Ophthotech Reaches $29 Million Deal in Securities Fraud Lawsuit

Biopharmaceutical company Ophthotech Corp. has agreed to pay $29 million to resolve all claims in a proposed class action alleging it made misleading statements in connection with its clinical studies for a drug to treat a specific type of macular degeneration.

Frank Micholle filed the lawsuit in 2017, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act, and Sheet Metal Workers’ Pension Plan of Southern California, Arizona and Nevada was appointed lead plaintiff in 2018. In 2019, a federal court in New York denied Ophthotech’s motion to dismiss.

The lead plaintiff has now asked the court to approve a $29 million all-cash deal that was the result of arm’s length negotiation, according to a motion seeking preliminary approval of the settlement agreement dated Sept. 10. The motion also seeks attorneys’ fees not to exceed 30% of the settlement amount and litigation expenses of no more than $500,000.

“This resolution, which falls well within the range of possible approval, involved a thorough investigation, extensive motion practice, thorough document discovery and several depositions, consultation with an expert on damages and loss causation, and a formal mediation involving rigorous and extensive negotiations,” the plaintiff’s unopposed motion says.

The suit accuses Ophthotech of making materially false and misleading statements regarding the enrollment criteria for clinical trials for a medication known as Fovista. The medication allegedly appeared promising in early phase trials but ultimately wasn’t proven effective against wet age-related macular degeneration.

If preliminary approval is granted by Judge Vernon S. Broderick of the U.S. District Court for the Southern District of New York, a final approval would still be needed to settle the ongoing litigation.

The lead plaintiff is represented by Robbins Geller Rudman & Dowd LLP. Ophthotech is represented by Wilmer Cutler Pickering Hale & Dorr LLP.

The case is Micholle v. Ophthotech Corp., S.D.N.Y., No. 1:17-cv-00210, 9/10/21.