According to the complaint, Hemispherx is a biopharmaceutical company engaged in the clinical development, manufacture, marketing and distribution of new drug therapies based on natural immune system enhancing technologies for the treatment of viral and immune-based chronic disorders. The Company's products include Ampligen, an experimental drug undergoing clinical development for the treatment of chronic fatigue syndrome.
The complaint alleges that, during the Class Period, defendants misled investors regarding the status of Hemispherx's New Drug Application ("NDA") for Ampligen with the U.S. Food and Drug Administration ("FDA"). Specifically, defendants failed to disclose and misrepresented the fact that the FDA had requested several reports from the Company before the NDA could even be considered, thus delaying the possible approval of Ampligen by several months at a minimum. On November 2, 2009, when the Company belatedly disclosed this information, the per share price of Hemispherx's common stock dropped from $1.45 on the previous day to $1.13, a drop of more than 20%. The next day, one commenter characterized the November 2nd Company "update" as essentially an admission "that its prior public statements were false and misleading."
On February 12, 2010, Judge Paul S. Diamond consolidated several actions under lead case, In re Hemispherx Biopharma, Inc. Litigation, Civil Action No. 09-5262, and granted the motion for approval of lead plaintiff and lead counsel. The Hemispherx Investor Group was appointed lead plaintiff and the law firms of Berger Montague and Brower Piven as its lead counsel were approved as lead counsel. On March 1, 2010, the lead plaintiff filed a Consolidated Class Action Complaint. On March 12, 2010, the defendants filed a motion to dismiss. On April 20, 2010, the defendants’ motion to dismiss was denied.
According to a press release dated August 24, 2010, Hemispherx Biopharma, Inc. announced that, as result of court mediation proceedings, it has entered into a written agreement in principle with the Court-appointed lead plaintiffs to settle all of the currently pending securities class actions consolidated in the U.S. District Court for the Eastern District of Pennsylvania. The proposed settlement requires formal court approval. The class actions have been stayed by the Court pending those mandatory procedures needed to formalize and approve the settlement. The settlement will be paid from the company's insurance coverage and will not result in the payment of any funds by the Company. Furthermore, the settlement expressly is not an admission of any culpability by Hemispherx or its officers.
On September 24, 2010, a motion for preliminary approval of settlement was filed.
According to a press release dated November 16, 2010, pursuant to Rule 23 of the Federal Rules of Civil Procedure and by Order of the United States District Court for the Eastern District of Pennsylvania dated October 20, 2010, a hearing will be held on January 20, 2011 at 10:00 a.m. in Courtroom 6B, United States Courthouse, 601 Market Street, Philadelphia, PA 19106, to determine (1) whether the proposed Settlement (the "Settlement") of the above-captioned action ("Action") for $3,600,000 should be approved by the Court as fair, reasonable, and adequate; (2) whether the motion of Co-Lead Counsel for an award of attorneys' fees and reimbursement of expenses should be approved; and (3) whether the Action should be dismissed with prejudice.
On February 14, 2011, the settlement was approved and the action was dismissed with prejudice.