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03/28 21:32 /FROM PR NEWSWIRE 800-682-9599/ [STK PGNS [IN] MTC [SU] LAW TO]
BUSINESS
/FROM PR NEWSWIRE 800-682-9599/ [STK] PGNS [IN] MTC [SU] LAW TO BUSINESS EDITOR:
Wolf Popper LLP Accuses PathoGenesis of Securities Fraud
NEW YORK, March 28 /PRNewswire/ -- PathoGenesis Corporation (Nasdaq: PGNS) and two of its senior officers have been named in a securities fraud lawsuit filed on March 24, 1999 in the U.S. District Court for the District of Washington. The lawsuit was filed on behalf of all persons or entities who purchased PathoGenesis common stock during the period January 26, 1999 through March 22, 1999 inclusive (the "Class Period"). PathoGenesis is primarily in the business of marketing a drug, tradenamed TOBI, to treat cystic fibrosis.
The lawsuit alleges that defendants' January 25, 1999 announcement that PathoGenesis had achieved net revenues of $17.8 million during the fourth quarter of 1998, almost exclusively from the sale of TOBI, was materially false and misleading. Defendants informed investors on that announcement that fourth quarter sales growth was "due to excellent acceptance of TOBI by the cystic fibrosis community." Defendants reiterated their positive comments about product demand throughout the first quarter of 1999, and guided analysts to revenue estimates of $90-100 million for 1999. On the basis of the company's public statements as to the acceptance of its product by the cystic fibrosis community, fourth quarter 1998 financial results, and company guidance, analysts and investors were projecting that PathoGenesis would achieve net revenues in 1999 of $90 million.
Defendants knew or were reckless in failing to know that fourth quarter financial results were not due to excellent acceptance of TOBI by the cystic fibrosis community, but rather due to defendants' efforts to induce PathoGenesis' distributors to accept greater shipments of the drug than necessary to meet customer demand. Defendants knew or were reckless in failing to know that demand for TOBI had peaked and that sales for the product in future quarters would be dramatically below that achieved in the fourth quarter. Defendants' knowledge, and basis for obtaining that knowledge, was through direct contact with the limited number of distributors for the company's product and the 113 cystic fibrosis treatment centers.
Defendants belatedly announced on March 22, 1999 that sales for the first quarter of 1999 would be only approximately $10 million -- or 50% below estimates that were based on defendants' own public statements -- precisely because its distributors had accepted product in the fourth quarter of 1998 that was not then necessary to meet customer demand. On March 23, 1999, PathoGenesis common stock fell approximately 66%, from $34 to $12 a share, on this announcement.
The Complaint filed in the class action alleges that defendants were motivated to commit the fraud, among other things, (i) to create the perception of demand for its product among healthcare professionals, and therefore drive future growth, and (ii) to sell shares at inflated prices.
The class action was brought on behalf of defrauded investors by Wolf Popper LLP. Under the federal securities laws, investors who purchased PathoGenesis securities during the period January 26, 1999 through March 22, 1999 have until May 24, 1999 to file a motion to be a lead plaintiff in the class action.
Wolf Popper has successfully recovered billions of dollars for defrauded investors and shareholders. The reputation and expertise of the firm in shareholder and other class action litigation have been repeatedly recognized by the courts, which have appointed the firm lead counsel in complex multi-district and consolidated litigations.
Persons with information or questions concerning the class action should contact Wolf Popper LLP through its toll-fee number, 877-370-7703, or at rfinkel@wolfpopper.com. CONTACT: Robert C. Finkel, Esq.
WOLF POPPER LLP
845 Third Avenue New York, NY 10022-6689
Telephone: 212-451-9620
Toll Free: 877-370-7703
Facsimile: 212-486-2093
E-Mail: rfinkel@wolfpopper.com or wolfpopper@aol.com
Website: wolfpopper.com SOURCE Wolf Popper LLP
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/CONTACT: Robert C. Finkel, Esq. of Wolf Popper LLP, 212-451-9620, 877-370-7703, Fax, 212-486-2093, or rfinkel@wolfpopper.com, or wolfpopper@aol.com/
/Web site: wolfpopper.com -- HSSU023 -- 9489 03/28/99 21:17 EST prnewswire.com Copyright PR Newswire 1998. All rights reserved.
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