A feature article in today’s San Francisco Chronicle discusses the rise in securities class actions brought against biotechnology companies. The article notes that although biotechnology companies make up only 2% of the publicly-traded companies in the U.S., they were served with 17% of all securities class actions filed in 2003 (as compared to 9% in 2002). The 10b-5 Daily has recently posted about biotech disclosure issues.
Quote of note: “Without discussing the merits of any specific case, [Biotechnology Industry Organization President Carl] Feldbaum said the wave of lawsuits is a ‘growing, malignant phenomenon’ that could hamper the discovery of life-saving remedies. ‘The victims of choice seem to be small companies that may be on the verge of success, and that is a potentially crippling development,’ he said.
Quote of note II: “Kevin Roddy, president-elect of the National Association of Shareholder and Consumer Attorneys, said biotech advocates shouldn’t be seeking special protection from investor suits on grounds that they are working on badly needed medicines. ‘They want to be above the law, because they think there’s something special about what they do,’ Roddy said. ‘If they want to go out and raise money from the public, they have to tell the truth.'”