Lawsuit Says Cellpro Misled Investors During Patent Fight

BOTHELL - Attorneys representing CellPro shareholders have filed a class-action lawsuit against the biotech firm, contending it tried to artificially boost the company's stock price while it fought a patent-infringement complaint.

The suit, filed yesterday in U.S. District Court for the Western District of Washington, claims CellPro violated the Securities and Exchange Act by issuing false and misleading financial statements and press releases about the infringement case brought by Johns Hopkins University.

The company spokesman had no response yesterday.

"We have not been served with papers, so I can not comment on this," Cellpro spokesman Mark Handfelt said.

In July, CellPro was found guilty in U.S. District Court of willfully infringing on cancer-treatment patents owned by the university.

A district court judge ordered CellPro to pay $6.9 million in damages and 60 percent of any profits related to its Celprate cancer treatment to Baxter Corp., Becton Dickinson & Co. and Johns Hopkins.

The treatment, which separates tumor cells from healthy blood-producing stem cells, is CellPro's flagship drug. CellPro President Rick Murdock warned last year the court decision effectively would put his firm out of business.

But earlier this year, CellPro won an appeal allowing it to keep selling the drug internationally. It suffered a $41 million loss in 1997, though.

Now shareholders involved in the class-action suit say CellPro officials and their attorneys tried to deceive the investing public about the allegations to keep the stock price from slipping while the case proceeded.

The stock sank to $3.50 a share July 28, when the district court decision came down. It had traded as high as $20.375 in February 1996.

The class-action suit also contends that CellPro issued inaccurate reports about its products, intellectual property and business operations.

The class-action suit, which covers shareholders who bought CellPro stock between March 10, 1995, and July 28, 1997, was filed by the law firms of Berger & Montague and Scott & Scott.