LITIGATION |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Mar. 31, 2011 |
Sep. 30, 2011 |
Dec. 31, 2010 |
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LITIGATION |
A
purported class action complaint was filed on March 5, 2010 in the
United States District Court for the District of Massachusetts by
an alleged shareholder of the Company, on behalf of himself and all
others who purchased or otherwise acquired the Company’s
common stock in the period between December 14, 2009 and February
24, 2010, against the Company and its President and Chief Executive
Officer, Harry S. Palmin. On October 1, 2010, the court
appointed lead plaintiffs (Boris Urman and Ramona McDonald) and
appointed lead plaintiffs’ counsel. On October 22,
2010, an amended complaint was filed. The amended
complaint claims that the Company violated Section 10(b) of the
Securities Exchange Act of 1934, as amended, and Rule 10b-5
promulgated thereunder in connection with alleged disclosures
related to the Phase 3 clinical trial of NOV-002 for non-small cell
lung cancer. On December 6, 2010, the Company filed a
motion to dismiss the complaint with prejudice. On
January 20, 2011, the plaintiffs filed their opposition to our
motion and on March 3, 2011, the Company filed its response to
their opposition. The motion to dismiss remains pending. The
Company believes the allegations are without merit and intends to
defend vigorously against the allegations.
On
June 28, 2010, the Company received a letter from counsel to ZAO
BAM and ZAO BAM Research Laboratories (Russian companies,
collectively referred to as “BAM”) alleging that the
Company modified the chemical composition of NOV-002 without prior
notice to or approval from BAM, constituting a material breach of a
technology and assignment agreement the Company had entered into
with BAM on June 20, 2000 (the “June 2000
Agreement”). The letter references the
Company’s amendment, submitted to the FDA on August 30, 2005,
to its investigational new drug application dated August 1999 as
the basis for BAM’s claims and demands the transfer of all
intellectual property rights concerning NOV-002 to
BAM. Mark Balazovsky, a director of Novelos from June
1996 until November 2006 and a shareholder of Novelos through at
least June 25, 2010, is, to the Company’s knowledge, still
the general director and principal shareholder of ZAO
BAM. The Company believes the allegations are without
merit and intends to defend vigorously against any proceedings that
BAM may initiate as to these allegations. On September 24, 2010,
the Company filed a complaint in Suffolk Superior Court seeking a
declaratory judgment by the court that the June 2000 Agreement has
been replaced by a subsequent agreement between the parties dated
April 1, 2005 (the “April 2005 Agreement”), that
Novelos’ obligations to BAM are governed solely by the April
2005 Agreement and that the obligations of the June 2000 agreement
have been performed and fully satisfied. On November 29,
2010, BAM answered the complaint, denying the material allegations,
and stating its affirmative defenses and certain counterclaims. On
January 14, 2011, the Company responded to the counterclaims,
denying BAM’s material allegations and stating its
affirmative defenses. The Company believes the
counterclaims are without merit and intends to vigorously defend
against them.
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Following
the Acquisition, the Company is party to certain legal matters that
existed with Novelos prior to the Acquisition. The following
summarizes the status of those matters.
Class Action
A
putative federal securities class action complaint was filed on
March 5, 2010 in the United States District Court for the District
of Massachusetts by an alleged shareholder of Novelos, on behalf of
himself and all others who purchased or otherwise acquired Novelos
common stock in the period between December 14, 2009 and February
24, 2010, against Novelos and its President and Chief Executive
Officer, Harry S. Palmin. On October 1, 2010, the court
appointed lead plaintiffs (Boris Urman and Ramona McDonald) and
appointed lead plaintiffs’ counsel. On October 22,
2010, an amended complaint was filed. The amended complaint
claims, among other things, that Novelos violated Section 10(b) of
the Securities Exchange Act of 1934, as amended, and Rule 10b-5
promulgated thereunder in connection with alleged misleading
disclosures related to the progress of the Phase 3 clinical trial
of NOV-002 for non-small cell lung cancer. On December 6,
2010, the defendants filed a motion to dismiss the complaint with
prejudice. On January 20, 2011, the plaintiffs filed their
opposition to our motion and on March 3, 2011, the defendants filed
their response to the opposition. On June 23, 2011, the motion to
dismiss was granted and the case was dismissed without
prejudice. Because the dismissal was without prejudice, the
plaintiffs could reinstitute the proceeding by
filing an amended complaint. On August 5, 2011, the
plaintiffs filed a second amended complaint realleging that the
defendants violated Section 10(b) of the Exchange Act and Rule
10b-5 in connection with alleged misleading disclosures related to
the Phase 3 clinical trial for NOV-002 in non-small cell lung
cancer.
On September 9, 2011, the defendants filed a motion to dismiss the
second amended complaint. The plaintiff’s
opposition to the motion was filed on October 14, 2011
and the defendants filed a reply brief on November 4,
2011. The
Company and Mr. Palmin believe the allegations are without merit
and intend to vigorously defend against them.
BAM Dispute
On
June 28, 2010, Novelos received a letter from counsel to ZAO BAM
and ZAO BAM Research Laboratories (Russian companies, collectively
referred to as “BAM”) alleging that it modified the
chemical composition of NOV-002 without prior notice to or approval
from BAM, constituting a material breach of a technology and
assignment agreement Novelos had entered into with BAM on June 20,
2000 (the “June 2000 Agreement”). The letter
references the amendment, submitted to the FDA on August 30, 2005,
to Novelos’ investigational new drug application dated August
1999 as the basis for BAM’s claims and demands the transfer
of all intellectual property rights concerning NOV-002 to
BAM. Mark Balazovsky, a director of Novelos from June 1996
until November 2006 and a shareholder of Novelos through at least
June 25, 2010, is, to our knowledge, still the general director and
principal shareholder of ZAO BAM. On September 24, 2010,
Novelos filed a complaint in Suffolk Superior Court seeking a
declaratory judgment by the court that the June 2000 Agreement has
been replaced by a subsequent agreement between the parties dated
April 1, 2005 (the “April 2005 Agreement”), that
Novelos’ obligations to BAM are governed solely by the April
2005 Agreement and that the obligations of the June 2000 agreement
have been performed and fully satisfied. On November 29,
2010, BAM answered the complaint, denying the material allegations,
and stating its affirmative defenses and certain counterclaims. On
January 14, 2011, Novelos responded to the counterclaims, denying
BAM’s material allegations and stating its affirmative
defenses. On June 9, 2011, BAM filed an amended counterclaim
alleging additional claims related to Novelos’ acquisition of
Cellectar. In that amended counterclaim, BAM alleges that the
acquisition evidences Novelos’ abandonment of the technology
assigned to it by BAM constituting a breach of the June 2000
Agreement or, if that agreement is determined to no longer be in
effect, a breach of the April 2005 Agreement and/or a breach of the
implied duty of good faith and fair dealing with respect to the
April 2005 Agreement. On June 15, 2011 the Company filed its
response to their amended counterclaim. On August 5, 2011,
the Company filed a motion for judgment on the pleadings as to its
declaratory judgment count and all counts of BAM’s amended
counterclaim. The motion was opposed by BAM and a
hearing on the motion was held on September 27, 2011.
On
October 17, 2011, the court ruled on the Company’s
behalf for each of
its declaratory judgment claims and dismissed all counts of
BAM’s counterclaim. Judgment in favor of the Company was
entered on October 20, 2011. On November 14, 2011, BAM filed a
notice of appeal.
We
do not anticipate that these litigation contingencies will have a
material impact on the Company’s future financial position,
results of operations or cash flows.
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11. LITIGATION
A
purported class action complaint was filed on March 5, 2010 in the
United States District Court for the District of Massachusetts by
an alleged shareholder of the Company, on behalf of himself and all
others who purchased or otherwise acquired the Company’s
common stock in the period between December 14, 2009 and February
24, 2010, against the Company and its President and Chief Executive
Officer, Harry S. Palmin. On October 1, 2010, the court
appointed lead plaintiffs (Boris Urman and Ramona McDonald) and
appointed lead plaintiffs’ counsel. On October 22,
an amended complaint was filed. The amended complaint
claims that the Company violated Section 10(b) of the Securities
Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder in connection with alleged disclosures related to the
Phase 3 clinical trial of NOV-002 for non-small cell lung
cancer. On December 6, 2010, the Company filed a motion
to dismiss the complaint with prejudice. On January 20,
2011, the plaintiffs filed their opposition to our motion and on
March 3, 2011, we filed our response to their opposition. Our
motion to dismiss remains pending. The Company believes the
allegations are without merit and intends to defend vigorously
against the allegations.
On
June 28, 2010, the Company received a letter from counsel to ZAO
BAM and ZAO BAM Research Laboratories (collectively,
“BAM”) alleging that the Company modified the chemical
composition of NOV-002 without prior notice to or approval from
BAM, constituting a material breach of a technology and assignment
agreement the Company had entered into with BAM on June 20, 2000
(the “June 2000 Agreement”). The letter
references the Company’s amendment, submitted to the FDA on
August 30, 2005, to its investigational new drug application dated
August 1999 as the basis for BAM’s claims and demands the
transfer of all intellectual property rights concerning NOV-002 to
BAM. Mark Balazovsky, a director of Novelos from June
1996 until November 2006 and a shareholder of Novelos through at
least June 25, 2010, is, to the Company’s knowledge, still
the general director and principal shareholder of ZAO
BAM. The Company believes the allegations are without
merit and intends to defend vigorously against any proceedings that
BAM may initiate as to these allegations. On September 24, 2010,
the Company filed a complaint in Suffolk Superior Court seeking a
declaratory judgment by the court that the June 2000 Agreement has
been replaced by a subsequent agreement between the parties dated
April 1, 2005 (the “April 2005 Agreement”), that
Novelos’ obligations to BAM are governed solely by the April
2005 Agreement and that the obligations of the June 2000 agreement
have been performed and fully satisfied. On November 29,
2010, BAM answered the complaint, denying the material allegations,
and stating its affirmative defenses and certain counterclaims. On
January 14, 2011, the Company responded to the counterclaims,
denying BAM’s material allegations and stating our
affirmative defenses. The Company believes the
counterclaims are without merit and intends to vigorously defend
against them.
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