According to the docket, the Court entered the Order and Final Judgment on November 3, 2001. The case is closed. The settlement amount, $3.75 million, has been funded by the Cell Pathways, Inc.'s primary insurance carrier.

On June 7, 2001, the Company reached an agreement in principle settling all claims arising from this lawsuit. On September 4, 2001, the court preliminarily approved the settlement. Notice has been provided to the class and the period within which members of the class may elect to opt out or object to the settlement expired on November 5, 2001. This settlement is still subject to final court approval. There is no assurance that the settlement will be approved or completed in a timely fashion or at all.

In February and March of 1999, five different groups of stockholders filed class actions in the United States District Court in Philadelphia against the Company, and certain of its officers and directors alleging violations of Section 11 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaints alleged that the Company made false and misleading statements about the efficacy and near-term commercialization of the Company's lead drug candidate, Exisulind.

The cases were consolidated on March 12, 1999, and a consolidated amended complaint which asserts claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10-b5 was filed on June 28, 1999 seeking an unspecified amount of damages on behalf of a class of persons who traded in the Company's securities between October 7, 1998 and February 2, 1999 (extended class period).

The original Complaint alleged that during the Class Period, defendants disseminated numerous announcements concerning PREVATAC (exisulind), its current and future prospects concerning PREVATAC (exisulind) in violation of the federal securities laws. The Complaint alleges that the defendants' false statements artificially inflated the price of Cell pathways stock.