By Advocate.com Editors
Originally published on Advocate.com March 19 2003 1:00 AM ET
Law firm Milberg Weiss filed a multimillion-dollar securities fraud class-action lawsuit Monday against biotech firm VaxGen, the maker of the AIDSVAX HIV vaccine, claiming that the company allowed insiders to sell stock before announcing disappointing clinical trial results of the vaccine. The suit was filed in the U.S. district court for the Northern District of California on behalf of investors who purchased VaxGen stock between August 6, 2002, and February 26, 2003. The lawsuit claims the company cheated thousands of small investors by allowing favored investors to sell company stock before the company released information that showed the vaccine reduced overall new HIV infections by only 3.8%. Specifically, the lawsuit alleges that VaxGen officers knew the vaccine would not be effective and that they allowed institutional stock sales prior to the announcement. Following the release of the clinical trial data, VaxGen stock fell from $23.25 per share to just $3 per share.
VaxGen officials call the lawsuit "without merit." "VaxGen has complied with all securities laws and, if need be, will defend itself vigorously," said a company spokesperson.