ormance. Specifically, during the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company was overstating the efficacy and safety of its Ablatherm trials by using faulty statistical methods and presenting misleading data; (ii) the Company was understating the frequency of adverse events in its trials for Ablatherm including erectile dysfunction, urinary incontinence, and urethral and bowel injury; and (iii) as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.
On July 28, 2014, a U.S. Food and Drug Administration ("FDA") staff report was released in anticipation of a July 30, 2014 meeting of the Gastroenterology and Urology Devices Panel Advisory Committee meeting (the "FDA Staff Report"). In the FDA Staff Report, the FDA questioned whether EDAP's methods for testing the device were adequate. Specifically, FDA staff questioned EDAP's safety and effectiveness data because the Company compared patients in two different studies to gather evidence, rather than a head-to-head trial. EDAP relied on a registry of patients in Europe who have used Ablatherm, and compared their data to a subgroup of patients in a U.S. Department of Veterans Affairs trial who underwent surgery called radical prostatectomy. Patients who used Ablatherm had a 1.1 percent risk of their cancer spreading after eight years, compared to a 1.4 percent risk for men who underwent surgery.
On the news, EDAP stock fell $1.23 in unusually heavy volume, or over 25%, to close at $3.65 on July 28, 2014.
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