California-based biopharmaceutical company CytRx Corp. found themselves facing a proposed securities class action lawsuit in California federal court over allegations that the company concealed “bad news” affecting business after the FDA put a hold on its cancer trial drug Aldoxorubicin.
The suit alleges that CytRx stock was trading at inflated prices because the company did not disclose material information related to the FDA’s hold on their trial drug. When the company revealed the information, the stock price plummeted, causing significant losses for investors.
According to the complaint, “These material misstatements and/or omissions had the cause and effect of creating in the market an unrealistically positive assessment of the company and its financial well-being and prospects, thus causing the company’s securities to be overvalued and artificially inflated.”
The proposed class action could include thousands of individuals who purchased CytRx stock.
In a separate matter, CytRx was sued over Aldoxorubicin in a derivative action in Delaware, where board members were accused of giving themselves “spring-loaded stock options” before positive results for clinical trials were released. Those claims were settled in June of last year, with the company repricing roughly 2 million stock options that were awarded to board members and other executives.
CytRx CEO Steven Kriegsman and CFO John Kaloz were named individually in the suit.
Call a Los Angeles Stock Fraud Attorney Today
If you suffered significant losses in CytRx stock, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.