IsoRay (NYSE:ISR) is facing putative class-action lawsuits from shareholders accusing the company of making false or misleading statements about a clinical trial of its Cesium 131 brachytherapy seeds designed to treat cancer.
The lawsuits, from at least 3 different shareholders, claim 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 Richland, Wash.-based company’s press release came out May 20, 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 and were back to $1.51 apiece today.
“As a result of defendants’ false statements, IsoRay securities traded at artificially inflated prices during the class period. However, after the above revelations seeped into the market, the company’s shares were hammered by massive sales, sending the company’s stock price down to where it had traded at prior to the May 20, 2015 press release, causing economic harm and damages to Class members,” according to 1 of the lawsuits, which were filed in federal courts in Eastern Washington and Central California.
The lawsuits seek jury trials and the recovery of damages on behalf of shareholders, plus legal costs.