On November 22, 2010, the Company noted that it entered into a binding Protocol Agreement with the United States Food and Drug Administration ("FDA"), which is an agreement for the conduct of the pivotal trial in order to establish the safety and effectiveness of Company. The Company noted that the data accrual phase of the Company’s pivotal trial was completed in the third quarter of 2008 and the image processing classification algorithms were finalized in the fourth quarter. Nevertheless, throughout the Class Period, Defendants conditioned investors to believe that FDA approval of the Company would be forthcoming through a host of materially false and misleading statements regarding the status of the Company's ongoing clinical studies, and the safety and efficacy of the Company's products. For instance, on February 13, 2009, Defendants announced "positive top-line results of its pivotal trial of MelaFind, a non-invasive, point-of-care instrument to assist in the early detection of melanoma, the deadliest form of skin cancer."
In touting positive aspects of the Company, Defendants were able to, among other things: (a) deceive the investing public regarding the Company's business, operations, management, future business prospects and the intrinsic value of MELA's common stock; (b) deceive the investing public regarding MELA's business and management; (c) deceive the investing public regarding the efficacy of the Company and its prospects for FDA approval; (d) enable Defendants to sell almost $79 million of MELA's common stock to the public while in possession of material adverse non-public information about the Company; and (e) cause plaintiff and other members of the Class to purchase MELA common stock at artificially inflated prices.
Finally, on November 16, 2010, however, investors learned the truth concealed by Defendants' Class Period misstatements. On that date, it was reported, in part, that the Company "could cause harm because of the potential for misdiagnosis," and that "FDA staff pointed to numerous problems with Mela's study of the device, called MelaFind, including a significant lack of data, and urged a new clinical trial."
On this news, investors were shocked to learn the truth regarding Company. As a result, MELA's stock price plummeted approximately 46% on heavy trading volume, to close at $2.92 per share. While shares have traded slightly higher days later after an FDA advisory panel narrowly voted in favor of Company, most Wall Street analysts are still not optimistic on chances for approval, according to an AP news report from November 19, 2010.
On February 15, 2011, Judge J. Frederick Motz granted the motion to consolidate several actions, and further granted the motion to appoint the MELA Investor Group as Lead Plaintiffs and granted the motion to appoint their choice of counsel. By May 2, 2011, the MELA Investor Group shall file and serve a consolidated amended complaint.
On May 3, 2011, the plaintiffs filed a Consolidated Amended Class Action Complaint. The defendants responded by filing a motion to dismiss on July 29, 2011.
According to the Order entered on October 20, 2011, by November 18, 2011, Lead Plaintiff shall file and serve a motion to amend the Complaint (the "Motion"), together with a memorandum of law in support thereof and a proposed Second Consolidated Amended Complaint for Violations of the Federal Securities Laws. The parties agree that Defendants' July 29, 2011 motion to dismiss the Complaint is withdrawn without prejudice.
On November 18, 2011, the lead plaintiff filed a motion to amend/correct the Consolidated Amended Complaint.
On October 2, 2012, the Court issued an Order granting defendants' motion to dismiss the Consolidated Amended Complaint. Judgment was entered in favor of defendants and the case was closed.
On December 10, 2012, the United States Court of Appeals for the Second Circuit issued a Mandate ordering the parties' stipulation withdrawing their earlier appeal.