CytRx Wins Dismissal of Case Following Stock Price Drop

Skadden secured the dismissal of a securities fraud class action filed against CytRx Corporation and its CEO and CFO when its stock price fell following the July 2016 release of preliminary data from the double-blind pivotal Phase 3 trial of its cancer drug aldoxorubicin. The lead plaintiff alleged that the company had fraudulently concealed that a two-month clinical hold in late 2014/early 2015 posed significant risks to the trial's timelines and the company's ability to produce statistically significant results when the data was due to be released. On June 14, Judge S. James Otero of the U.S. District Court for the Central District of California dismissed all of the plaintiff's claims, holding that the plaintiff mischaracterized certain statements made by the defendants, failed to demonstrate why other statements were false or misleading, and failed to plead a strong inference of scienter for each of the alleged misstatements.