UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · treatment of localized prostate cancer. According to the Company, Ablatherm-HIFU is generally recommended for patients

CLASS ACTION COMPLAINT

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK PLAINTIFF, Individually and on Behalf of All Others Similarly Situated, Plaintiff, v. EDAP TMS S.A., MARC OCZACHOWSKI, and ERIC SOYER Defendants.

Case No.

CLASS ACTION COMPLAINT FOR VIOLATIONS OF THE FEDERAL SECURITIES LAWS

JURY TRIAL DEMANDED

CLASS ACTION COMPLAINT 1

Plaintiff, by and through his attorneys, alleges the following upon information and belief,

except as to those allegations concerning Plaintiff, which are alleged upon personal knowledge.

Plaintiff’s information and belief is based upon, among other things, his counsel’s investigation,

which includes without limitation: (a) review and analysis of regulatory filings made by EDAP

TMS S.A. (“EDAP” or the “Company”), with the United States Securities and Exchange

Commission (“SEC”); (b) review and analysis of press releases and media reports issued by and

disseminated by EDAP; and (c) review of other publicly available information concerning

EDAP.

NATURE OF THE ACTION AND OVERVIEW

1. This is a class action on behalf of purchasers of EDAP securities between

February 1, 2013 and July 30, 2014, inclusive (the “Class Period”), seeking to pursue remedies

under the Securities Exchange Act of 1934 (the “Exchange Act”).

2. EDAP markets Ablatherm for high-intensity focused ultrasound (“HIFU”)

treatment of localized prostate cancer. According to the Company, Ablatherm-HIFU is generally

recommended for patients with localized prostate cancer (stages T1-T2) who are not candidates

for surgery or who prefer an alternative option, or for patients who failed radiotherapy treatment.

Ablatherm-HIFU is approved and commercialized in Europe as a treatment for prostate cancer

and is currently under regulatory review in the United States (“U.S.”). The Company also

develops its HIFU technology for the potential treatment of certain other types of tumors. EDAP

also produces and commercializes medical equipment (the Sonolith range) for treatment of

urinary tract stones using extra-corporeal shockwave lithotripsy (“ESWL”).

3. On July 28, 2014, the U.S. Food and Drug Administration’s (“FDA”) issued its

Executive Summary of EDAP’s pre-market approval application (“PMA”) for Ablatherm-HIFU


device. In the report, FDA staff questioned the effectiveness of the device, stating that the

clinical benefit of the device was “unclear”. Additionally, the FDA summary questioned

whether EDAP’s methods for testing the device were adequate 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 HIFU, and compared their data to

the low risk subgroup of patients who underwent radical prostatectomy (“RP”) surgery in a U.S.

Department of Veterans Affairs-initiated study, Prostate Cancer Intervention Versus Observation

Trial (“PIVOT”). Patients in the Ablatherm HIFU study had a 1.1 percent cumulative risk of

their cancer spreading after eight years, compared to a 1.4 percent risk for the PIVOT low risk

RP subgroup.

4. On this news, shares of EDAP declined $1.23 per share, over 25%, to close on

July 28, 2014, at $3.65 per share, on unusually heavy volume.

5. On July 30, 2014, after the market closed, the Company revealed that the FDA’S

Gastroenterology and Urology Devices Panel (“GUDP”) convened to review the Ablatherm-

HIFU device for the treatment of low-risk, localized prostate cancer had found that the Company

had failed to demonstrate the efficacy of its product or that it had demonstrated that the benefits

of the device outweighed its risk.

6. On this news, shares of EDAP declined $1.50 per share, nearly 44%, to close on


7. Throughout the Class Period, Defendants made false and/or misleading

statements, as well as failed to disclose material adverse facts about the Company’s business,

operations, and prospects. Specifically, Defendants made false and/or misleading statements

and/or failed to disclose: (1) that the Company overstated the efficacy of the Ablatherm-HIFU


device by relying on cross-study comparisons rather than a head-to-head trial; (2) that the

metastasis-free survival rate was an inappropriate endpoint for this patient population; and (3)

that, as a result of the foregoing, the Company’s statements about its business, operations, and

prospects, including statements about the Ablatherm-HIFU device’s prospects for FDA approval,

were materially false and misleading and/or lacked a reasonable basis.

8. As a result of Defendants’ wrongful acts and omissions, and the precipitous

decline in the market value of the Company’s securities, Plaintiff and other Class members have

suffered significant losses and damages.

JURISDICTION AND VENUE

9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange

Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17

C.F.R. § 240.10b-5).

10. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).

11. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and

Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the

alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts

charged herein, including the preparation and dissemination of materially false and/or misleading

information, occurred in substantial part in this Judicial District.

12. In connection with the acts, transactions, and conduct alleged herein, Defendants

directly and indirectly used the means and instrumentalities of interstate commerce, including the

United States mail, interstate telephone communications, and the facilities of a national securities

exchange.


PARTIES

13. Plaintiff, as set forth in the accompanying certification, incorporated by reference

herein, purchased EDAP common stock during the Class Period, and suffered damages as a

result of the federal securities law violations and false and/or misleading statements and/or

material omissions alleged herein.

14. Defendant EDAP is a French corporation with its principal executive offices

located at Parc d’Activites la Poudrette-Lamartine, 4/6, rue du Dauphiné, 69120 Vaulx-en-Velin,

France.

15. Defendant Marc Oczachowski (“Oczachowski”) was, at all relevant times, Chief

Executive Officer (“CEO”) and a director of EDAP.

16. Defendant Eric Soyer (“Soyer”) was, at all relevant times, Chief Financial Officer

(“CFO”) of EDAP.

17. Defendants Oczachowski and Soyer are collectively referred to hereinafter as the

“Individual Defendants.” The Individual Defendants, because of their positions with the

Company, possessed the power and authority to control the contents of EDAP’s reports to the

SEC, press releases and presentations to securities analysts, money and portfolio managers and

institutional investors, i.e., the market. Each defendant was provided with copies of the

Company’s reports and press releases alleged herein to be misleading prior to, or shortly after,

their issuance and had the ability and opportunity to prevent their issuance or cause them to be

corrected. Because of their positions and access to material non-public information available to

them, each of these defendants knew that the adverse facts specified herein had not been

disclosed to, and were being concealed from, the public, and that the positive representations

which were being made were then materially false and/or misleading. The Individual


Defendants are liable for the false statements pleaded herein, as those statements were each

“group-published” information, the result of the collective actions of the Individual Defendants.

SUBSTANTIVE ALLEGATIONS

Background 18. EDAP markets Ablatherm for HIFU treatment of localized prostate cancer.

According to the Company, Ablatherm-HIFU is generally recommended for patients with

localized prostate cancer (stages T1-T2) who are not candidates for surgery or who prefer an

alternative option, or for patients who failed radiotherapy treatment. Ablatherm-HIFU is

approved and commercialized in Europe as a treatment for prostate cancer and is currently under

regulatory review in the U.S. The Company also develops its HIFU technology for the potential

treatment of certain other types of tumors. EDAP also produces and commercializes medical

equipment (the Sonolith range) for treatment of urinary tract stones using ESWL.

Materially False and Misleading Statements Issued During the Class Period

19. The Class Period begins on February 1, 2013. On this day, the Company issued a

press release entitled, “EDAP Submits U.S. FDA Pre-Market Approval Application for

Ablatherm(R)-HIFU for Treatment of Low Risk, Localized Prostate Cancer.” Therein, the

Company, in relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today the submission of its Pre-Market Approval (PMA) application to the U.S. Food and Drug Administration (FDA) on January 31, 2013 for the Company’s Ablatherm-HIFU (High Intensity Focused Ultrasound) for treatment of low risk, localized prostate cancer. EDAP’s PMA submission includes data from the ENLIGHT study, a multi-center U.S. Phase II/III clinical trial that completed the two year follow-up needed to evaluate its primary endpoint in August 2012, as well as data from the Company’s extensive worldwide database of treatment information and follow-up data from patients who have undergone HIFU therapy for prostate cancer.


Prostate cancer is currently the most common form of cancer among men in the United States with approximately 238,000 new cases for 2013. In addition, men are being diagnosed at an earlier age and at earlier stages of the disease. Marc Oczachowski, Chief Executive Officer of EDAP TMS, remarked, “We have clearly seen a paradigm shift in prostate cancer, as patients are diagnosed earlier than ever before. Low risk patients need a middle ground between radical treatment, which is often overly-aggressive, and the anxiety of ‘watchful waiting.’ Ablatherm-HIFU is well-positioned to address this unmet medical need by providing a unique non-invasive and fully robotic treatment option.” Marc Oczachowski concluded, “The PMA submission to the FDA represents a significant milestone in the U.S. regulatory process for Ablatherm-HIFU. The EDAP team, together with its clinical, regulatory and legal advisors, has devoted six years to conducting the U.S. clinical trial that studied Ablatherm-HIFU as a treatment for localized prostate cancer. I am very proud of the team, and we will continue to work closely with the agency during the final stages of the process.” 20. On February 8, 2013, the Company issued a press release entitled, “EDAP’s

Ablatherm-HIFU Demonstrates Long-Term Efficacy and Safety Over Fourteen-Year Period.”

Therein, the Company, in relevant part, stated:

Longest Retrospective Study of HIFU Patients to Date Published Confirms Benefits of Treatment EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today new data demonstrating the safety and long-term efficacy of Ablatherm-HIFU, an ultrasound guided HIFU device for the treatment of localized prostate cancer. The data was electronically published in January 2013 by the British Journal of Urology, International. Roman Ganzer, M.D., Primary Investigator and Associate Professor of Urology at the University of Regensburg in Germany, summarized, “We studied a large consecutive patient series that underwent primary HIFU for localized prostate cancer, gathering data over the longest follow-up period in current literature, with data extending out to 14 years. Our results improve the understanding of the long term cancer control of HIFU as a primary therapy for prostate cancer as well as the morbidity associated with the procedure. The study solidifies the fact that HIFU is a safe and effective therapeutic option for patients with localized prostate cancer of low and intermediate risk profile. The morbidity experienced by patients was reasonable and, specifically, the rate of serious side effects such as recto-urethral fistulae is very low.”


The study, titled “Fourteen-year oncological and functional outcomes of high-intensity focused ultrasound in localized prostate cancer,” was a fourteen year retrospective single-center study of 538 patients with localized prostate cancer who underwent primary Ablatherm-HIFU for clinically localized prostate cancer between November 1997 and September 2009 at the University Hospital of Regensburg (Germany). The study had a mean follow-up of 8.1 years and a range of up to 14 years. The findings included favorable oncological outcomes with biochemical disease-free survival rates at five and 10 years of 88% and 71% for low risk patients and 83% and 63% for intermediate risk patients, respectively. John Rewcastle, Ph.D., Medical Director of EDAP TMS, remarked, “This is a landmark publication as it contains a report of 10 year biochemical outcomes with follow-up extending to 14 years. The biochemical disease free survival rates are comparable with those reported following other prostate cancer treatments and this is balanced with an attractive morbidity profile. This represents the longest follow-up of any series to date, and validates the outcomes of Ablatherm-HIFU as first line, whole gland treatment for prostate cancer.”

(Emphasis added). 21. On February 22, 2013, the Company issued a press release entitled, “EDAP’s

Ablatherm-HIFU Offers Reliable Therapy for Localized Prostate Cancer.” Therein, the


Munich Study Concludes 15 Year Outcome Data May Warrant Closing of Investigational Phase for HIFU EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today new long term data demonstrating high rates of both cancer-specific survival, and freedom from salvage therapy for patients treated with high-intensity focused ultrasound (HIFU) therapy. The study was performed by Drs. Stefan Thürroff and Christian Chaussy and evaluated the cancer control and morbidity of HIFU, in combination with transurethral resection of the prostate prior to treatment, over a 15 year period. The study was electronically published in February 2013 by the Journal of Urology, the Official Journal of the American Urological Association. The study, titled “Evolution and outcomes of 3 MHz High intensity focused ultrasound therapy for localized prostate cancer over 15 years,” examined 704 patients treated from 1995 to the end of 2009 at the Munich-Harlaching Clinic located in Munich, Germany. Within the study population, 78.5% of men had intermediate- or high-risk disease. Data showed a cancer-specific survival rate after treatment of 99% and a metastasis-free survival rate of 95%. The salvage treatment-free rates were 98% for low-risk, 72% for intermediate-risk, and 68%


for high-risk disease. The overall survival of the patients in the study did not differ across risk groups and was identical to current local (Bavarian) population survival statistics. Stefan Thüroff, M.D., Primary Investigator and Vice Chairman of the Department of Urology at the Harlaching Clinic, said, “These study results show that HIFU offers men with localized prostate cancer a standardized, reliable therapy with a low rate of perioperative co-morbidity and an absence of serious morbidity. Importantly, we found that salvage therapy was not required by 98% of low-risk patients. This outcome is extremely important from the perspective of the patient, and clearly demonstrates the extent of cancer control afforded by HIFU therapy.” Dr. Thüroff concluded, “HIFU has remained investigational because the published research on the therapy has not yet reached sufficient maturity to be considered definitive. The authors of this study concur that the collected data of 15 year outcomes may warrant the possible closing of the investigational phase of whole gland HIFU. The confidence this study provides in the ability to ablate prostate cancer may also encourage the use of focal therapy.” John Rewcastle, Ph.D., Medical Director of EDAP-TMS, commented, “This is an extremely important publication as it not only further establishes the safety, efficacy, and long term durability of HIFU as a prostate cancer treatment, it also demonstrates reproducibility. Cancer control outcomes are similar to those recently published by a separate German research group that reported outcomes over a 14 year period. Importantly, within this larger and longer independent study, prostate cancer did not appear to reduce the life expectancy of those men diagnosed with the disease who underwent HIFU. Impressively, this was achieved with less than 2% of low-risk patients seeking salvage treatment and in absence of serious morbidity. This is an impressive further validation of Ablatherm-HIFU as treatment for prostate cancer.” 22. On March 7, 2013, the Company issued a press release entitled, “EDAP Receives

U.S. FDA Administrative Acceptance Review Notification for Ablatherm(R)-HIFU Pre-Market

Approval Application.” Therein, the Company, in relevant part, stated:

PMA for Treatment of Low Risk, Localized Prostate Cancer

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today that the U.S. Food and Drug Administration (FDA) has provided a positive administrative acceptance review notification for the Company’s Pre-Market Approval (PMA) application for its Ablatherm Integrated Imaging HIFU (High Intensity Focused Ultrasound) device for treatment of low risk, localized prostate cancer. The FDA conducted an administrative acceptance review of EDAP’s PMA application and found it to contain all of the necessary elements


and information needed to proceed with filing review. Based on the FDA PMA Review Process, the administrative acceptance review is the first step in the multi-step process and the next step is the filing review. Both of these reviews access the completeness of the application and not the clinical outcomes of the study, which begins after a positive filing review. Marc Oczachowski, Chief Executive Officer of EDAP-TMS, remarked, “We are pleased to continue to move through the PMA Review Process for the application submitted for Ablatherm Integrated Imaging HIFU PMA. We look forward to keeping investors informed as we continue to advance through the FDA process.” 23. On March 28, 2013, the Company issued a press release entitled, “EDAP

Receives U.S. FDA Filing Acceptance of Pre-Market Approval Application.” Therein, the


Ablatherm(R)-HIFU PMA Application Proceeds to Substantive Review EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today that the U.S. Food and Drug Administration has provided a positive Filing Review Notification on the Company’s Pre-Market Approval (PMA) application for its Ablatherm Integrated Imaging HIFU (High Intensity Focused Ultrasound) device for the treatment of low-risk, localized prostate cancer. The FDA conducted a filing review of EDAP’s PMA, and found it to contain all of the information needed to proceed with the substantive review, in which the FDA will evaluate the safety and effectiveness of Ablatherm Integrated Imaging HIFU device, as well as EDAP’s engineering, manufacturing and quality systems. Marc Oczachowski, Chief Executive Officer of EDAP TMS, commented, “Receiving FDA filing acceptance for our PMA in less than two months is both very timely and a major milestone. We are moving forward in the PMA Review Process as the agency commences its substantive review. We will continue to work closely with the FDA review team.” 24. On April 2, 2013, the Company issued a press release entitled, “EDAP Reports

Fourth Quarter 2012 and Full Year Results.” Therein, the Company, in relevant part, stated:

Highlights

• Record fourth quarter 2012 revenue of EUR 9.5 million (USD 12.3 million), up 25.3% year-over-year

• Record full year revenue of EUR 26.1 million (USD 33.6 million), up 16.9% year-over-year


• Record lithotripsy sales in 2012 • PMA for Ablatherm®-HIFU for treatment of low risk, localized prostate

cancer accepted by the FDA for filing on March 26, 2013 EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the fourth quarter and year ended December 31, 2012, and provided an update on recent strategic developments. Marc Oczachowski, EDAP’s Chief Executive Officer, stated, “We are very pleased with our record revenues in the fourth quarter, and for the full year 2012. Our sales growth can be attributed to the robust sales of our innovative Sonolith lithotripters around the globe. Customers continue to respond to our innovative products and improving offerings. We continue to aggressively pursue market penetration, and strengthen our sales operations across key markets, including Europe, Asia, and the U.S.” Mr. Oczachowski continued, “Our PMA application for Ablatherm-HIFU is steadily moving forward through the U.S. FDA review process. Last week we received notification that our PMA had been accepted for Filing Review, less than two months after we submitted the complete application to the FDA. With this significant milestone completed, we have now entered the substantive review phase, and we are looking forward to a continuing dialog with the agency as the review process advances.” Recent Developments In March 2013, the U.S. Food and Drug Administration (FDA) provided a positive Filing Review Notification for the EDAP’s Pre-Market Approval (PMA) application for its Ablatherm Integrated Imaging HIFU (High Intensity Focused Ultrasound) device for treatment of low risk, localized prostate cancer. The PMA was received by the FDA on February 5, 2013, and was given a filing date of February 28, 2013. The PMA submission included data from the Company’s ENLIGHT study, a multi-center U.S. Phase II/III clinical trial that completed the two year follow-up needed to evaluate its primary endpoint in August 2012, as well as data from the Company’s extensive worldwide database of treatment information and follow-up data from patients who have undergone HIFU therapy for prostate cancer. In March 2013, EDAP introduced Focal.One®, the Company’s new robotic HIFU device for focal therapy of prostate cancer at the European Association of Urology Annual Congress in Milan, Italy. Focal.One is the first device fully dedicated to the focal approach for prostate cancer therapy. It combines three essential components to efficiently perform a focal treatment: (i) state-of-the-art imaging to localize tumors with the use of magnetic resonance imaging combined with real-time ultrasound, (ii) utmost precision of HIFU treatment focused on


identified targeted cancer areas only and (iii) immediate feedback on treatment efficacy utilizing Contrast-Enhanced Ultrasound Imaging. In February 2013, the Journal of Urology, the Official Journal of the American Urological Association published results from a study in Munich on 704 patients over fifteen years. The study demonstrated high rates of both cancer-specific survival, and freedom from salvage therapy for patients treated with HIFU therapy. Investigators concluded that the 15 year outcome data may warrant closing of investigational phase for HIFU. In January 2013, the British Journal of Urology, International, published a landmark study of over 538 patients demonstrating the safety and long-term efficacy of EDAP’s Ablatherm-HIFU for the treatment of localized prostate cancer with ten year biochemical outcomes and follow-up extending to fourteen years. Data from this long-term year retrospective study, the longest study of HIFU patients to date published, confirmed benefits of the treatment. Fourth Quarter 2012 Results Total revenue for the fourth quarter 2012 was EUR 9.4 million (USD 12.3 million), a 25.3% year over year increase compared to EUR 7.5 million (USD 10.1 million) for the fourth quarter 2011 and a 66% sequential increase compared to EUR 5.7 million (USD 7.1 million) for the third quarter 2012. Total revenue for the HIFU division was EUR 2.3 million (USD 3.0 million) for the fourth quarter 2012, compared to EUR 1.8 million (USD 2.4 million) for the same period last year. Results for the fourth quarter 2012 reflected the sale of three Ablatherm-HIFU devices, as compared to one device sold in the same period last year. For the three months ended December 31, 2012, total revenue for the Lithotripsy division was EUR 7.1 million (USD 9.3 million), compared to EUR 5.8 million (USD 7.8 million), during the year ago period. During the fourth quarter 2012, the Company recorded sales of 21 lithotripsy machines, comprised of 11 Sonolith i-move devices, seven Sonolith i-sys devices and three Sonolith Praktis devices, compared to a total of sixteen devices sold in the fourth quarter of 2011. Gross profit for the fourth quarter 2012 was EUR 3.9 million (USD 5.1 million), compared to EUR 2.8 million (USD 3.8 million) for the year ago period. Gross profit margin was 41.3% in the fourth quarter 2012, compared to 37.2% in the year ago period. The change in the gross profit margin was mostly attributed to sales volumes. Operating expenses were EUR 3.6 million (USD 4.7 million) for the fourth quarter 2012, compared to EUR 3.2 million (USD 4.3 million) for the same period 2011. Operating profit was EUR 254,000 (USD 331,000) for the fourth quarter


2012, compared to an operating loss of EUR 371,000 (USD 499,000 million) in the fourth quarter of 2011. Net loss for the fourth quarter 2012 was EUR 1.1 million (USD 1.4 million), or EUR 0.06 per diluted share, as compared to net loss for the fourth quarter of 2011 of EUR 579,000 (USD 779,000), or EUR 0.04 per diluted share. Net income for the fourth quarter 2012 included a non-cash interest expense of EUR 439,000 to adjust the Company’s outstanding convertible debt and warrants to fair market value. At December 31, 2012, cash and cash equivalents, including short-term treasury investments, were EUR 8.1 million (USD 10.7 million). The Company’s cash flow was stable in the fourth quarter. Full Year 2012 Results Total revenue for the full year ended December 31, 2012 was EUR 26.1 million (USD 33.7 million), a 16.9% growth year-over-year as compared to EUR 22.3 million (USD 31.2 million) for the full year 2011. 2012 revenue included the sale of 52 lithotripsy devices and 4 Ablatherm-HIFU devices.. Gross profit for the full year 2012 was EUR 10.4 million (USD 13.5 million) and operating loss was EUR 2.0 million (USD 2.6 million), compared to EUR 8.9 million (USD 12.4 million) and EUR 2.5 million (USD 3.5 million), respectively, for the same period 2011. Net loss for the full year 2012 was EUR 7.5 (USD 9.7 million), or EUR 0.43 per diluted share. The full year 2012 net loss included a non-cash interest expense of EUR 4.0 million (USD 5.1 million) to reflect the accounting fair value impact of the January 2012 exchange offering on its convertible debentures and related warrants, the reduction of the outstanding non-convertible debt and fair-value adjustments of outstanding warrants. 25. On April 2, 2013, EDAP filed its Annual Report with the SEC on Form 20-F for

the 2012 fiscal year. The Company’s Form 20-F was signed by Defendants Oczachowski and

Soyer and affirmed the results previously announced that day.

26. On May 16, 2013, the Company issued a press release entitled, “EDAP Reports

23% Increase in First Quarter 2013 Revenues.” Therein, the Company, in relevant part, stated:

• First quarter 2013 revenue rose 23% to EUR 5.9 million (USD 7.8 million)


• Continuing US investments in both FDA regulatory process and US operations

• Great momentum and success achieved at two of the world major urology congresses for EDAP’s advanced technologies

• Publication of two independent studies both reporting 10 year outcomes of men undergoing Ablatherm HIFU for localized prostate cancer

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the first quarter ended March 31, 2013, and provided an update on recent strategic developments. Marc Oczachowski, EDAP’s Chief Executive Officer, stated, “With total revenues up 23% year-over-year, we are continuing to see strong demand for our innovative lithotripsy product range in key global markets. In parallel, we increased our investments in both our FDA regulatory program and our U.S. sales and marketing efforts to further penetrate the U.S. market with both our technologies, which in combination contributed to the 16.5% increase in our first quarter operating expenses. Our device backlog is comprised of ten lithotripters at the midpoint of the second quarter and our team is continuing to cultivate customer leads around the world. Leveraging our aggressive marketing strategy, we anticipate seeing continuous traction in our sales across targeted geographic markets.” “As reported, we had significant attendance at our booths and recorded strong interest in both our HIFU and ESWL technologies during the two most important urology congresses in the world, the European Annual Urology (EAU) meeting in Milan, Italy, and the American Urology Association (AUA) annual meeting in San Diego, California. We have increasing momentum on both our HIFU range of devices, fueled by the launch of our innovative Focal.One® device at the EAU, and on our lithotripsy technologies propelled by a high number of live demonstrations to physicians during the AUA.” Mr. Oczachowski continued, “The FDA process for our Ablatherm-HIFU is on track as we submitted our Pre-Market Approval (PMA) application that was reviewed and approved for filing in late March. We continue working and communicating smoothly with the agency and we have a 100-day meeting scheduled with the FDA for early June to discuss our file.” First Quarter Highlights and Recent Developments EDAP received positive reception at the American Urological Association (AUA) 2013 Annual Meeting, held in San Diego on May 4-8, 2013. Sonolith i-move treatment demonstrations at the booth were very well attended by urologists. At the meeting, four scientific abstracts presented clinical outcomes for HIFU treatment of prostate cancer and two regarding the exclusive ultrasound Visio


Track® localization system of Sonolith lithotripter. Two of the HIFU presentations were awarded “Best Posters” from the AUA. EDAP received a positive Filing Review Notification from the FDA in March for its PMA application for its Ablatherm-HIFU device for the treatment of low risk, localized prostate cancer. The PMA submission included clinical data from the Company’s ENLIGHT study, a multi-center U.S. Phase II/III clinical trial that completed the two year follow-up needed to evaluate its primary endpoint in August 2012, as well as data from the Company’s extensive worldwide database of treatment information and follow-up data from patients who have undergone HIFU therapy for prostate cancer. EDAP introduced Focal.One®, the first robotic HIFU device fully dedicated to the focal therapy of prostate cancer, at the European Association of Urology Annual Congress in Milan, Italy in March 2013. Focal.One® combines three essential components to efficiently perform a focal treatment: (i) state-of-the-art imaging to visualize tumors with elastic image fusion of magnetic resonance imaging and real-time ultrasound, (ii) high resolution HIFU treatment with smaller elementary lesions allowing for unprecedented treatment precision within the prostate and (iii) immediate feedback on treatment efficacy utilizing Contrast-Enhanced Ultrasound Imaging. Not only is Focal.One® the only device to have all three of these features - no other HIFU device has any of these features. In January 2013, the British Journal of Urology, International, published a landmark study from the University of Regensburg in Germany. The study included 538 patients and demonstrated the safety and long-term efficacy of EDAP’s Ablatherm-HIFU for the treatment of localized prostate cancer with ten year biochemical outcomes and follow-up extending to fourteen years. Data from this long-term year retrospective study, the longest study of HIFU patients to date published, confirmed benefits of the treatment. This publication was quickly followed by a second paper reporting 10 year outcomes. In February 2013, the Official Journal of the American Urological Association, the Journal of Urology, published results from a study in Munich of 704 patients followed over a period of fifteen years. The study demonstrated high rates of both cancer-specific survival, and freedom from salvage therapy for patients treated with HIFU therapy. Investigators concluded that the 15 year outcome data may warrant closing of investigational phase for HIFU. First Quarter 2013 Results Total revenue for the first quarter 2013 was EUR 5.9 million (USD 7.8 million), a 23% year over year increase compared to EUR 4.8 million (USD 6.8 million) for the first quarter 2012.


Total revenue for the HIFU division was EUR 1.4 million (USD 1.8 million) for the first quarter 2013, compared to EUR 1.3 million (USD 1.9 million) for the same period last year. Results for the first quarter 2013 included the sale of one Ablatherm-HIFU device. For the three months ended March 31, 2013, total revenue for the lithotripsy division was EUR 4.5 million (USD 6.0 million), compared to EUR 3.5 million (USD 4.9 million), during the year ago period. During the first quarter 2013, the Company recorded sales of ten lithotripsy machines, comprised of eight Sonolith i-move devices and two Sonolith i-sys devices, compared to a total of five devices sold in the first quarter of 2012. Gross profit for the first quarter 2013 was EUR 2.2 million (USD 2.9 million), compared to EUR 1.9 million (USD 2.7 million) for the year ago period. Gross profit margin was 37.1% in the first quarter 2013, compared to 39.3% in the year ago period. The change in the gross profit margin was mostly attributed to the negative impact of the Japanese Yen exchange rate to the Euro. Operating expenses were EUR 3.4 million (USD 4.5 million) for the first quarter 2013, compared to EUR 2.9 million (USD 4.1 million) for the same period 2012. The sizeable increase in operating expenses was mostly attributable to continued regulatory expenses associated with the PMA filing for Ablatherm-HIFU, as well as sales and marketing investments in the U.S.. As a result of such investments, operating loss was EUR 1.2 million (USD 1.6 million) for the first quarter 2013, compared to an operating loss of EUR 1.0 million (USD 1.4 million) in the first quarter of 2012. Net loss for the first quarter 2013 was EUR 3.9 million (USD 5.1 million), or EUR 0.21 per share, as compared to net loss for the first quarter 2012 of EUR 2.9 million (USD 4.1 million), or EUR 0.22 per share. Net loss for the first quarter 2013 included a non-cash interest expense of EUR 2.3 million related to fair value adjustments in the accounting of the Company’s outstanding debt and warrants, mostly driven by the increase in the stock price during the first quarter 2013. At March 31, 2013, cash and cash equivalents, including short-term treasury investments, were EUR 7.3 million (USD 9.3 million). 27. On May 21, 2013, the Company issued a press release entitled, “EDAP to Raise

$12 Million in Registered Direct Offering.” Therein, the Company, in relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), a global leader in therapeutic ultrasound, announced that it has entered into definitive agreements with certain institutional investors for a registered direct placement of $12 million of ordinary shares in the form of American Depositary Shares (“ADSs”) at a price of $4.00 per share, with warrants attached.


The warrants issued to the investors will allow them to purchase up to 1.5 million ordinary shares. The warrants have an exercise price of $4.25 per share and are exercisable beginning six months from the date of their issuance for a period of five years. The offering is expected to close on or about May 24, 2013 subject to satisfaction of customary closing conditions. H.C. Wainwright & Co., LLC, acted as the exclusive placement agent for the transaction. 28. On May 22, 2013, the Company filed a Prospectus Supplement with the SEC on

Form 424(B)(5) for its direct placement. Therein, the Company, in relevant part, stated:

We market the Ablatherm® for high-intensity focused ultrasound (HIFU) treatment of localized prostate cancer. HIFU treatment is shown to be a minimally invasive and effective treatment option with a low occurrence of side effects. Ablatherm-HIFU is generally recommended for patients with localized prostate cancer (stages T1-T2) who are not candidates for surgery or who prefer an alternative option, or for patients who failed radiotherapy treatment. Ablatherm-HIFU is approved and commercialized in Europe as a treatment for prostate cancer and is currently under regulatory review in the U.S. following submission of the Pre-Market Approval Application in January 2013 after the completion of a multi-center U.S. Phase II/III clinical trial under an Investigational Device Exemption (IDE) granted by the FDA. The Company also develops its HIFU technology for the potential treatment of certain other types of tumors. EDAP TMS SA also produces and commercializes medical equipment (the Sonolith® range) for treatment of urinary tract stones using extra-corporeal shockwave lithotripsy (ESWL). 29. With respect to the use of proceeds from the direct offering, the Company, in

relevant part, stated:

We estimate that the net proceeds of this offering, after deducting placement agent fees and our estimated offering expenses and excluding any proceeds, if any, from the exercise of the Warrants issued in this offering and the Placement Agent Warrants, will be approximately $10,800,000. We intend to use a portion of the net proceeds of this offering to reimburse our Debentures issued in the Exchange, either immediately or over the remaining term of the Debentures. As of May 20, 2013, Debentures in the aggregate principal amount of $8 million were outstanding. The Debentures accrue interest at a rate of 9% per annum and mature on June 30, 2014. We are required to use a minimum of 40% of the net proceeds to repay a portion of the Debentures.


In the event that all of the Warrants and the Placement Agent Warrants are exercised (assuming that the maximum number available hereunder are issued), we will receive an additional $7,275,000 before deducting placement agent fees and offering expenses. We intend to use the balance of the net proceeds to further strengthen our financial profile as well as to accelerate our investments in preparation for our market entry in the United States with Ablatherm-HIFU. 30. On August 28, 2013, the Company issued a press release entitled, “EDAP Reports

Second Quarter 2013 Results.” Therein, the Company, in relevant part, stated:

• Received CE mark for innovative robotic HIFU device Focal One® • Eliminated all outstanding long-term debt and strengthened financial

profile • Publication of long-term study reporting 10 year cancer-specific survival

and metastatic-free survival rates for prostate cancer patients treated with Ablatherm-HIFU

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the second quarter and six months ended June 30, 2013, and provided an update on recent strategic developments. Marc Oczachowski, EDAP’s Chief Executive Officer, stated, “During the quarter, we continued to make strides in our business plan as we strengthened our balance sheet and reached a significant milestone with our innovative technology. In particular, we repaid the full $8 million of our outstanding long-term debt. We also received CE mark in June for Focal One®, our additional and complementary robotic HIFU device, and we have subsequently commenced our commercialization efforts in Europe. In addition, device sales are progressing well as we reach the end of August, with several pending lithotripsy projects that we anticipated closing during the second quarter confirmed in early July due to customer related factors. We continue to strengthen our sales backlog and are working toward closing these in the coming weeks.” Recent Developments In June 2013, EDAP received CE mark (European regulatory approval) for Focal One®, its new and innovative robotic HIFU device fully dedicated to focal therapy of prostate cancer. The CE mark positions Focal One for commercialization in Europe and in many other countries. In June 2013, EDAP completed the full redemption of its $8.0 million outstanding long-term debt by using a portion of the net proceeds from the $12.0 million private placement executed in May 2013.


In June 2013, the 100-day meeting with the FDA provided a discussion forum regarding the PMA application for EDAP’s Ablatherm-HIFU device for the treatment of localized prostate cancer and confirmed that our submission process is ongoing. In May 2013, new long-term data demonstrating high rates of both cancer-specific and overall survival of 1,002 patients treated with high-intensity focused ultrasound (HIFU) was electronically published in European Urology, the official journal of the European Association of Urology. The prospective, single-arm, single-institution cohort study, led by Drs. Sebastien Crouzet and Albert Gelet of Edouard Herriot Hospital, evaluated the morbidity and long-term oncologic outcomes of primary HIFU therapy for localized prostate cancer. The study is the Company’s third peer reviewed publication this year reporting 10 year cancer-specific survival and metastatic-free survival rates following Ablatherm-HIFU treatment. Second Quarter 2013 Results Total revenue for the second quarter 2013 was EUR 4.5 million (USD 5.9 million), compared to EUR 6.1 million (USD 7.8 million) for the second quarter 2012. Total revenue for the HIFU division was EUR 967,000 (USD 1.3 million) for the second quarter 2013, compared to EUR 1.1 million (USD 1.4 million) for the same period last year. Results for the second quarter 2013 included the sales of RPP’s and sales of spare parts and services. For the three months ended June 30, 2013, total revenue for the lithotripsy division was EUR 3.5 million (USD 4.6 million), compared to EUR 5.0 million (USD 6.4 million), during the year ago period. During the second quarter 2013, the Company recorded sales of eight lithotripsy machines, comprised of five Sonolith i-move devices and three Sonolith Praktis devices, compared to a total of fourteen devices sold in the second quarter of 2012. Gross profit for the second quarter 2013 was EUR 1.6 million (USD 2.1 million), compared to EUR 2.4 million (USD 3.1 million) for the year ago period. Gross profit margin was 36.1% in the second quarter 2013, compared to 39.1% in the year ago period. The change in the gross profit margin was mostly attributed to the negative impact of the Japanese Yen exchange rate variations against the Euro. Operating expenses were EUR 3.1 million (USD 4.0 million) for the second quarter 2013, compared to EUR 3.3 million (USD 4.2 million) for the same period 2012. Operating loss was EUR 1.5 million (USD 1.9 million) for the second


quarter 2013, compared to an operating loss of EUR 937,000 (USD 1.2 million) in the second quarter of 2012. Net loss for the second quarter 2013 was EUR 195,000 (USD 255,000), or EUR 0.01 per diluted share, as compared to net loss for the second quarter 2012 of EUR 3.0 million (USD 3.8 million), or EUR 0.16 per diluted share. Net loss for the second quarter 2013 included interest income of EUR 1.9 million as a result of non-cash accounting adjustments related to the full redemption of the Company’s long-term debt and to fair value variations of the Company’s outstanding warrants. First Six Months 2013 Results Total revenue for the first half of 2013 was EUR 10.4 million (USD 13.7 million), including a negative impact of EUR 800,000 due to currency exchange rate variations, down 4.9% compared to EUR 11.0 million (USD 14.3 million) for the first half of 2012. Excluding the impact of exchange rate variations, total revenues would have experienced moderate growth of 2% for the period. Gross profit for the first half of 2013 was EUR 3.8 million (USD 5.0 million) and gross profit margin was 36.7% and 39.5% on a like-for-like basis after adjusting for the currency exchange variations, compared to 39.2% in the year ago period. Operating loss for the first half of 2013 was EUR 2.6 million (USD 3.5 million) and net loss for the first half of 2013 was EUR 4.1 million (USD 5.3 million), or EUR 0.21 per diluted share, as compared to net loss of EUR 5.9 million (USD 7.6 million), or EUR 0.32 per diluted share, in the first half of 2012. Net loss for the first six months of 2013 included a non-cash interest expense of EUR 0.4 million (USD 0.5 million) to reflect the full redemption of the Company’s long-term financial debt and accounting fair value adjustments on its outstanding warrants. At June 30, 2013, cash and cash equivalents, including short-term treasury investments, were EUR 7.4 million (USD 9.6 million). The Company’s net cash position was stable in the second quarter 2013. 31. On November 21, 2013, the Company issued a press release entitled, “EDAP

Reports Third Quarter 2013 Results.” Therein, the Company, in relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the third quarter ended September 30, 2013. Recent Highlights

• Total third quarter 2013 revenue of EUR 5.6 million, sequential quarterly growth of 24%


• Strong device backlog entering fourth quarter 2013 • Focal One® delivered in October 2013 and first treatments performed in

Europe • Ablatherm-HIFU highlighted in presentations at the 31st World Congress

of Endourology Marc Oczachowski, EDAP’s Chief Executive Officer, commented, “During the third quarter, we continued to execute our business plan by generating revenue from sales of our commercialized devices. As expected, we closed several orders that were secured during the second quarter. Entering the fourth quarter, we have a strong device backlog of 14 Lithotripters and the entire EDAP team worldwide is focusing on closing deals before year end as this is the most active time of our seasonal business. “Importantly, we recently delivered our first Focal One® device to a customer in Europe. The delivery and installation was completed as scheduled and the first treatments were successfully performed. We are pleased with the reception of this device in the early stages of our marketing efforts and we are excited about the potential opportunity of Focal One®.” Third Quarter 2013 Results Total revenue for the third quarter 2013 was EUR 5.6 million (USD 7.4 million), compared to EUR 5.7 million (USD 7.1 million) for the third quarter 2012. Total revenue for the lithotripsy division was EUR 4.3 million (USD 5.8 million) for the three months ended September 30, 2013, as compared to EUR 4.8 million (USD 6.0 million) for the year ago period. During the third quarter 2013, the Company recorded sales of nine lithotripsy machines, compared to a total of 12 devices sold in the third quarter of 2012. Total revenue for the HIFU division was EUR 1.2 million (USD 1.7 million) for the third quarter 2013, compared to EUR 0.9 million (USD 1.1 million) for the same period last year. The Company recorded the sale of one Ablatherm-HIFU device during the third quarter of 2013. Gross profit for the third quarter 2013 was EUR 2.2 million (USD 3.0 million), compared to EUR 2.2 million (USD 2.8 million) for the year ago period. Gross profit margin was 40.3% in the third quarter 2013, compared to 39.6% in the year ago period. Operating expenses were EUR 2.6 million (USD 3.4 million) for the third quarter 2013, compared to EUR 2.6 million (USD 3.3 million) for the same period in 2012. Operating loss was EUR 333,000 (USD 444,000) for the third quarter 2013, compared to EUR 341,000 (USD 429,000) in the third quarter of 2012.


Net loss for the third quarter 2013 was EUR 373,000 (USD 497,000), or EUR 0.02 per diluted share (USD 0.02 per diluted share), as compared to net loss for the third quarter 2012 of EUR 496,000 (USD 624,000), or EUR 0.03 per diluted share (USD 0.03 per diluted share). First Nine Months 2013 Results Total revenue for the first nine months of 2013 was EUR 16.0 million (USD 21.1 million), and EUR 17.1 million on a constant currency basis compared to EUR 16.6 million (USD 21.4 million) in the first nine months of 2012. Gross profit for the first nine months of 2013 was EUR 6.1 million (USD 8.0 million), compared to EUR 6.5 million (USD 8.4 million) for the first nine months of 2012. Gross profit margin was 37.9% in the first nine months of 2013, and 40.6% on a constant currency basis compared to 39.3% in the first nine months of 2012. Operating loss for the first nine months of 2013 was EUR 3.0 million (USD 3.9 million), compared to EUR 2.3 million (USD 2.9 million) for the same period of 2012. Net loss for the first nine months of 2013 was EUR 4.5 million (USD 5.9 million), or EUR 0.22 per diluted share (USD 0.29 per diluted share), as compared to net loss of EUR 6.4 million (USD 8.2 million), or EUR 0.37 per diluted share (USD 0.48 per diluted share), in the first nine months of 2012. Net loss for the first nine months of 2013 included a EUR 1.1 million (USD 1.5 million) currency exchange loss. At September 30, 2013, cash and cash equivalents, including short-term treasury investments, were EUR 6.4 million (USD 8.7 million). The Company’s net cash utilization was EUR 0.9 million in the third quarter 2013 and included EUR 1.4 million of inventory replenishment in preparation for the fourth quarter 2013 sales activity. 32. On April 3, 2014, the Company issued a press release entitled, “EDAP Reports

Fourth Quarter 2013 and Full Year Results.” Therein, the Company, in relevant part, stated:

Highlights

• Major milestones successfully achieved for Ablatherm-HIFU FDA PMA process

• Strong lithotripsy sales traction in the US with greater than twofold sales increase

• Record sales backlog of lithotripsy and HIFU devices entering 2014


EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the fourth quarter and year ended December 31, 2013, and provided an update on recent strategic developments. Marc Oczachowski, EDAP’s Chief Executive Officer, stated, “We are pleased with the continued progress that our PMA submission has made over the past year. Just last month, we completed the question and answer phase with the FDA. We are now advancing towards the FDA advisory panel meeting.” Mr. Oczachowski continued, “Our 2013 topline results were in line with the prior year on a constant currency basis and the year-over-year decrease in our total GAAP revenues was primarily due to the significant exchange loss of the Euro compared to the Japanese Yen. We are pleased with the strong traction of our lithotripsy business in the U.S. with a twofold sales increase in 2013. Starting in 2014, we have a record sales backlog with over fifteen lithotripters and five HIFU devices, comprised of two Focal One and three Ablatherms.” Fourth Quarter 2013 Results Total revenue for the fourth quarter 2013 was EUR 8.1 million (USD 11.0 million). The current quarter revenue compared to EUR 9.4 million (USD 12.3 million) for the fourth quarter 2012 and a 45% sequential increase over EUR 5.6 million (USD 7.4 million) for the third quarter 2013. Total revenue for the HIFU division was EUR 1.5 million (USD 2.1 million) for the fourth quarter 2013, compared to EUR 2.3 million (USD 3.0 million) for the same period in 2012. Results for the fourth quarter 2013 reflected the sale of one Focal One device, as compared to three HIFU devices sold in the same period last year. For the three months ended December 31, 2013, total revenue for the Lithotripsy division was EUR 6.6 million (USD 8.9 million), compared to EUR 7.1 million (USD 9.3 million), during the year ago period. During the fourth quarter 2013, the Company recorded sales of eighteen lithotripsy machines, comprised of 13 Sonolith i-move devices and five Sonolith i-sys devices, compared to a total of 21 devices sold in the fourth quarter of 2012. Gross profit for the fourth quarter 2013 was EUR 3.3 million (USD 4.4 million), compared to EUR 3.9 million (USD 5.1 million) for the year ago period. Gross profit margin was 40.2% in the fourth quarter 2013, compared to 41.3% in the year ago period. The change in the gross profit margin was mostly attributed to the negative currency variations against the Euro. Operating expenses were EUR 3.0 million (USD 4.1 million) for the fourth quarter 2013, compared to EUR 3.6 million (USD 4.7 million) for the same period 2012. Operating profit was EUR 226,000 (USD 309,000) for the fourth quarter


2013, compared to an operating profit of EUR 254,000 (USD 331,000) in the fourth quarter of 2012. Net loss for the fourth quarter 2013 was EUR 570,000 (USD 778,000), or EUR 0.03 per diluted share, compared to net loss for the fourth quarter of 2012 of EUR 1.1 million (USD 1.4 million), or EUR 0.06 per diluted share. Full Year 2013 Results Total revenue for the full year ended December 31, 2013 was EUR 24.1 million (USD 32.0 million) and EUR 26.0 million on a constant currency basis, compared to EUR 26.1 million (USD 33.6 million) for the full year 2012. 2013 revenue included the sales of 45 lithotripsy devices and three HIFU devices. Gross profit for the full year 2013 was EUR 9.3 million (USD 12.4 million), compared to EUR 10.4 million (USD 13.5 million) for the full year 2012. Operating loss was EUR 2.8 million (USD 3.7 million), compared to EUR 2.0 million (USD 2.6 million) for the same period 2012. Net loss for the full year 2013 was EUR 5.0 (USD 6.7 million), or EUR 0.24 per diluted share, compared to a full year 2012 net loss of EUR 7.5 million (USD 9.7 million). At December 31, 2013, cash and cash equivalents, including short-term treasury investments, were EUR 7.7 million (USD 10.6 million). The Company’s net utilization of cash was EUR 396,000 in the fourth quarter 2013 and included the EUR 8.5 million net proceeds from the May 2013 capital increase and the EUR 6.0 million full repayment in June 2013 of the remaining financial debt. 33. On April 3, 2014, EDAP filed its Annual Report with the SEC on Form 20-F for

the 2013 fiscal year. The Company’s Form 20-F was signed by Defendants Oczachowski and

Soyer and affirmed the results previously announced that day.

34. On May 15, 2014, the Company issued a press release entitled, “EDAP Reports

First Quarter 2014 Results.” Therein, the Company, in relevant part, stated:

Highlights

• Record revenue of EUR 7.8 million for the first quarter 2014, a 31% year-over-year increase

• First quarter 2014 gross margin up nine points to 46% • Second sequential quarter with positive operating income • Ablatherm HIFU PMA moves to panel preparation phase with FDA


• Reimbursement of HIFU for prostate cancer granted in France • HIFU officially recommended for prostate cancer by European

Association of Urology EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, announced today financial results for the first quarter ended March 31, 2014, and provided an update on recent strategic developments. Marc Oczachowski, EDAP’s Chief Executive Officer, stated, “We are very enthusiastic about the Company’s all time record results for the first quarter driven by a growing demand for our HIFU devices. This reflects the strong market momentum for our new Focal One HIFU technology that was introduced in Europe last summer. It is very exciting to see the growing adoption of our products among the urology community as we now have a complete and unique HIFU offering including Focal One and Ablatherm to cover most market needs. As we advance through the second quarter, we have a strong sales backlog featuring ten lithotripters and two HIFU devices and remain focused on driving product sales.” Mr. Oczachowski continued, “Our HIFU technology has now gained a new status among the international urology community and health authorities. Just last month, France’s Ministry of Health granted national reimbursement for prostate cancer treatment procedures using HIFU and the European Association of Urology updated its guidelines to recommend HIFU as primary and salvage prostate cancer therapy. In the US, we have now moved to the next phase with our PMA application which is panel preparation, the team is currently in the interactive review process with FDA.” First Quarter 2014 Results Total revenue for the first quarter 2014 was EUR 7.8 million (USD 10.6 million), a 31% year-over-year increase compared to EUR 5.9 million (USD 7.8 million) for the first quarter 2013. Total revenue for the HIFU division was EUR 3.3 million (USD 4.5 million) for the first quarter 2014, compared to EUR 1.4 million (USD 1.8 million) for the same period last year. Results for the first quarter 2014 included the sale of three Ablatherm and two Focal One devices. For the three months ended March 31, 2014, total revenue for the lithotripsy division was EUR 4.5 million (USD 6.1 million), in line with EUR 4.5 million (USD 6.0 million), during the year ago period. During the first quarter 2014, the Company recorded sales of nine lithotripsy machines, comprised of seven Sonolith i-move devices, one Sonolith i-sys device, and one Sonolith Praktis, compared to a total of ten devices sold in the first quarter of 2013.


Gross profit for the first quarter 2014 was EUR 3.6 million (USD 4.9 million), compared to EUR 2.2 million (USD 2.9 million) for the year ago period. Gross profit margin was 45.9% in the first quarter 2014, compared to 37.1% in the year ago period. The change in the gross profit margin was mostly attributable to the increase in HIFU equipment sales. Operating expenses were EUR 3.0 million (USD 4.1 million) for the first quarter 2014, compared to EUR 3.4 million (USD 4.5 million) for the same period of 2013. As a result of our increased device sales during the quarter, operating profit was EUR 558,000 (USD 765,000) for the first quarter of 2014, compared to an operating loss of EUR 1.2 million (USD 1.6 million) in the first quarter of 2013. Most noticeably, this is the first time the Company reported two sequential quarters with positive operating income. Net income for the first quarter of 2014 was EUR 840,000 (USD 1.2 million), or EUR 0.04 per diluted share, as compared to net loss for the first quarter of 2013 of EUR 3.9 million (USD 5.1 million), or EUR 0.21 per diluted share. At March 31, 2014, cash and cash equivalents, including short-term treasury investments, were EUR 6.4 million (USD 8.9 million). The EUR 1.2 million cash utilization in the first quarter was attributed to increased receivables related to increased sales in the first quarter to be collected over the second and third quarters. 35. On May 22, 2014, the Company issued a press release entitled, “EDAP’s

Ablatherm-HIFU FDA Panel Meeting Confirmed for July 30, 2014.” Therein, the Company, in

relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, today announced that the U.S. Food and Drug Administration (FDA) Gastroenterology and Urology Devices Panel of the Medical Devices Advisory Committee will review the Pre-Market Approval (“PMA”) application for EDAP’s Ablatherm-HIFU device for the treatment of localized prostate cancer on July 30, 2014. Marc Oczachowski, EDAP’s Chief Executive Officer, said, “Confirmation of this important milestone is great news for the Company and its PMA application. The FDA provided us with a worksheet that details the deadlines and documents to be prepared and sent to the panel members for review ahead of the advisory committee meeting on July 30, 2014. We are very excited to now have a much clearer path toward FDA approval and the entire team at EDAP is diligently preparing for this major event in the PMA application process.”


36. On May 28, 2014, the Company issued a press release entitled, “EDAP to Raise

$9.3 Million in Registered Direct Offering.” Therein, the Company, in relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), a global leader in therapeutic ultrasound, announced that it has entered into definitive agreements with certain institutional investors for a registered direct placement of 3 million of ordinary shares in the form of American Depositary Shares (“ADSs”) at a price of $3.11 per share. The offering is expected to close on or about June 3, 2014 subject to satisfaction of customary closing conditions. H.C. Wainwright & Co., LLC, acted as the exclusive placement agent for the transaction and Northland Capital Markets acted as Financial Advisor. 37. On May 29, 2014, the Company filed a Prospectus Supplement with the SEC on

Form 424(B)(5) for its direct offering. Therein, the Company, in relevant part, stated:

We estimate that the net proceeds of this offering, after deducting placement agent fees and our estimated offering expenses will be approximately $8.4 million. We intend to use the net proceeds from the sale of the securities offered hereby for operating costs, capital expenditures and for general corporate purposes, including working capital, and more particularly, for continued product development and preparatory action in advance of the review at the end of July 2014 by the U.S. Food and Drug Administration (FDA) Gastroenterology and Urology Devices Panel of the Medical Devices Advisory Committee of the Pre-Market Approval (“PMA”) application for EDAP’s Ablatherm-HIFU device, as well as for any other preparatory work in connection with the PMA process. 38. The statements contained in ¶¶19-37 were materially false and/or misleading

when made because defendants failed to disclose or indicate the following: (1) that the Company

overstated the efficacy of the Ablatherm-HIFU device by relying on cross-study comparisons

rather than a head-to-head trial; (2) that the metastasis-free survival rate was an inappropriate

endpoint for this patient population; and (3) that, as a result of the foregoing, the Company’s

statements about its business, operations, and prospects, including statements about the


Ablatherm-HIFU device’s prospects for FDA approval, were materially false and misleading

and/or lacked a reasonable basis.

Disclosures at the End of the Class Period

39. On July 28, 2014, the FDA issued its Executive Summary of EDAP’s PMA

application for Ablatherm-HIFU device. In the report, FDA staff noted the limitations of the

Company’s safety and effectiveness data because the Company compared patients in two

different studies to gather evidence, rather than a head-to-head trial, stating, in relevant part:

The PMA clinical report makes comparisons across studies as if they were different arms of a randomized trial. Multiple problems arise when making such comparisons. One common difficulty with cross-study comparisons arises from differences in the frequency and timing of key follow-up measures between the two groups. For instance, while PIVOT RP subjects had regular bone scans at 5, 10, and 15 years, or at last visit for subjects with less than 15 years of follow-up, the comparator Ablatherm HIFU subjects underwent bone scans at physician discretion only. This difference could lead to under reporting of metastases for Ablatherm HIFU. Another problem in such comparisons is that patients in different groups may differ in prognostic variables, such as age, baseline PSA, cancer stage, and tumor size. Failure to adjust for such differences can bias the observed difference between two treatment groups when estimating the treatment effect. In the PMA, the comparisons between Ablatherm HIFU and PIVOT RP do not include adjustments for prognostic variables, as such information is not available to the applicant. The panel will be asked to discuss the adequacy and interpretability of the PMA effectiveness conclusions in this cross-study comparison. 40. Additionally, FDA staff questioned the effectiveness of the device, stating, in

relevant part:

FDA Comment: In light of the PIVOT study conclusions and the use of the low risk RP subgroup as the comparator to Ablatherm HIFU, the clinical benefit of the subject device in the treatment of the low risk population is unclear. 41. On this news, shares of EDAP declined $1.23 per share, over 25%, to close on



42. On July 30, 2014, after the market closed, the Company issued a press release

entitled, “EDAP Updates on FDA Advisory Committee Meeting on Ablatherm-HIFU for the

Treatment of Prostate Cancer.” Therein, the Company, in relevant part, stated:

EDAP TMS SA (Nasdaq:EDAP), the global leader in therapeutic ultrasound, today announced that the U.S. Food and Drug Administration’s (FDA) Gastroenterology and Urology Devices Panel (GUDP) voted 3 yes, 5 no with 1 abstention on the question of safety, 9 no on the question of efficacy, and 8 no with 1 abstention for the risk/benefit ratio for the use of its Ablatherm-HIFU device for the treatment of low-risk, localized prostate cancer. Marc Oczachowski, EDAP’s Chief Executive Officer, commented, “We are disappointed by the Committee’s recommendation regarding Ablatherm-HIFU for the treatment of low-risk, localized prostate cancer and we appreciate the dialogue during today’s meeting. We look forward to subsequent discussion with the FDA. We will continue to work diligently with the FDA as it carefully completes its final review for Ablatherm-HIFU’s PMA.” Prostate cancer is the most prevalent form of cancer in men with approximately 233,000 new cases diagnosed in the United States and approximately 380,000 in Europe each year. The FDA is not bound by the GUDP’s recommendation but will consider the committee’s guidance in reviewing the Pre-Market Approval (PMA) application for Ablatherm-HIFU. 43. On this news, shares of EDAP declined $1.50 per share, nearly 44%, to close on


44. On August 1, 2014, the FDA published a summary of the GUDP Panel’s

discussions, entitled, “Brief Summary of the Gastroenterology and Urology Panel of the Medical

Devices Advisory Committee Meeting – July 30, 2014.” Therein, the FDA summary, in relevant

part, stated:

Panel Deliberations/FDA Questions: Effectiveness The panelists discussed the two principal endpoints and comparisons presented in the PMA. First, the panelists discussed if biochemical survival rate at 2 years


using the Phoenix criteria demonstrates efficacy for non-radiation treatment of patients with low risk prostate cancer. The panelists overall did not support the use of this PSA-based endpoint, as it has not been validated for use in evaluating this type of therapy. The panelists also discussed if it is valid to use a performance goal as the comparator to evaluate the effectiveness of a new therapy for low risk prostate cancer. The majority of the panelists concluded “no,” although a few felt that use of a performance goal might be justified if it were validated. The panel members agreed that the use of the specific proposed literature-derived performance goal for comparison of the Ablatherm 2-year biochemical survival rate is not valid, and these results do not demonstrate device effectiveness. Second, the panelists discussed the clinical utility of metastasis rate at 8 years in the low risk prostate cancer population, considering the low incidence of events observed in the Prostate Cancer Intervention Versus Observation Trial (PIVOT) that is referenced in the PMA. Overall, they concluded that this endpoint is not clinically meaningful for this patient population. Additionally, most panelists were in agreement that comparison of Ablatherm to radical prostatectomy is not supportive of effectiveness, given that radical prostatectomy was not found to be different from observation in the PIVOT trial. The panelists concluded that the results of this analysis do not demonstrate device effectiveness. Next, the panelists discussed the effectiveness of the Ablatherm in view of the positive biopsy rate of 28% observed in the IDE. Panelists stated that this finding is the most pertinent of the outcome data provided in the PMA, and concluded that this result is not supportive of device effectiveness. Several panelists had questions regarding the characteristics of patients with positive biopsy, and there was discussion of the potential value of incorporating genomic profiles in potential prospective trials to assess cancer aggressiveness. Safety Overall, the panelists felt that the safety profile of this device has been adequately characterized for its intended use in the IDE study cohort. They cited the detailed, standardized follow-up that occurred during the IDE trial as support for this decision. The panelists were split, however, as to whether these results demonstrate Ablatherm safety. Some felt the adverse event profile is well-documented, similar to that of other treatments, and could be conveyed to patients with adequate counseling. Others expressed concerns about the need for inclusion of quality of life and urinary symptoms in the analysis of safety, wide confidence intervals from the limited cohort size, the unknown adverse events associated with the expected rate of repeat/salvage treatment, limitations given the enrollment of patients with only small prostates, potential operator dependency, and the lack of information provided on post-void residual volume and catheter removal. Post-Approval Study


The panelists were in agreement that metastasis-free survival is not appropriate for use as the primary endpoint for a post-approval study. Suggested alternate endpoints included biopsy (in the event of biochemical failure, as well as at 5 years), MR imaging, and longer term survival data. With regard to safety endpoints, the panelists were in agreement with the sponsor’s proposal to assess adverse events through 2 years. The panelists were in agreement that a comparator group is needed. However, there were different recommendations for the comparator group, including an active surveillance group, active treatment (e.g. radiation), or patients refusing any further treatment strategy. The panelists recommended the following issues also be evaluated in the post-market setting: assessment of whether training is appropriate for practitioners who do not work in in Centers of Excellence; and evaluation of quality of life.

CLASS ACTION ALLEGATIONS

45. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a class, consisting of all those who purchased EDAP’s

securities between February 1, 2013 and July 30, 2014, inclusive (the “Class Period”) and who

were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and

directors of the Company, at all relevant times, members of their immediate families and their

legal representatives, heirs, successors or assigns and any entity in which Defendants have or had

a controlling interest.

46. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, EDAP’s securities were actively traded on the

Nasdaq Stock Market (the “NASDAQ”). While the exact number of Class members is unknown

to Plaintiff at this time and can only be ascertained through appropriate discovery, Plaintiff

believes that there are hundreds or thousands of members in the proposed Class. Millions of

EDAP shares were traded publicly during the Class Period on the NASDAQ. As of December

31, 2013, EDAP had 21,789,670 shares of common stock outstanding. Record owners and other

members of the Class may be identified from records maintained by EDAP or its transfer agent


and may be notified of the pendency of this action by mail, using the form of notice similar to

that customarily used in securities class actions.

47. Plaintiff’s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by Defendants’ wrongful conduct in violation of

federal law that is complained of herein.

48. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

49. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants’ acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period omitted and/or misrepresented material facts about the business, operations, and

prospects of EDAP; and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

50. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation makes it impossible for members of the Class to individually

redress the wrongs done to them. There will be no difficulty in the management of this action as

a class action.


UNDISCLOSED ADVERSE FACTS

51. The market for EDAP’s securities was open, well-developed and efficient at all

relevant times. As a result of these materially false and/or misleading statements, and/or failures

to disclose, EDAP’s securities traded at artificially inflated prices during the Class Period.

Plaintiff and other members of the Class purchased or otherwise acquired EDAP’s securities

relying upon the integrity of the market price of the Company’s securities and market

information relating to EDAP, and have been damaged thereby.

52. During the Class Period, Defendants materially misled the investing public,

thereby inflating the price of EDAP’s securities, by publicly issuing false and/or misleading

statements and/or omitting to disclose material facts necessary to make Defendants’ statements,

as set forth herein, not false and/or misleading. Said statements and omissions were materially

false and/or misleading in that they failed to disclose material adverse information and/or

misrepresented the truth about EDAP’s business, operations, and prospects as alleged herein.

53. At all relevant times, the material misrepresentations and omissions particularized

in this Complaint directly or proximately caused or were a substantial contributing cause of the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or

misleading statements about EDAP’s financial well-being and prospects. These material

misstatements and/or omissions had the cause and effect of creating in the market an

unrealistically positive assessment of the Company and its financial well-being and prospects,

thus causing the Company’s securities to be overvalued and artificially inflated at all relevant

times. Defendants’ materially false and/or misleading statements during the Class Period


resulted in Plaintiff and other members of the Class purchasing the Company’s securities at

artificially inflated prices, thus causing the damages complained of herein.

LOSS CAUSATION

54. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused

the economic loss suffered by Plaintiff and the Class.

55. During the Class Period, Plaintiff and the Class purchased EDAP’s securities at

artificially inflated prices and were damaged thereby. The price of the Company’s securities

significantly declined when the misrepresentations made to the market, and/or the information

alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,

causing investors’ losses.

SCIENTER ALLEGATIONS

56. As alleged herein, Defendants acted with scienter in that Defendants knew that

the public documents and statements issued or disseminated in the name of the Company were

materially false and/or misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced

in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their

receipt of information reflecting the true facts regarding EDAP, his/her control over, and/or

receipt and/or modification of EDAP’s allegedly materially misleading misstatements and/or

their associations with the Company which made them privy to confidential proprietary

information concerning EDAP, participated in the fraudulent scheme alleged herein.

APPLICABILITY OF PRESUMPTION OF RELIANCE (FRAUD-ON-THE-MARKET DOCTRINE)


57. The market for EDAP’s securities was open, well-developed and efficient at all

relevant times. As a result of the materially false and/or misleading statements and/or failures to

disclose, EDAP’s securities traded at artificially inflated prices during the Class Period. On July

7, 2014, the Company’s stock closed at a Class Period high of $5.97 per share. Plaintiff and

other members of the Class purchased or otherwise acquired the Company’s securities relying

upon the integrity of the market price of EDAP’s securities and market information relating to

EDAP, and have been damaged thereby.

58. During the Class Period, the artificial inflation of EDAP’s stock was caused by

the material misrepresentations and/or omissions particularized in this Complaint causing the

damages sustained by Plaintiff and other members of the Class. As described herein, during the

Class Period, Defendants made or caused to be made a series of materially false and/or

misleading statements about EDAP’s business, prospects, and operations. These material

misstatements and/or omissions created an unrealistically positive assessment of EDAP and its

business, operations, and prospects, thus causing the price of the Company’s securities to be

artificially inflated at all relevant times, and when disclosed, negatively affected the value of the

Company stock. Defendants’ materially false and/or misleading statements during the Class

Period resulted in Plaintiff and other members of the Class purchasing the Company’s securities

at such artificially inflated prices, and each of them has been damaged as a result.

59. At all relevant times, the market for EDAP’s securities was an efficient market for

the following reasons, among others:

(a) EDAP stock met the requirements for listing, and was listed and actively

traded on the NASDAQ, a highly efficient and automated market;


(b) As a regulated issuer, EDAP filed periodic public reports with the SEC

and/or the NASDAQ;

(c) EDAP regularly communicated with public investors via established

market communication mechanisms, including through regular dissemination of press releases

on the national circuits of major newswire services and through other wide-ranging public

disclosures, such as communications with the financial press and other similar reporting services;

and/or

(d) EDAP was followed by securities analysts employed by brokerage firms

who wrote reports about the Company, and these reports were distributed to the sales force and

certain customers of their respective brokerage firms. Each of these reports was publicly

available and entered the public marketplace.

60. As a result of the foregoing, the market for EDAP’s securities promptly digested

current information regarding EDAP from all publicly available sources and reflected such

information in EDAP’s stock price. Under these circumstances, all purchasers of EDAP’s

securities during the Class Period suffered similar injury through their purchase of EDAP’s

securities at artificially inflated prices and a presumption of reliance applies.

NO SAFE HARBOR

61. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this Complaint.

The statements alleged to be false and misleading herein all relate to then-existing facts and

conditions. In addition, to the extent certain of the statements alleged to be false may be

characterized as forward looking, they were not identified as “forward-looking statements” when

made and there were no meaningful cautionary statements identifying important factors that


could cause actual results to differ materially from those in the purportedly forward-looking

statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to

any forward-looking statements pleaded herein, Defendants are liable for those false forward-

looking statements because at the time each of those forward-looking statements was made, the

speaker had actual knowledge that the forward-looking statement was materially false or

misleading, and/or the forward-looking statement was authorized or approved by an executive

officer of EDAP who knew that the statement was false when made.

FIRST CLAIM Violation of Section 10(b) of

The Exchange Act and Rule 10b-5 Promulgated Thereunder Against All Defendants

62. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

63. During the Class Period, Defendants carried out a plan, scheme and course of

conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing

public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and

other members of the Class to purchase EDAP’s securities at artificially inflated prices. In

furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of them,

took the actions set forth herein.

64. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made

untrue statements of material fact and/or omitted to state material facts necessary to make the

statements not misleading; and (iii) engaged in acts, practices, and a course of business which

operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to

maintain artificially high market prices for EDAP’s securities in violation of Section 10(b) of the


Exchange Act and Rule 10b-5. All Defendants are sued either as primary participants in the

wrongful and illegal conduct charged herein or as controlling persons as alleged below.

65. Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about EDAP’s financial

well-being and prospects, as specified herein.

66. These defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure investors of EDAP’s value and

performance and continued substantial growth, which included the making of, or the

participation in the making of, untrue statements of material facts and/or omitting to state

material facts necessary in order to make the statements made about EDAP and its business

operations and future prospects in light of the circumstances under which they were made, not

misleading, as set forth more particularly herein, and engaged in transactions, practices and a

course of business which operated as a fraud and deceit upon the purchasers of the Company’s

securities during the Class Period.

67. Each of the Individual Defendants’ primary liability, and controlling person

liability, arises from the following facts: (i) the Individual Defendants were high-level executives

and/or directors at the Company during the Class Period and members of the Company’s

management team or had control thereof; (ii) each of these defendants, by virtue of their

responsibilities and activities as a senior officer and/or director of the Company, was privy to and

participated in the creation, development and reporting of the Company’s internal budgets, plans,

projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and


familiarity with the other defendants and was advised of, and had access to, other members of the

Company’s management team, internal reports and other data and information about the

Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants

was aware of the Company’s dissemination of information to the investing public which they

knew and/or recklessly disregarded was materially false and misleading.

68. The defendants had actual knowledge of the misrepresentations and/or omissions

of material facts set forth herein, or acted with reckless disregard for the truth in that they failed

to ascertain and to disclose such facts, even though such facts were available to them. Such

defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and

for the purpose and effect of concealing EDAP’s financial well-being and prospects from the

investing public and supporting the artificially inflated price of its securities. As demonstrated

by Defendants’ overstatements and/or misstatements of the Company’s business, operations,

financial well-being, and prospects throughout the Class Period, Defendants, if they did not have

actual knowledge of the misrepresentations and/or omissions alleged, were reckless in failing to

obtain such knowledge by deliberately refraining from taking those steps necessary to discover

whether those statements were false or misleading.

69. As a result of the dissemination of the materially false and/or misleading

information and/or failure to disclose material facts, as set forth above, the market price of

EDAP’s securities was artificially inflated during the Class Period. In ignorance of the fact that

market prices of the Company’s securities were artificially inflated, and relying directly or

indirectly on the false and misleading statements made by Defendants, or upon the integrity of

the market in which the securities trades, and/or in the absence of material adverse information

that was known to or recklessly disregarded by Defendants, but not disclosed in public


statements by Defendants during the Class Period, Plaintiff and the other members of the Class

acquired EDAP’s securities during the Class Period at artificially high prices and were damaged

thereby.

70. At the time of said misrepresentations and/or omissions, Plaintiff and other

members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff

and the other members of the Class and the marketplace known the truth regarding the problems

that EDAP was experiencing, which were not disclosed by Defendants, Plaintiff and other

members of the Class would not have purchased or otherwise acquired their EDAP securities, or,

if they had acquired such securities during the Class Period, they would not have done so at the

artificially inflated prices which they paid.

71. By virtue of the foregoing, Defendants have violated Section 10(b) of the

Exchange Act and Rule 10b-5 promulgated thereunder.

72. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and

the other members of the Class suffered damages in connection with their respective purchases

and sales of the Company’s securities during the Class Period.

SECOND CLAIM Violation of Section 20(a) of

The Exchange Act Against the Individual Defendants

73. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

74. The Individual Defendants acted as controlling persons of EDAP within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company’s operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had


the power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements which Plaintiff contends are false and misleading. The Individual Defendants were

provided with or had unlimited access to copies of the Company’s reports, press releases, public

filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after

these statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

75. In particular, each of these Defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

76. As set forth above, EDAP and the Individual Defendants each violated Section

10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By virtue of

their positions as controlling persons, the Individual Defendants are liable pursuant to Section

20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful conduct,

Plaintiff and other members of the Class suffered damages in connection with their purchases of

the Company’s securities during the Class Period.

PRAYER FOR RELIEF

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

(a) Determining that this action is a proper class action under Rule 23 of the Federal

Rules of Civil Procedure;


(b) Awarding compensatory damages in favor of Plaintiff and the other Class

members against all defendants, jointly and severally, for all damages sustained as a result of

Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;

(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in

this action, including counsel fees and expert fees; and

(d) Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

Documents

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW … · treatment of localized prostate cancer. According to the Company, Ablatherm-HIFU is generally recommended for patients