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|1.||WHAT IS THIS CASE ABOUT?|
CTI is a biopharmaceutical company whose stock trades on the NASDAQ stock exchange under the ticker symbol “CTIC.” During the Class Period, one of CTI’s drug candidates was “pacritinib,” a treatment for myelofibrosis, a type of blood-related cancer. In the Action, Plaintiffs allege that Defendants made material misstatements and misleading omissions about pacritinib, including in offering documents for CTI Series N-1 Preferred Stock and CTI Series N-2 Preferred Stock, and that persons who purchased CTI Securities during the Class Period were injured when the truth was revealed.
The Defendants are CTI BioPharma Corp. (“CTI” or the “Company”); James A. Bianco, Louis A. Bianco, Jack W. Singer, Frederick W. Telling, Reed V. Tuckson, Phillip M. Nudelman, John H. Bauer, Karen Ignagni, Richard L. Love, and Mary O. Mundinger (collectively, the “Individual Defendants” and, together with CTI, the “CTI Defendants”); and defendants Piper Jaffray & Co., Landenburg Thalmann & Co. Inc., Roth Capital Partners, LLC, and National Securities Corporation (collectively, the “Underwriter Defendants,” and, together with the CTI Defendants, the “Defendants”).
On February 10, 2016, a securities class action complaint alleging claims against CTI and the Individual Defendants was filed in the United States District Court for the Southern District of New York, styled Ahrens v. CTI BioPharma Corp., No. 1:16-cv-01044-PAE (“Ahrens”). On February 12, 2016, a securities class action complaint alleging substantially identical claims was filed in the Western District of Washington, styled McGlothin v. CTI BioPharma Corp., No. 2:16-cv-00216-RSL (“McGlothin”).
On May 19, 2016, the Southern District of New York granted the CTI Defendants’ unopposed motion to transfer Ahrens to the Western District of Washington, and on June 13, 2016, the Western District of Washington entered an order consolidating Ahrens and McGlothin and ordering that the consolidated action be recaptioned as In re CTI BioPharma Corp. Securities Litigation, No. 16-cv-216-RSL.
Following a hearing on August 25, 2016, the Court appointed DAFNA LifeScience, LP and DAFNA LifeScience Select, LP as Lead Plaintiff for the consolidated action; and approved Lead Plaintiff’s selection of Bernstein Litowitz Berger & Grossmann LLP as Lead Counsel for the class.
On November 8, 2016, Lead Plaintiff and additional plaintiff Michael Li filed and served the Consolidated Class Action Complaint (the “Complaint”). The Complaint asserts claims under Section 11 of the Securities Act of 1933 (the “Securities Act”) against CTI, the Individual Defendants and the Underwriter Defendants; claims under Section 12(a)(2) of the Securities Act against the Underwriter Defendants; and claims under Section 15 of the Securities Act against James A. Bianco. The Complaint alleges, among other things, that the Offering Materials issued by Defendants in connection with the October 2015 offering of CTI Series N-1 Preferred Stock and the December 2015 offering of CTI Series N-2 Preferred Stock contained materially false statements and misleading omissions concerning pacritinib and the results of a Phase III trial of that drug.
The Complaint also asserts claims under Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated thereunder, against CTI and James Bianco; and claims under Section 20(a) of the Exchange Act against James Bianco. The Complaint alleges that CTI and James Bianco made additional misstatements and material omissions concerning pacritinib during investor conferences and in press releases and that CTI and James Bianco made the false statements and omissions with scienter. The Complaint further alleges the truth concealed by Defendants’ misstatements and omissions was revealed on February 8 and 9, 2016 when CTI disclosed that the FDA had placed a partial hold and hold on clinical trials of pacritinib due to safety concerns, which caused the price of CTI’s securities to drop significantly.
On January 9, 2017, Defendants filed and served their motions to dismiss the Complaint. On February 6, 2017, Lead Plaintiff filed and served its opposition to Defendants’ motions and, on February 22, 2017, Defendants filed and served their reply papers.
The Parties participated in two in-person mediation sessions with Jed D. Melnick of JAMS, an experienced mediator. In advance of the first session on March 29, 2017, the Parties exchanged mediation statements, which were submitted to Mr. Melnick together with numerous exhibits. The first mediation session ended at an impasse. Discussions and the exchange of information continued telephonically and in writing. The Parties submitted supplemental mediation statements prior to the second session on June 26, 2017. That session also ended without agreement being reached.
Following the June 26, 2017 mediation, the Parties continued to conduct arm’s-length settlement negotiations, with the assistance of Mr. Melnick. On August 3, 2017, the Parties reached an agreement in principle to settle the Action that was memorialized in a term sheet (the “Term Sheet”) executed that day. The Term Sheet set forth the Parties’ agreement to settle and release all claims asserted in the Action in return for a $20,000,000 cash payment.
On September 15, 2017, the Parties entered into a Stipulation and Agreement of Settlement (the “Stipulation”), which sets forth the terms and conditions of the Settlement. The Stipulation can be viewed at www.CTIBioPharmaSecuritiesSettlement.com.
On October 24, 2017, the Court preliminarily approved the Settlement, authorized the Notice to be disseminated to potential Settlement Class Members, and scheduled the Settlement Hearing to consider whether to grant final approval to the Settlement.
|2.||HOW DO I KNOW IF I AM AFFECTED BY THE SETTLEMENT? WHO IS INCLUDED IN THE SETTLEMENT CLASS?|
If you are a member of the Settlement Class, you are subject to the Settlement, unless you timely requested to be excluded. The Settlement Class consists of:
all persons and entities who purchased or otherwise acquired CTI Securities during the period from March 9, 2015 through February 9, 2016, inclusive (the “Class Period”), and were damaged thereby. “CTI Securities” means (i) CTI common stock; (ii) CTI Series N-1 Preferred Stock; and/or (iii) CTI Series N-2 Preferred Stock, but does not include any shares of such securities that traded on an exchange outside the United States.
Excluded from the Settlement Class are (a) Defendants; (b) the Officers and directors of CTI during the Class Period (the “Excluded Officers and Directors”); (c) the Immediate Family Members of the Individual Defendants and Excluded Officers and Directors; (d) any entity in which any Defendant, any Excluded Officer or Director, or any of their respective Immediate Family Members had during the Class Period and/or has a controlling interest; (e) Defendants’ liability insurance carriers; (f) any affiliates, parents or subsidiaries of CTI; (g) all CTI plans that are covered by ERISA; and (h) the legal representatives, heirs, agents, affiliates, successors-in-interest, or assigns of any excluded person or entity, in their respective capacity as such. Also excluded from the Settlement Class are any persons or entities that excluded themselves by submitting a request for exclusion in accordance with the requirements set forth in the Notice. See “What If I Do Not Want To Be A Member Of The Settlement Class? How Do I Exclude Myself?”
PLEASE NOTE: RECEIPT OF THE NOTICE DOES NOT MEAN THAT YOU ARE A SETTLEMENT CLASS MEMBER OR THAT YOU WILL BE ENTITLED TO RECEIVE PROCEEDS FROM THE SETTLEMENT.
IF YOU ARE A SETTLEMENT CLASS MEMBER AND YOU WISH TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF PROCEEDS FROM THE SETTLEMENT, YOU WERE REQUIRED TO SUBMIT THE CLAIM FORM THAT IS BEING DISTRIBUTED WITH THE NOTICE AND THE REQUIRED SUPPORTING DOCUMENTATION AS SET FORTH THEREIN POSTMARKED NO LATER THAN FEBRUARY 20, 2018. THIS DEADLINE IS NOW PASSED.
|3.||WHAT ARE LEAD PLAINTIFF’S REASONS FOR THE SETTLEMENT?|
Lead Plaintiff and Lead Counsel believe that the claims asserted against Defendants have merit. They recognize, however, the expense and length of proceedings that would be necessary to obtain a judgment against Defendants through trial and appeals, as well as the very substantial risks they would face in establishing liability and damages in this Action and in collecting a judgment against the CTI Defendants considering their ability to pay.
In light of these risks, the amount of the Settlement and the immediacy of recovery to the Settlement Class, Lead Plaintiff and Lead Counsel believe that the proposed Settlement is fair, reasonable and adequate, and in the best interests of the Settlement Class. Lead Plaintiff and Lead Counsel believe that the Settlement provides a substantial benefit to the Settlement Class, namely $20,000,000 in cash (less the various deductions described in the Notice), as compared to the risk that the claims in the Action would produce a smaller, or no recovery after summary judgment, trial, and appeals, possibly years in the future.
Defendants have denied the claims asserted against them in the Action and deny having engaged in any wrongdoing or violation of law of any kind whatsoever. Defendants have agreed to the Settlement solely to eliminate the burden and expense of continued litigation. Accordingly, the Settlement may not be construed as an admission of any wrongdoing by Defendants.
|4.||WHAT MIGHT HAPPEN IF THERE WERE NO SETTLEMENT?|
If there were no Settlement and Lead Plaintiff failed to establish any essential legal or factual element of their claims against Defendants, neither Lead Plaintiff nor the other members of the Settlement Class would recover anything from Defendants. Also, if Defendants were successful in proving any of their defenses, either at summary judgment, at trial or on appeal, the Settlement Class could recover substantially less than the amount provided in the Settlement, or nothing at all.
|5.||HOW ARE SETTLEMENT CLASS MEMBERS AFFECTED BY THE ACTION AND THE SETTLEMENT?|
As a Settlement Class Member, you are represented by Lead Plaintiff and Lead Counsel, unless you entered an appearance through counsel of your own choice at your own expense. You were not required to retain your own counsel.
If you are a Settlement Class Member and do not wish to remain a Settlement Class Member, you had to exclude yourself from the Settlement Class by following the instructions in the section entitled, “What If I Do Not Want To Be A Member Of The Settlement Class? How Do I Exclude Myself?”
If you are a Settlement Class Member and you wished to object to the Settlement, the Plan of Allocation, or Lead Counsel’s application for attorneys’ fees and reimbursement of Litigation Expenses, and if you did not exclude yourself from the Settlement Class, you were allowed to present your objections by following the instructions in the section entitled, “When And Where Will The Court Decide Whether To Approve The Settlement?”.
If you are a Settlement Class Member and you did not exclude yourself from the Settlement Class, you are bound by any orders issued by the Court. When the Settlement was approved, the Court entered a judgment (the “Judgment”). The Judgment dismissed with prejudice the claims against Defendants and provided that, upon the Effective Date of the Settlement, Lead Plaintiff and each of the other Settlement Class Members, on behalf of themselves, and their respective heirs, executors, administrators, predecessors, successors, and assigns, in their capacities as such, shall have fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged each and every Released Plaintiffs’ Claim (as defined below) against the Defendants and the other Defendants’ Releasees (as defined below), and shall forever be barred and enjoined from prosecuting any or all of the Released Plaintiffs’ Claims against any of the Defendants’ Releasees.
“Released Plaintiffs’ Claims” means, to the extent allowed by law, all claims and causes of action of every nature and description, whether known claims or Unknown Claims, whether arising under federal, state, common, or foreign law, that Lead Plaintiff or any other member of the Settlement Class, including additional named plaintiff Michael Li: (i) asserted in the Complaint; or (ii) could have asserted or could assert in any forum that arise out of or are based upon the acts, omissions, nondisclosure, allegations, transactions, facts, matters, occurrences, or oral or written representations or statements involved, set forth, or referred to in the Complaint, and that relate to the purchase of CTI Securities during the Class Period. Released Plaintiffs’ Claims do not include: (i) any claims relating to the enforcement of the Settlement; (ii) any claims asserted in any shareholder derivative action or action under ERISA that are based on similar allegations, including In re CTI BioPharma Shareholder Derivative Action, No. 2:16-cv-00756 (W.D. Wash.) or any of the actions consolidated therein; and (iii) the claims of any person or entity that submits a request for exclusion that is accepted by the Court.
“Defendants’ Releasees” means (i) Defendants and their current and former officers, directors, agents, parents, affiliates, subsidiaries, successors, predecessors, assigns, assignees, employees, and attorneys, in their capacities as such; and (ii) Berkley Insurance Company, XL Specialty Insurance Company, Allied World National Assurance Company, Continental Casualty Company, and Old Republic Insurance Company (together, the “CTI Insurers”), and each of the CTI Insurers’ respective current and former officers, directors, agents, parents, affiliates, subsidiaries, successors, predecessors, assigns, assignees, employees, and attorneys, in their capacities as such.
“Unknown Claims” means any Released Plaintiffs’ Claims that Lead Plaintiff or any other Settlement Class Member does not know or suspect to exist in his, her, or its favor at the time of the release of such claims, and any Released Defendants’ Claims which any Defendant does not know or suspect to exist in his, her, or its favor at the time of the release of such claims, which, if known by him, her, or it, might have affected his, her, or its decision(s) with respect to this Settlement. With respect to any and all Released Claims, the Parties stipulate and agree that, upon the Effective Date of the Settlement, Lead Plaintiff and Defendants shall expressly waive, and each of the other Settlement Class Members shall be deemed to have waived, and by operation of the Judgment or the Alternate Judgment, if applicable, shall have expressly waived, any and all provisions, rights, and benefits conferred by any law of any state or territory of the United States, or principle of common law or foreign law, which is similar, comparable, or equivalent to California Civil Code §1542, which provides:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
Lead Plaintiff and Defendants acknowledge, and each of the other Settlement Class Members shall be deemed by operation of law to have acknowledged, that the foregoing waiver was separately bargained for and a key element of the Settlement.
The Judgment also provided that, upon the Effective Date of the Settlement, Defendants, on behalf of themselves, and their respective heirs, executors, administrators, predecessors, successors, and assigns in their capacities as such, will have fully, finally, and forever compromised, settled, released, resolved, relinquished, waived, and discharged each and every Released Defendants’ Claim (as defined below) against Lead Plaintiff and the other Plaintiffs’ Releasees (as defined below), and shall forever be barred and enjoined from prosecuting any or all of the Released Defendants’ Claims against any of the Plaintiffs’ Releasees.
“Released Defendants’ Claims” means all claims and causes of action of every nature and description, whether known claims or Unknown Claims, whether arising under federal, state, common, or foreign law, that arise out of or relate in any way to the institution, prosecution, or settlement of the claims asserted in the Action against the Defendants. Released Defendants’ Claims do not include any claims relating to the enforcement of the Settlement or any claims against any person or entity that submits a request for exclusion from the Settlement Class that is accepted by the Court.
“Plaintiffs’ Releasees” means Lead Plaintiff, all other plaintiffs in the Action, their respective attorneys, and all other Settlement Class Members, and their respective current and former officers, directors, agents, parents, affiliates, subsidiaries, successors, predecessors, assigns, assignees, employees, and attorneys, in their capacities as such.
|6.||HOW DO I PARTICIPATE IN THE SETTLEMENT? WHAT DO I NEED TO DO?|
To have been potentially eligible for a payment from the proceeds of the Settlement, you must have been a member of the Settlement Class and you must have timely completed and returned the Claim Form with adequate supporting documentation postmarked no later than February 20, 2018. If you requested exclusion from the Settlement Class or did not submit a timely and valid Claim Form, you are not be eligible to share in the Net Settlement Fund.
|7.||HOW MUCH WILL MY PAYMENT BE?|
Pursuant to the Settlement, the CTI Defendants agreed to pay or caused to be paid twenty million dollars ($20,000,000) in cash. The Settlement Amount has been deposited into an escrow account. The Settlement Amount plus any interest earned thereon is referred to as the “Settlement Fund.” The Settlement was approved by the Court and the Effective Date occurs, the “Net Settlement Fund” (that is, the Settlement Fund less (a) all federal, state, and/or local taxes on any income earned by the Settlement Fund and the reasonable costs incurred in connection with the determined amount of and payed taxes owed by the Settlement Fund (included reasonable expenses of tax attorneys and accountants); (b) the costs and expenses incurred in connection with the provided notice to Settlement Class Members and the administered Settlement on behalf of Settlement Class Members; and (c) any attorneys’ fees and Litigation Expenses awarded by the Court) was distributed to Settlement Class Members who submitted valid Claim Forms, in accordance with the proposed Plan of Allocation or such other plan of allocation as the Court may approve.
Neither Defendants nor any other person or entity that paid any portion of the Settlement Amount on their behalf are entitled to get back any portion of the Settlement Fund once the Court’s order or judgment approving the Settlement becomes Final. Defendants shall not have any liability, obligation, or responsibility for the administration of the Settlement, the disbursement of the Net Settlement Fund, or the plan of allocation.
Approval of the Settlement is independent from approval of a plan of allocation. Any determination with respect to a plan of allocation did not affect the Settlement.
Any Settlement Class Member who failed to submit a Claim Form postmarked on or before February 20, 2018 is fully and forever barred from receiving payments pursuant to the Settlement but will in all other respects remain a Settlement Class Member and be subject to the provisions of the Stipulation, including the terms of any Judgment entered and the releases given. This means that each Settlement Class Member releases the Released Plaintiffs’ Claims (as defined above) against the Defendants’ Releasees (as defined above) and will be enjoined and prohibited from filing, prosecuting, or pursuing any of the Released Plaintiffs’ Claims against any of the Defendants’ Releasees whether or not such Settlement Class Member submits a Claim Form.
Participants in and beneficiaries of a CTI sponsored plan covered by ERISA (“CTI ERISA Plan”) should NOT include any information relating to their transactions in CTI Securities held through any CTI ERISA Plan in any Claim Form that they may submit in this Action. They should include ONLY those shares that they purchased or acquired outside of any CTI ERISA Plan.
The Court has reserved jurisdiction to allow, disallow, or adjust on equitable grounds the Claim of any Settlement Class Member.
Each Claimant shall be deemed to have submitted to the jurisdiction of the Court with respect to his, her, or its Claim Form.
Only Settlement Class Members, i.e., persons and entities who purchased or otherwise acquired CTI Securities during the Class Period and were damaged as a result of such purchases or acquisitions will be eligible to share in the distribution of the Net Settlement Fund. Persons and entities that are excluded from the Settlement Class by definition or that excluded themselves from the Settlement Class pursuant to request are not eligible to receive a distribution from the Net Settlement Fund.
|8.||WHAT PAYMENT ARE THE ATTORNEYS FOR THE SETTLEMENT CLASS SEEKING? HOW WILL THE LAWYERS BE PAID?|
Lead Counsel applied to the Court for an award of attorneys’ fees for all Plaintiffs’ Counsel in an amount not to exceed 20% of the Settlement Fund. At the same time, Lead Counsel applied for reimbursement of Litigation Expenses in an amount not to exceed $200,000, which included an application for reimbursement of the reasonable costs and expenses incurred by Plaintiffs directly related to their representation of the Settlement Class. The Court determined the amount of any award of attorneys’ fees or reimbursement of Litigation Expenses. Such sums as were approved by the Court were paid from the Settlement Fund. Settlement Class Members are not personally liable for any such fees or expenses.
|9.||WHAT IF I DO NOT WANT TO BE A MEMBER OF THE SETTLEMENT CLASS? HOW DO I EXCLUDE MYSELF?|
Each Settlement Class Member is bound by all determinations and judgments in this lawsuit, whether favorable or unfavorable, unless such person or entity mailed or delivered a written Request for Exclusion from the Settlement Class, addressed to In re CTI BioPharma Corp. Securities Litigation, EXCLUSIONS, P.O. Box 9349, Dublin, OH 43017-4249. The exclusion request must have been mailed or delivered no later than January 11, 2018. This deadline is now passed.
If you asked to be excluded from the Settlement Class, you were not eligible to receive any payment out of the Net Settlement Fund.
|10.||WHEN AND WHERE WILL THE COURT DECIDE WHETHER TO APPROVE THE SETTLEMENT? DO I HAVE TO COME TO THE HEARING? MAY I SPEAK AT THE HEARING IF I DON’T LIKE THE SETTLEMENT?|
Settlement Class Members do not need to attend the Settlement Hearing. The Court will consider any submission made in accordance with the provisions below even if a Settlement Class Member does not attend the hearing. You can participate in the Settlement without attending the Settlement Hearing.
The Settlement Hearing was held on February 1, 2018, when the Court granted final approval of the Settlement.
|11.||CAN I SEE THE COURT FILE? WHOM SHOULD I CONTACT IF I HAVE QUESTIONS?|
The Notice contains only a summary of the terms of the proposed Settlement. For more detailed information about the matters involved in this Action, you are referred to the papers on file in the Action, including the Stipulation, which may be inspected during regular office hours at the Office of the Clerk, United States District Court for the Western District of Washington, United States Courthouse, 700 Stewart Street, Seattle, WA 98101. Additionally, copies of the Stipulation and any related orders entered by the Court will be posted on the website maintained by the Claims Administrator, www.CTIBioPharmaSecuritiesSettlement.com.
All inquiries concerning the Notice and the Claim Form should be directed to:
|In re CTI BioPharma Corp. Securities Litigation P.O. Box 9349 Dublin, OH 43017-4249 (844) 402-8599 www.CTIBioPharmaSecuritiesSettlement.com info@CTIBioPharmaSecuritiesSettlement.com||and/or||BERNSTEIN LITOWITZ BERGER & GROSSMANN LLP 12481 High Bluff Drive, Suite 300 San Diego, CA 92130 (800) 380-8496 firstname.lastname@example.org|
DO NOT CALL OR WRITE THE COURT, THE OFFICE OF THE CLERK OF THE COURT, DEFENDANTS OR THEIR COUNSEL REGARDING THE NOTICE.