IsoRay (NYSE:ISR) said today that the US District Court for the Eastern District of Washington has approved a previously announced $3.5 million settlement related to a class action suit brought against it by shareholders last June.
The Richland, Wash.-based company faced putative class-action lawsuits from investors, accusing the company of making false or misleading statements about a clinical trial of its Cesium 131 brachytherapy seeds designed to treat cancer, according to a press release released last May.
The company initially announced the settlement last Sept., but stipulated that the settlement was “subject to a number of conditions” including final court approval, and said that it would communicate to potential class members before a decision is made.
IsoRay said the court entered an order and final judgement dismissing and releasing claims in the complaint against IsoRay, and approved the $3.5 million settlement fund, minus payment for fees, according to court documents.
The lawsuits, from at least 3 different shareholders, claimed that IsoRay made false statements about a clinical study of Cesium 131. The study was the 1st major peer-reviewed study of the brachytherapy seeds.
The company’s press release came out May 20, 2016, 1 day after the study was published in the journal Brachytherapy. IsoRay’s release claimed a 100% survival rate at 5 years in high-risk patients and a 96% success rate in local tumor control. ISR shares surged on the news, more than doubling to $3.12 apiece by the market’s close May 20.
But the next day TheStreet.com published an article criticizing IsoRay’s claims, challenging the company’s interpretation of the data and accusing IsoRay of publishing false claims to inflate its stock value. The Brachytherapy report found that other treatments showed statistically equivalent survival and local tumor control rates. IsoRay shares fell 35.3% to a $2.02-per-share close May 21