Stockholders v Maxim Pharmaceuticals, Inc.
Maxim Pharmaceuticals Concealed Facts About Ceplene Drug
A class action has been filed against Maxim Pharmaceuticals, Inc., a global biopharmaceuticals company (NASDAQ:MAXM) and certain of its officers and directors by stockholders who purchased the company's common stock between November 11, 2002 and September 17, 2004. The action claims that the defendants violated federal securities laws by issuing a series of material misrepresentations to the market over this time period, thereby artificially inflating the price of the company's securities. The stockholders seek to recover compensatory damages for the loss of value of their stock.
Specifically, the complaint alleges that during the Company artificially inflated the price of Maxim shares by issuing a series of false and misleading statements about the utility of Ceplene in the treatment of malignant melanoma. Despite expert review by the FDA and others of the dismal results of their failed Phase III trial, defendants sought to convince investors that Ceplene still held promise as a treatment for malignant melanoma.
According to the complaint, the Company concealed:
• reports of survival rates and the status of malignant melanoma patients treated with Ceplene;
• information that Ceplene was safe, effective and approved for use;
• information that even though the Company represented to investors that the FDA "Approved" Ceplene, no new clinical data or information demonstrating that the drug was effective in the treatment of malignant melanoma had been provided to the agency since it rejected the drug in 2001;
• studies that explained why the drug did not work.
The complaint further alleges that disclosure of the negative results of the later clinical trial were delayed, which afforded insiders with knowledge of the undisclosed material information an opportunity for trading in Company securities.
On September 19, 2004, the Company announced the failure of Ceplene to demonstrate an improvement in overall patient survival, the primary endpoint. Based on this disclosure, the stock imploded, closing the next trading day at $3.04, for a loss of $2.90 or 48.8% of its value, on volume of over 17 million shares.
