CryoLife, Inc. Securities Litigation

CryoLife is in the business of providing implantable human tissues for use in cardiovascular, vascular and orthopedic surgeries.

CryoLife was the subject of inspections by the United States Food & Drug Administration ("FDA") and Centers for Disease Control and Prevention ("CDC"). Plaintiffs allege that CryoLife made a series of false and misleading statements during the Class Period that impacted the Company's share price, including regarding the following:

• On March 15, 2002, the CDC's Morbidity and Mortality Weekly Report indicated that half of 26 bacterial infections in patients who received implants of orthopaedic cadaver tissues, including one that resulted in death, occurred in patients who received tissues from a single tissue processor, known by the public to be CryoLife. The Report also indicated that the CDC had recommended additional practices to CryoLife to reduce the risk for infections. Following that Report the closing price of CryoLife stock on March 15, 2002 fell more than $8 per share from its closing price on March 14, 2002.
• On June 24, 2002, CryoLife issued a press release announcing that the Company had received a warning letter from the FDA related to the FDA's April 2002 inspection of CryoLife. Following that press release the closing price of CryoLife stock on June 25, 2002 fell more than $4 per share from its closing price on June 24, 2002.
• On July 23, 2002, CryoLife announced that "due to the adverse publicity surrounding our industry, a few customers have decreased their use of allograft tissue implants." Following that announcement the closing price of CryoLife stock on July 23, 2002 declined $3.20 per share from its closing price on July 22, 2002.
• On August 14, 2002, the FDA announced a recall of a large part of CryoLife's existing inventory because its safety could not be assured. Following that announcement the closing price of CryoLife stock on August 14, 2002 dropped more than $7 per share from its closing price on August 13, 2002.

In its Order dated March 1, 2004, the Court characterized the case as follows:

• The class claims, issues and defenses concern whether the defendants misrepresented and concealed, with actual knowledge or severe recklessness, facts regarding compliance of CryoLife, Inc. ("CryoLife") with regulations, directives and recommendations of governmental agencies and the consequences thereof, whether CryoLife assured the highest standard of quality control, and whether CryoLife's quality control either met or exceeded typical industry processes. The issues also relate to the consequences of deficiencies found by various governmental agencies in CryoLife's tissue procurement, processing, discard, testing and other practices, as well as the consequences of other matters that are alleged to have been concealed or misrepresented with actual knowledge or severe recklessness.

On June 17, 2005, the Court entered an order allowing certain of Plaintiffs' claims to be tried before a jury in the Northern District of Georgia. At the time of Settlement, several critical pre-trial motions, including motions to exclude testimony by Plaintiffs' experts, had not been decided by the Court. The outcome of these motions was a significant risk to Plaintiffs.

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