October 16th, 2006
Hartford, Connecticut, October 16, 2006/PRNewswire/Shepherd, Finkelman, Miller & Shah, LLC Announces Class Action Lawsuit Against Connetics Corporation -- CNCT
Shepherd, Finkelman, Miller & Shah, LLC (http://www.sfmslaw.com; e-mail: firstname.lastname@example.org), a law firm with offices in Connecticut, Florida, New Jersey, Pennsylvania and Wisconsin, announces that a lawsuit seeking class action status has been filed in the United States District Court for the Northern District of California on behalf of all persons (the “Class”) who purchased the securities of Connetics Corporation (NASDAQ: CNCT - News) (“Connetics” or the “Company”) during the period between and including June 28, 2004 through July 9, 2006 (the “Class Period”).
A copy of the Complaint may be obtained from the Court, or you can call our offices toll free at either 866/540-5505 or 877/891-9880 to speak with an attorney regarding this matter and we will send you a copy of the Complaint. In addition, you can contact us at the e-mail addresses provided above and below and we will send you a copy of the Complaint and answer any questions that you may have.
The Complaint charges Connetics and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to Defendants or recklessly disregarded by them: (1) the Company would be unable to obtain Food and Drug Administration (“FDA”) approval for its new acne drug, Velac, due, in part, to high incidences of tumors in a carcinogenicity study; (2) Defendants’ statements concerning the prospects for Velac obtaining FDA approval and regarding the Company’s future financial expectations from its success were lacking in any reasonable basis when made; (3) the Company improperly accounted for rebates; (4) the Company understated its rebate reserves; (5) the Company lacked adequate internal controls; (6) the Company’s financial statements were prepared in violation of Generally Accepted Accounting Principles (“GAAP”); (7) as a result of the foregoing, the Company was unable to achieve its forecasted operating results; and (8) the Company’s financial statements were materially false and misleading during the Class Period.
On April 26, 2005, Connetics shocked the market when it announced that the FDA had requested additional information concerning Velac. On this news, shares of Connetics plummeted $5.27, or 19.1 percent, to close, on April 27, 2005, at $22.30 per share, on unusually heavy trading volume. On June 13, 2005, before the market opened, the Company further stunned investors when it announced that it had received a letter from the FDA for Velac indicating that the pharmaceutical would not be approved for sale. On this news, shares of Connetics sank $5.64, or 27.2 percent, to close, on June 13, 2005, at $15.13 per share, on unusually heavy trading volume. On March 28, 2006, the Securities and Exchange Commission (“SEC”) announced that it had filed suit in the United States District Court for the Southern District of New York against Defendant, Alexander J. Yaroshinsky (“Yaroshinsky”), charging him with illegally trading on the basis of non-public, inside information after learning of the FDA preliminary reactions to the carcinogenicity study of Velac. Further, on May 3, 2006, after the market closed, the Company announced that its financial statements for the year ended December 31, 2005, as well as potentially for additional periods, should no longer be relied upon because Connetics had determined that it understated its rebate reserves as of the end of 2005. The Company also stated that, for the second quarter of 2006, it projected total revenues of $50.5 million to $52.5 million, and total revenues between $211 million and $217 million for 2006.
On June 22, 2006, the SEC filed an Amended Complaint against Yaroshinsky, which included details of the study relating to the cancer tests of Velac. The SEC also named one of Yaroshinsky’s neighbors as a Defendant, alleging that the individual had traded on inside information received from Yaroshinsky. On July 10, 2006, before the market opened, Connetics announced that it expected revenue and earnings per share for the second quarter, and for the full year 2006, to be materially below the amounts included in the guidance that the Company provided on May 3, 2006. On this news, shares of Connetics plunged $3.93, or 33.6 percent, to close, on July 10, 2006, at $7.76 per share, on unusually heavy trading volume.
If you purchased Connetics securities between June 28, 2004 through July 9, 2006 (inclusive), you may qualify to serve as lead plaintiff on behalf of the Class. All motions for appointment as lead plaintiff must be filed with the Court no later than November 17, 2006. Any member of the proposed Class may move the Court to serve as lead plaintiff in this action through counsel of his or her choice, or may remain an absent Class member. There are certain legal requirements to serve as lead plaintiff which we would be pleased to discuss with you. Please contact James E. Miller, Esquire (866/540-5505; email@example.com), or James C. Shah, Esquire (877/891-9880; firstname.lastname@example.org), if you would like to discuss this action or have any questions regarding this notice or your rights.
Shepherd, Finkelman, Miller & Shah, LLC (http://www.sfmslaw.com) is a national law firm that represents investors, including institutions and individuals, as well as consumers, in class action and other complex litigation, and maintains offices in Connecticut, Florida, New Jersey, Pennsylvania and Wisconsin. The firm’s attorneys have appeared in matters on behalf of our clients throughout the United States and have been appointed lead counsel in a number of class actions and corporate governance matters.