In July 2013 a class action was filed against biotechnology company Biovest International, Inc. (Hill v. Accentia Biopharmaceuticals, Inc. et al.). The lawsuit emanated from alleged false and misleading statements made by defendant, relative to the success of a developmental vaccine to treat non-Hodgkin's lymphoma and the likelihood of FDA approval.
The Complaint alleged that the FDA informed Biovest that the results of their Phase III clinical trials for their Biovax vaccine, did not support the application for FDA approval. Further that the defendant, in violation of federal security laws, allegedly made numerous false and misleading statements in press releases and in securities filings leading investors to believe that the vaccine was on track for FDA approval. The class pertained to those people who bought common stock in the company during the period beginning July 26, 2008 and ending August 14, 2012.
Biovest has denied any wrongdoing or impropriety and has agreed to settle the case for 1.25 million dollars. Although the settlement money may cover any alleged financial loss to shareholders, it does not redress the non-tangible damage of false hope created in countless cancer patients that would have benefited from such a successful cancer vaccine. If the case continued and all the allegations against defendant were proven true, punitive damages may have been awarded. Accordingly, perhaps a settlement was not the most equitable result in this case. In the end this reminds us of law school's lesson number one, which is that the law does not necessarily equal that which is fair.
Long Island Lawyer
Paul A. Lauto, Esq.