Biotech Co. Cellceutix Hyped Sham Drugs, Class Action Says

By Carmen Germaine (September 11, 2015, 7:36 PM EDT) -- A proposed securities class action filed Friday in New York federal court accuses biotechnology company Cellceutix Corp. of fraudulently hyping two of its drugs to inflate stock prices, leading to a precipitous drop when an online report accused the company of being a shell corporation.

Shareholder Nicole O'Connell claims that Beverley, Massachusetts-based Cellceutix and co-founders Krishna Menon and Leo Ehrlich concealed that two of its drugs were ineffective and falsely claimed Menon had earned a Ph.D. in pharmacology from Harvard University in order to pump up stock value.

The truth emerged, O'Connell said in the complaint, when an investor posted a...

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