The original Complaint alleges that NeoPharm and certain of its directors and officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of NeoPharm common stock. Specifically, the Complaint alleges that NeoPharm issued a series of statements concerning its Liposome Encapsulated Praclitaxel ("LEP") product, and that the defendants made materially false positive statements to Pharmacia in order to induce their participation in clinical trials of LEP; failed to disclose that Pharmacia was studying a different formulation of LEP that would not necessarily support the approval of NeoPharm's LEP product; and failed to disclose that all of Pharmacia's clinical trials failed to produce any positive benefits to patients. In addition, certain individual defendants wrongfully sold shares of NeoPharm on the open market at artificially inflated prices, reaping proceeds of over $7 million. When, on April 19, 2002, NeoPharm announced that it filed for arbitration to resolve a dispute with Pharmacia, and, in response, Pharmacia counter-claimed for breach of its agreement with NeoPharm concerning the nature of NeoPharm's initial disclosures, the market reacted accordingly. NeoPharm's stock price dropped from $20.41 per share on April 19, 2002 to $15.43 on April 22, 2002 on volume of 2,863,000 -- over seventeen times the prior day's volume.

As disclosed by the Company’s FORM 10-Q For Quarterly Period Ended June 30, 2006, on September 16, 2002, a consolidated amended complaint was filed against the Company in this matter. The amended complaint shortened the class period to October 31, 2001 through April 19, 2002, removed the former director and executive officer of the Company as a defendant, and added the Company’s former Chief Scientific Officer and Executive Vice President of Research and Development as a defendant. On November 4, 2002, the Company moved to have the complaint dismissed. The Company’s motion to dismiss was granted in part and denied in part in February 2003. The Chairman of the Company was dismissed from the lawsuit at that time. In November 2004, the plaintiffs filed a motion to amend and a motion for summary adjudication. The motion to amend seeks to again make the Chairman of the Company a defendant, and realleges that certain pre-class period statements are actionable. The motion for summary adjudication asks the Court to rule that certain statements made in the arbitration award between the Company and Pharmacia (now Pfizer) be deemed facts established in this proceeding. The Company filed oppositions to both motions. The Court has not yet ruled on the motions. No trial date has been set and discovery is ongoing.

On August 17, 2004, the Honorable Joan Humphrey Lefkow granted the lead plaintiff’s June 17, 2004 renewed motion for class certification. On September 13, 2004, a settlement conference was held before the Honorable Geraldine Soat Brown. According to the Minute Order for that day, the parties were unable to reach a settlement agreement and the case was returned to the assigned judge. On February 23, 2007, Judge Lefkow signed the Memorandum Opinion and Order denying the plaintiff’s motion for summary adjudication. On March 21, 2008, the defendants filed a motion for summary judgment. The plaintiffs have responded with an opposition to that motion.

According the Opinion and Order signed by the Honorable Joan H. Lefkow on March 31, 2010, the defendants' motion for summary judgment is granted as to statements made before January 14, 2002 and denied as to all other statements.

On November 8, 2010, a Stipulation of Settlement was filed. The proposed settlement is in the amount of $3,350,000 in cash. On December 21, 2010, the settlement was preliminarily approved. The final settlement hearing was set for March 17, 2011. At the hearing, the motion for final approval of the settlement was granted.