MBI to settle Albunex shareholder suit
Contrast agent developer Molecular Biosystems has reached a preliminary agreement to settlea class action lawsuit brought against the San Diego company.The litigation was filed by shareholders upset over delays inregulatory approval of the company's
Contrast agent developer Molecular Biosystems has reached a preliminary agreement to settlea class action lawsuit brought against the San Diego company.The litigation was filed by shareholders upset over delays inregulatory approval of the company's Albunex cardiac ultrasoundcontrast agent.
MBI submitted a premarket approval (PMA) application for Albunexto the Food and Drug Administration in September 1990 (SCAN 9/26/90).The company suffered a setback in November 1992 when the federalagency asked for additional information to support the PMA (SCAN12/2/92).
The shareholder lawsuit, also filed in November 1992, allegesthat MBI misled investors about the timing and prospects for Albunex'sapproval. MBI denies all claims of wrongdoing and maintains thisdenial as part of the settlement agreement, according to the company.
According to the terms of the settlement, MBI will pay $3 millionin cash and $1.5 million in MBI common stock into a settlementfund. The fund will be distributed to members of the class ofpurchasers who bought MBI stock from May 27, 1992 through Feb.1, 1994 and who file valid claims.
Fortunately for MBI, FDA approval for Albunex appears to beforthcoming. The agency in April granted MBI an "approvableletter" for Albunex, outlining final requests that, oncemet, will mean that the agent meets all requirements for finalFDA approval (SCAN 5/4/94).
In other MBI news, the company last month reported a net lossof $18.8 million for its 1994 fiscal year (end-March), comparedto a net loss of $14.1 million the prior year. Contributing tothe loss was a one-time charge against earnings of $3.7 millionto settle the class action lawsuit. MBI also reported that developmentcosts have increased for its second-generation cardiac ultrasoundagent and its oral ultrasound agent, Oralex.
MBI's revenues jumped 138%, however, from $3.7 million in 1993to $8.8 million in 1994. The increase was due to the approvalof Albunex in Japan last October, according to the company. MBIreceived a milestone payment of $5 million from its Japanese licensee,Shionogi & Co., after Albunex received Japanese regulatoryapproval (SCAN 10/6/93).