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A Nevada federal judge has granted preliminary approval to a nearly $16 million settlement between Spectrum Pharmaceuticals Inc. and a class of investors alleging that the company and its executives overstated the progress of two developmental drugs and withheld negative trial data, which ultimately caused a significant drop in the company’s stock price.

U.S. District Judge Cristina D. Silva issued the order on Monday, approving the $15.95 million deal and certifying the class of investors who purchased Spectrum common stock between March 7, 2018, and August 5, 2021. The judge named International Trading Group Inc. as the class representative and appointed attorneys from Robbins Geller Rudman & Dowd LLP as class counsel.

The settlement stipulates that Spectrum’s insurers will contribute $13.2 million toward the total settlement, with the company responsible for the remaining amount. Robbins Geller plans to petition the court for attorney fees and reimbursement of litigation expenses.

The case centers around two drugs, poziotinib and Rolontis, which were in late-stage development aimed at treating lung cancer and chemotherapy-induced neutropenia, respectively. According to court documents, investors claim that Spectrum and its leadership misrepresented the drugs’ status and concealed adverse clinical trial results. This alleged misconduct artificially inflated the company’s stock value.

Despite assurances from company executives expressing confidence in FDA approval and readiness for regulatory inspections, both drugs ultimately failed to secure FDA approval. This led to a sharp decline in Spectrum’s stock price from $21.23 to $2.55 per share.

The lead plaintiff and legal representatives continue to pursue the matter in the U.S. District Court for the District of Nevada under the case Luo v. Spectrum Pharmaceuticals Inc. et al., case number 2:21-cv-01612.