Hemispherex settles class action lawsuit with no admission of guilt or culpability
Hemispherx Biopharma Inc. (AMEX:HEB) an advanced specialty pharmaceutical company engaged in the clinical development of new drug entities for treatment of seriously debilitating disorders, yesterday announced that it has entered into a written agreement in with Court-appointed head plaintiffs in an effort to settle substantially all of the securities class actions lawsuits currently pending in the U.S. District Court for the Eastern District of Pennsylvania.
The proposed settlement brought about as result of a Court mandated mediation process, requires final court approval but it is likely that the judge will find it agreeable and no force further negotiations. The lawsuits have been temporarily halted from moving forward by the Court, pending the results of the mandatory procedures needed to review, finalize and approve the settlement on behalf of both parties. As it stands now the settlement will be paid from HEB’s insurance coverage and therefore will not result in the use of company funds to satisfy the company’s obligations as termed in the settlement agreement.
The company also wanted to make it clear to investors that the settlement “expressly is not an admission of any culpability by Hemispherx or its officers.”
Thomas K. Equels, General Counsel for Hemispherx stated: “We at Hemispherx look forward to Court approval of this settlement. Our team will be glad to have these class actions behind us so that we can focus our time and resources on the important work of new drug development related to Ampligen(R) for CFS, important flu related clinical trials, and the manufacturing and marketing of our FDA approved anti-viral Alferon(R).”
The lawsuit alleged that the company and certain officers materially misrepresented the status of HEB’s new drug application for Ampligen, an experimental drug used to fight chronic fatigue syndrome. Last November, the FDA rejected the company’s new drug application for Ampligen, recommending the company conduct additional studies to demonstrate its effectiveness.
The initial news caused some panic to investors as the stock opened down yesterday but as the news was digested investors slowly realized it would not affect the company’s bottom line and eventually shares closed close to the priors days close.
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