Catalyst Pharmaceutical Securities Class Action
Catalyst Pharmaceutical Partners, Inc. recently announced a proposed settlement for a pending securities class action.
Securities class action filing
On Nov. 4, 2014, the biopharmaceutical firm, which works to develop and commercialize treatments for individuals suffering from rare and debilitating illnesses, announced it has entered into a memorandum of understanding to settle the pending shareholder class action.
The company offered this agreement after a securities class action was filed in the U.S. District Court for the Southern District of Florida in an effort to represent purchasers of Catalyst Pharmaceutical Partners’ common shares between Aug. 27, 2013 and Oct. 18, 2013.
Lawsuit surrounds drug Firdapse
The amended complaint named the company as well as one of its executive officers as defendants, and alleged misrepresentations surrounding the development of Firdapse, a drug the company is developing to treat the rare disease Lambert-Eaton myasthenic syndrome.
In October, the company, which is seeking U.S. Food and Drug Administration approval for the treatment, announced the drug obtained positive results in a Phase 3 trial, according to South Florida Business Journal.
The government agency has offered an expedited approval process for Firdapse, and the company is offering the treatment through an expanded program, whereby some of the more than 3,000 Americans who have LEMS will be able to access the drug outside the clinical trial, the media outlet reported.
Securities class action claims
The lawsuit has claimed that even though Princeton, New Jersey-based Jacobus Pharmaceutical Partners sells a drug that contains the same active ingredient as Firdapse, Catalyst has asserted that no effective treatment existed for this condition, according to South Florida Business Journal.
Proposed class action settlement terms
Amid these allegations, the proposed securities class action settlement would entail the company paying a $3.5 million settlement in exchange for a dismissal and release of all claims.
The stipulation of settlement, which will be filed with the court and must be approved by the legal entity, will acknowledge that the defendants are denying all allegations and admit no liability by entering the agreement and continue to claim the state lacks merit.
The proposed settlement is not expected to have a material effect on the company’s operations, position or results, because the biopharmaceutical firm’s insurance carrier is expected to pay the settlement in full.
Regardless of the outcome, the company has indicated plans to hire between 25 and 30 people to bring Firdapse to market after the treatment generated positive results in its Phase 3 trial in October.
Catalyst bought Firdapse’s North American rights from San Rafael, California-based BioMarin, which released the drug in Europe in 2010, South Florida Business Journal reported.
Catalyst CEO makes statement
“We believe that we would have prevailed if the litigation had proceeded,” Patrick McEnany, CEO and chairman of Catalyst Pharmaceuticals, said in a statement. “However, in light of the potential costs of continued litigation, as well as the potential burden and disruption to the Company and its management, Catalyst, together with its insurance carrier, believed that it made sense to settle the case for the amount set forth in the settlement agreement.”
If the court approves the proposed securities class action settlement, class members should expect to receive a notice containing information about the allocation and distribution of settlement funds, along with details on how they can make a claim on the settlement fund.