Minnesota Prostate Research Labs, Inc. (MPRL), made an initial public offering of its shares in August 1998. It stated in its prospectus that research on laboratory animals indicated that the lab may have discovered a cure for prostate cancer in humans. MPRL pointed out as well that results in animal testing did not necessarily mean that the same positive result would occur in humans. MPRL shares initially traded at $10 per share in 1999 and rose to $18 in August 2001, when the MPRL prostate cancer drug was finally approved for sale to the public. Tuttle reviewed the initial prospectus and analysts' reports on the drug and purchased 10,000 shares at $18 per share on August 18, 2001. In September of 2002, an independent study of the four leading prostate medicines indicated that MPRL's product was as effective as sugar pills in curing prostate cancer and other prostate symptoms. The price of MPRL shares plummeted to $6 per share. Tuttle is contemplating a Rule 10b-5 securities fraud class-action lawsuit against MPRL. Advise him of his chances of success in this lawsuit and any expenses that he would be exposed to other than the cost of his attorney.
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