Delcath (NSDQ:DCTH) said yesterday that it agreed to pay $8.5 million to settle a clutch of lawsuits filed by shareholders over losses related to its development of the drug-device combination Melblez kit.
The lawsuits, filed by shareholders in 2013, sought compensation for losses between April 21, 2010, and May 2, 2013, stemming from 3 separate incidents the plaintiffs claim caused share prices to drop significantly.
The plaintiffs claimed Delcath made false or misleading statements about its development of Melblez, withholding information about severe toxicity and deaths associated with adverse reactions, as well as facility violations of current good manufacturing practices. DCTH shares dropped 96%, from $11.30 per share in 2011 to an eventual price of 46¢ apiece in 2013. The stock was trading at 87¢ per share in mid-afternoon activity today, down -4.4% on the day.
Investors back then were reacting to Delcath’s failed attempt to win an New Drug Application for Melblez, after the FDA found issues with their manufacturing process, a high rate of death during testing and the risks of the drug outweighing the benefits, according to the suits.
Delcath said it agreed to a proposed settlement fund of $8.5 million in return for for the release of all claims in the litigation. The final approval hearing for the case is scheduled for October 19.