #: 07-CV-04819
JUDGE: Hon. Paul A. Crotty
DATE FILED: 06/06/2007
CLASS PERIOD START: 03/27/2003
CLASS PERIOD END: 06/04/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Law Offices of Marc S. Henzel (Bala Cynwyd)
    273 Montgomery Ave. Suite 202, Law Offices of Marc S. Henzel (Bala Cynwyd), PA 19004
    610.660.8000 610.660.8080 · securitiesfraud@comcast.net
  2. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville)
    58 South Service Road, Suite 200, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (Melville), NY 11747
    631.367.7100 631.367.1173 ·
  3. Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego)
    655 West Broadway, Suite 1900, Lerach Coughlin Stoia Geller Rudman & Robbins LLP (San Diego), CA 92101
    619.231.1058 619.231.7423 ·
No Document Title Filing Date
COURT: S.D. New York
DOCKET #: 07-CV-04819
JUDGE: Hon. Paul A. Crotty
DATE FILED: 10/23/2007
CLASS PERIOD START: 02/19/2004
CLASS PERIOD END: 06/04/2007
PLAINTIFF FIRMS NAMED IN COMPLAINT:
  1. Bernstein Liebhard & Lifshitz, LLP (New York)
    10 E. 40th Street, 22nd Floor, Bernstein Liebhard & Lifshitz, LLP (New York), NY 10016
    800.217.1522 · info@bernlieb.com
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