According to the law firm press release, Spectrum is a biotechnology company with integrated commercial and drug development operations with a focus on hematology and oncology. In the United States, it markets two oncology drugs, FUSILEV® and ZEVALIV®.
FUSILEV is a folate analog used for the treatment of patients with advanced metastatic cancer. The key competitive formulation to FUSILEV was a generic drug, leucovorin. In 2008 and 2009, leucovorin supplies declined as one manufacturer reported low stockpiles due to increased demand and another stopped production due to expansion of its facility. These shortages of leucovorin represented a huge opportunity for Spectrum, as it was able to increase its sales of FUSILEV.
The complaint alleges that throughout the Class Period, defendants violated the federal securities laws by disseminating false and misleading statements to the investing public in connection with FUSILEV, continually dismissing concerns that sales of FUSILEV would be adversely affected by increased supplies of leucovorin and concealing the impact that the increased availability of leucovorin would have on FUSILEV sales. As a result of defendants’ false statements, Spectrum’s stock traded at artificially inflated prices during the Class Period, reaching a high of $13.05 per share on September 18, 2012.
On March 12, 2013, after the market closed, Spectrum issued a press release providing its full-year revenue outlook. The Company reported that sales of FUSILEV would be dropping significantly due to anticipated changes in ordering patterns for FUSILEV, which were due in part to the recent stabilization of the folate analog market. Additionally, the Company forecast full-year 2013 revenues in the range of $160 to $180 million, much lower than analysts’ revenue expectations of $297.33 million for 2013. On this news, Spectrum’s stock plummeted $4.64 per share to close at $7.79 per share on March 13, 2013, a one-day decline of 37% on volume of 22.5 million shares.
According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows: (a) once the availability of leucovorin increased, Spectrum’s sales of FUSILEV would plummet; (b) the purported advantages of FUSILEV over leucovorin would not be sufficient for clinics and hospitals to continue to opt for the more expensive FUSILEV once leucovorin was available in larger quantities; and (c) based upon the above, defendants lacked a reasonable basis for their positive statements about the Company and its revenue and earnings during the Class Period.
On April 19, 2013, Perry, et al. v. Spectrum Pharms., Inc., et al.; Carroll v. Spectrum Pharms., Inc., et al.; and Santi v. Spectrum Pharms., inc., et al. were consolidated under the single docket number 2:13-cv-00433.
On May 21, 2013, the Court issued an Order relating and consolidating Skene v. Spectrum Pharms,, Inc. and Rubin v. Spectrum Pharms,, Inc. under 2:13-cv-00433.
Plaintiffs filed a consolidated complaint on May 20, 2014.
On November 20, 2015, the parties filed a Stipulation of Settlement. This Settlement was preliminarily approved on January 27, 2016. The Settlement was approved and Final Judgment entered on June 13.