BOSTON, Jan. 27, 2005 (PRIMEZONE) -- An investor sued Pharmos Corp. ("Pharmos" or the "Company") (Nasdaq:PARS) today, claiming that the bio-pharmaceutical firm misled investors about the efficacy of one of its drugs.
Berman DeValerio Pease Tabacco Burt & Pucillo (www.bermanesq.com) filed the class action in the U.S. District Court for the District of New Jersey. The lawsuit seeks damages for violations of federal securities laws on behalf of all investors who bought Pharmos common stock during the period of August 23, 2004 through and including December 17, 2004 (the "Class Period").
To receive a copy of the complaint, you may contact the court, call the firm at (800) 516-9926 or go to http://www.bermanesq.com/pdf/Pharmos-Cplt.pdf.
The lawsuit claims that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder, including U.S. Securities and Exchange Commission ("SEC") Rule 10b-5.
The complaint names as Defendants: Pharmos; Haim Aviv, the Company's Chairman, Chief Executive Officer and Chief Scientist; and Gad Riesenfeld, the President and Chief Operating Officer of Pharmos.
According to the complaint, Defendants repeatedly touted the efficacy of the drug Dexanabinol throughout the Class Period, causing the Company's stock price to substantially increase. Dexanabinol is the Company's main product and is used to treat traumatic brain injury.
In reality, however, Dexanabinol was ineffective in the treatment of traumatic brain injury, and Defendants were aware of or recklessly disregarded evidence of the drug's ineffectiveness, the lawsuit says.
Defendants used the artificially inflated stock price to their advantage and sold millions of dollars of Pharmos stock to investors in an August 2004 private placement.
In addition, between November 15, 2004 and December 1, 2004, more than six months after enrollment in Phase III trials of Dexanabinol for Severe Traumatic Brain Injury was completed, Aviv and Riesenfeld together sold over 400,000 shares of Pharmos stock for more than $1.6 million.
On December 20, 2004, Defendants shocked the investing public when they announced the results from the Phase III trials. The press release issued by Pharmos revealed that Dexanabinol did not show a neuroprotective effect in a comprehensive study of 861 patients that had begun more than a year prior to the announcement.
On this news, shares of Pharmos stock fell from $3.50 to $1.18, a 66% decline. In addition, analysts at Harris Nesbitt, Ferris Baker Watts, Rodman & Renshaw and RBC Capital all responded by reducing their investment ratings for Pharmos.
If you purchased Pharmos common stock from August 23, 2004 through and including December 17, 2004 you may wish to contact the following attorneys at Berman DeValerio Pease Tabacco Burt & Pucillo to discuss your rights and interests.
Colleen M. Conners, Esq.
Leslie R. Stern, Esq.
One Liberty Square
Boston, MA 02109
(800) 516-9926
law@bermanesq.com
If you wish to apply to be lead plaintiff in this action, a motion on your behalf must be filed with the court no later than March 25, 2005. You may contact the attorneys at Berman DeValerio to discuss your rights regarding the appointment of lead plaintiff and your interest in the class action, or you may submit information online at http://www.bermanesq.com/Securities/Signup1.asp?caseid=534. Please note, you may also retain counsel of your choice and need not take any action at this time to be a class member.
Berman DeValerio Pease Tabacco Burt & Pucillo prosecutes class actions nationwide on behalf of institutions and individuals, chiefly victims of securities fraud, antitrust law violations, and consumer fraud. The firm consists of 32 attorneys in Boston, San Francisco and West Palm Beach, Florida.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.