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Shares in Ciphergen Sink 18 Percent on News of Second Class-Action Suit

NEW YORK, Dec. 7 (GenomeWeb News) - Shares in Ciphergen Biosystems were down 18.26 percent, or $.21, at $.94 in heavy mid-afternoon trading after the company confirmed that it is the target of a class-action lawsuit.

 

As GenomeWeb News reported this morning, Ciphergen was named in a second class-action lawsuit yesterday alleging that the company and certain of its officers and directors misled shareholders.

 

The latest suit, filed by the Law Offices of Charles Piven in US District Court in the northern district of California, charges that Ciphergen and certain of its top brass violated federal securities laws by "issuing a series of materially false and misleading statements to the market" between Aug. 8 and Nov. 16, according to a statement from Piven's office.

 

The suit comes one day after the law offices of Kaplan Fox & Kilsheimer  sued the company in a class-action suit with essentially the same allegations. In the new case, the attorneys have not named a plaintiff and have called on Ciphergen shareholders that meet certain legal requirement to contact its office by Feb. 6, 2006.

 

As previously reported in GenomeWeb News, Ciphergen disclosed on Nov. 16 that an internal audit committee had determined that the company's  second-quarter results need to be restated and could not be trusted.

 

The restatement would reduce the quarter's reported revenue by 7 percent, or $503,000, and increase reported net loss by 3 percent, or $301,000, Ciphergen said at the time.

 

The suit claims that Ciphergen's original second-quarter financial results, which reported a 10-percent slide in revenue and a 30-percent increase in losses, artificially inflated share prices, and that when the company disclosed its audit committee's findings, the stock plummeted 21percent, from $1.73 to $1.36 per share.

 

Investors who purchased Ciphergen stock between Aug. 8 and Nov. 16 are covered under class-action status.

 

Ciphergen did not immediately return a telephone call seeking comment, but in a statement today the firm said it has not responded to the suit.

 

Separately, Ciphergen today said it received a delisting notification from Nasdaq exchange because its market capital has failed to remain above $50 million for 10 consecutive days. The company received the Nasdaq letter on Dec. 2. Ciphergen has until Jan. 3, 2006, to regain compliance. The company said it will appeal the decision on Dec. 8.

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