Update: This case has settled.
Pomerantz LLP has filed a class action lawsuit against Delcath Systems, Inc. (“Delcath” or the “Company”)(NASDAQ: DCTH) and certain of its officers. The class action, filed in United States District Court, Southern District of New York, and docketed under 13 CIV 3116, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of Delcath between April 21, 2010 and May 2, 2013, both dates inclusive (the “Class Period”). This class action seeks to recover damages against the Company and certain of its officers and directors as a result of alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.
Delcath Systems, Inc. operates as a specialty pharmaceutical and medical device company focusing on the field of oncology. The company’s proprietary technology enables the administration of high-dose chemotherapy and other therapeutic agents to diseased organs or regions of the body, while controlling the systemic exposure of those agents.
The Complaint alleges that throught the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) the Company's New Drug Application ("NDA") for Melblez Kit (Melblez (melphalan) for Injection for use with the Delcath hepatic Delivery System), for the treatment of patients with unresectable ocular melanoma metastatic to the liver contained risks including substantial and severe toxicity and deaths associated with the drug's adverse reactions; and (2) the Company's manufacturing facilities were in violation of Current Good Manufacturing Practices ("cGMP").
On February 22, 2011, the Company disclosed that it had received a “refusal to file” letter from the U.S. Food & Drug Administration (“FDA”) for its NDA for its proprietary chemosaturation system. The letter “requested information involving manufacturing plant inspection timing, product and sterilization validations and additional safety information […] as well as additional statistical analysis clarification.” On this news, Delcath shares plummeted $4.29 or 38%, to close at $7.01 per share.
On April 30, 2013, the FDA published briefing documents ahead of a May 2, 2013 meeting by the Oncologic Drugs Advisory Committee (“ODAC”). The briefing documents concluded, among other things, that “substantial evidence of effectiveness in adequate and well controlled clinical trials utilizing the proposed drug-device combination product and a favorable benefit risk profile is required for approval.” Moreover, the briefing documents revealed that a staggering 7% of the 122 patients treated with the Melbaz kit died as a result of the treatment. On this news, Delcath shares declined $0.558 per share or over 40%, to close at $0.832 per share on April 30, 2013.
On May 2, 2013, the Company announced that the ODAC voted 16 to 0 that benefits of treatment with Delcath’s Melblez Kit do not outweigh the risks associated with the procedure. On this news, Delcath shares declined $0.3326 per share or nearly 42%, to close at $0.46 per share on May 3, 2013.