According to a press release dated November 20, 2008, the Company and certain of its officers and directors are charged with violations of the Securities Exchange Act of 1934. PharmaNet is a drug development services company that maintains offices and facilities in North America, Europe, South America, Asia, Africa and Australia and has clients in the branded pharmaceutical, biotechnology, generic drug and medical device industries.
The complaint alleges that the representations contained in PharmaNet’s press releases, SEC filings, conference calls and presentations during the Class Period were materially false and misleading when made because they failed to disclose that: (i) the Company’s backlog contained numerous contracts which were likely to be cancelled; (ii) the Company had ramped up expenses in order to perform contracts even though there was a substantial likelihood that the contracts would be cancelled; (iii) the Company was entering into contracts with highly risky biotechnology and pharmaceutical companies where the risk that the contract would be cancelled was greatly increased; and (iv) given the above factors, defendants lacked a reasonable basis for their positive statements about the Company, its business, backlog and earnings guidance.
According to the complaint, on April 30, 2008, PharmaNet issued a press release announcing its financial results for the first quarter of 2008. For the quarter, the Company reported direct revenue of $86.8 million and backlog of $482.9 million. In response to the announcement, the price of PharmaNet stock dropped from $23.86 per share to $17.10 per share on extremely heavy trading volume.
On February 18, 2009, the court consolidated related cases and appointed lead plaintiff and their selection of lead counsel.
On April 27, 2009, an amended class action complaint was filed by the plaintiffs.
On March 25, 2010, the Plaintiff’s claims regarding the defendant’s contract were dismissed with prejudice, while the remaining claims in the Amended Complaint were dismissed without prejudice.
On June 03, 2010, the Court issued Stipulation and Order of Dismissal with Prejudice and the Parties and their counsel at all times complied with and satisfied the requirements of Rule 11.