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California Court Finalizes PacBio Settlement of IPO-related Litigation

NEW YORK (GenomeWeb News) – A California court has finalized a settlement between Pacific Biosciences and plaintiffs over litigation associated with the company's initial public offering in 2010.

The Superior Court of the State of California, County of San Mateo granted final approval of the settlement on Oct. 25 of four class actions lawsuits that had been consolidated. In PacBio's Form 10-Q filed on Tuesday with the US Securities and Exchange Commission, the company said that it also has reached a deal in principle to settle with a single individual who chose not to be included in the state court settlement.

The plaintiffs in the litigation had alleged that PacBio violated federal securities law, accusing the company of, among other things, making inaccurate and misleading statements on its registration statement while omitting other facts.

One plaintiff, Greg Young, said that the registration statement "materially overstated the status of the RS system's development at the time of the IPO" and omitted facts about its relatively low raw-read accuracy — initially on the order of 80 percent to 84 percent — and low throughput that "would be significant" to potential purchasers.

PacBio went public at $16.00 per share, but its share price fell sharply and quickly afterward. In afternoon trading on Wednesday, PacBio's stock was up about 2 percent at $4.05 on the Nasdaq.

The settlement amounts for either the state court settlement or for the deal reached with the individual were not disclosed. In July, GenomeWeb Daily News reported that the plaintiffs' lawyers in the state court action said that the amount is for "at least" approximately $7.7 million.

Through a spokesperson, PacBio declined to comment.

At least one additional lawsuit, filed in December 2011, against PacBio related to its IPO remains active. In its SEC document this week, the Menlo Park, Calif.-based firm said that "upon its becoming final, the settlement of the state court action will have preclusive effect on claims previously asserted" in that case.

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