According to the Form 10-K for the fiscal year ended December 31, 2002, on May 13, 2002, the defendants filed Motions to Dismiss, seeking to have the Court dismiss the plaintiff’s Consolidated Amended Complaint. On December 20, 2002, the Court dismissed the Consolidated Amended Complaint for failing to meet the requirements of the Private Securities Litigation Reform Act of 1995. The Court’s order dismissed the Consolidated Amended Complaint without prejudice but gave the plaintiffs leave to amend the Consolidated Amended Complaint to attempt to cure its defects. Subsequently, the plaintiffs decided not to amend the Consolidated Amended Complaint, and on February 24, 2003, the parties filed a joint motion for voluntary dismissal of the Consolidated Amended Complaint with prejudice which the Court granted.
The original complaint was filed alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of materially false and misleading statements to the market between March 27, 2001 and November 1, 2001. Throughout the Class Period, the Company publicly touted two of its women's hormone replacement products and represented that sales of these agents would be substantial. These statements, as alleged in the complaint, were materially false and misleading because by November 13, 2000, defendants knew that Novartis Pharma AG ("Novartis"), its exclusive marketing agent in Europe, was not aggressively marketing Noven's two hormone drugs, and that Novartis was instead marketing its own competing drug, Estraderm. On August 2, 2001, Noven issued a press release which only partially revealed the truth, stating that sales to Novartis were weaker than analysts and investors had been led to believe. In response, Noven's stock price plunged by 43%, to close at $18.98 on August 3, 2001. Subsequently, on November 1, 2001, Noven issued a press release which revealed, for the first time, that Novartis had its own hormone-replacement system and would not be converting to Noven's product, that Novartis had excess-inventories of Noven's products and that, as a result, Noven's European sales would decline substantially in the fourth quarter of 2001 and 2002. In response to this announcement, Noven's stock price fell by 33% to $14.89.