Nuvelo Inc Case 02/09/2007
APRIL 2011 - As per the Notice:
Nuvelo Securities and Time Period:
1. Publicly-traded Nuvelo common stock (former ticker symbol: NUVO; current symbol ABIO; CUSIP No. 67072M301) purchased between January 5, 2006 and December 8, 2006, inclusive.
2. Publicly-traded options to purchase Nuvelo stock (call options) purchased between January 5, 2006 and December 8, 2006, inclusive.
Settlement Fund: $8,916,666.70 in cash plus any interest earned. Your recovery will depend on the timing of your purchases and any sales of Nuvelo securities during the Settlement Class Period. For example, class members cannot recover for losses on Nuvelo common stock that they sold, or for call options that expired or were sold, before the end of the trading day on December 8, 2006. Based on the information currently available to Lead Plaintiffs and the analysis performed by their damage consultants, it is estimated that if Settlement Class Members submit claims for 100% of the shares of Nuvelo common stock eligible to receive distribution under the Plan of Allocation (described below), the estimated average distribution per share will be approximately $0.26 before deduction of Court-approved fees and expenses, and the cost of notifying members of the Settlement Class and settlement administration. Historically, actual claims rates in similar cases are approximately 50%. Therefore, if Settlement Class Members submit claims for this lower percentage of shares, the estimated average distribution per share will be approximately $0.52 before deduction of Court-approved fees and expenses, and the cost of notifying members of the Settlement Class and settlement administration. The recovery for options cannot accurately be estimated. A Settlement Class Member’s actual recovery will be a proportion of the Net Settlement Fund determined by that claimant’s allowed loss as compared to the total allowed losses of all Settlement Class Members who submit valid Proof of Claim and Release forms (“Proof of Claim”).
Reasons for Settlement: Avoids the costs and risks associated with continued litigation, including the danger of no recovery.
FEBRUARY 2007 - The complaint charges Nuvelo and certain of its officers and directors with violations of the Securities Exchange Act of 1934. Nuvelo is a biopharmaceutical company engaged in the development and commercialization of acute cardiovascular and cancer therapies.
Specifically, the complaint alleges that Nuvelo misrepresented its chances of obtaining Food and Drug Administration (”FDA”) approval of a purported new blood clot dissolver, alfimeprase. The complaint alleges that despite the fact that 80% of Nuvelo’s value was attributed to this drug, the Company’s top officers concealed that their own clinical data demonstrated alfimeprase was ineffective in dissolving blood clots.
The complaint alleges that on or around December 14, 2005, the Company announced it had received a Special Protocol Assessment (”SPA”) agreement from the FDA, claiming that the SPA would solidify the regulatory pathway to approval for alfimeprase. Defendants also stated their “power calculations” demonstrated alfimeprase’s efficacy as a drug candidate. During a January 5, 2006 conference call, defendants confirmed they believed alfimeprase would reach the U.S. consumer market by 2008 and that alfimeprase would generate $500 million in annual sales in the U.S. alone. The complaint alleges Nuvelo’s stock price surged on this news and remained inflated throughout the Class Period while Nuvelo issued and sold 7.5 million shares of its common stock in an underwritten offering on January 30, 2006, receiving over $119 million in proceeds.
Then on December 11, 2006, Nuvelo disclosed that alfimeprase had completely failed its clinical trials. During the conference call following the announcement, Nuvelo’s CEO admitted that alfimeprase failed to perform better than placebos and that previously reported positive results were due to drug injections washing clots away rather than dissolving them. On this news the Company’s stock fell 80%, erasing over $800 million in market capitalization.
According to the complaint, the true facts, which were known by each of the defendants but concealed from the investing public during the Class Period, were that: (i) Nuvelo had no reliable clinical data suggesting that alfimeprase “dissolved” blood clots when applied to them through a catheter, other than physically washing them away; (ii) Nuvelo had no “power calculations” suggesting alfimeprase would out-perform a placebo as required to demonstrate the efficacy the FDA would demand; and (iii) defendants knew the decision of Amgen, the drug’s original developer, to walk away in December 2004 was based on Amgen’s educated suspicion (based on clinical data also known to defendants) that alfimeprase would likely not pass FDA muster and thus was not a commercially viable drug candidate.