A Medical Device Daily

Blood substitute/oxygen therapeuticdeveloper Biopure (Cambridge, Massachusetts) reported that the SEC has given final approval to a previously disclosed agreement concerning disclosures the company made in 2003.

Under the settlement, the company consented, without admitting or denying the allegations, to an injunction against future violations of federal securities laws and regulations, and the settlement requires no payments from the company. Biopure also agreed to retain and adopt the recommendations of an independent consultant who will review the company's future disclosures.

The SEC also gave final approval to a separate settlement agreement with the company's general counsel, Jane Kober, in a previously-filed action alleging misleading public statements about the company's efforts to obtain FDA approval for its primary product, Hemopure. The judgment against Kober permanently enjoins her from aiding violations of the reporting provisions of securities laws and orders her to pay a $40,000 civil penalty.

The settlement with the company consisted of a consent, without admitting or denying any allegations, to an injunction against aiding or abetting violations of certain non-intent-based reporting requirements, payment of a civil penalty, and dismissal by the SEC of all other allegations in the complaint.

These agreements conclude the investigation and litigation, Biopure said. “This settlement removes a cloud over the company,” said Biopure chairman/CEO Zafiris Zafirelis. “I am pleased to put this issue behind us as we focus on the development of our oxygen therapeutics.”

The original complaint alleged that, beginning in April 2003, Biopure received negative information from the FDA regarding its efforts to obtain approval of its synthetic blood substitute Hemopure but failed to disclose the information or described it as positive.

In April 2003, the FDA placed a clinical hold barring the company from conducting clinical trials of Hemopure on human trauma victims in hospitals because of safety concerns. However, over the next eight months, the company failed to disclose what the SEC termed “information concerning a clinical hold while making public statements about its plans to obtain approval for trauma uses.”

Then in July 2003, the FDA informed Biopure that it had not approved its application for use of Hemopure in orthopedic surgery, citing deficiencies in its application and concerns about safety and efficacy.

Biopure then issued public statements and SEC filings beginning on Aug. 1, 2003, describing the FDA communication as good news, boosting its stock price by more than 20%. But the company continued to make misleading statements until December 2003 while raising more than $35 million, the SEC said.

“As the true status of Biopure's efforts to obtain FDA approval became public, the company's stock price plummeted nearly 66% from its Aug. 1 price.”

In April, the SEC filed a civil injunctive action against Carl Rausch, former vice chairman of the board and senior technology officer of Biopure, for his role in misleading statements about the company's efforts to obtain FDA approval for Hemopure (Medical Device Daily, April 13, 2006). Rausch was charged with abetting misleading statements by the company between April and December 2003.

Without admitting or denying the allegations, Rausch consented to the entry of a final judgment enjoining him from violating federal securities laws and ordering him to pay a $40,000 penalty.

The SEC previously filed a civil injunctive action on Sept. 14, 2005, against Biopure and three other executives, including Kober, for their roles in this matter.