ATLANTA, Sept. 4, 2002 (PRIMEZONE) -- Notice is hereby given that a class action lawsuit has been filed in the United States District Court for the Northern District of Georgia on behalf of all persons who purchased or otherwise acquired the securities of First Horizon Pharmaceuticals ("First Horizon" or the "Company") (Nasdaq:FHRX) between April 24, 2002 through July 2, 2002, inclusive (the "Class Period"). The lawsuit alleges that First Horizon and other defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, by issuing a series of materially false and misleading statements to the market.
On April 24, 2002, First Horizon completed a public offering of securities, selling 6.5 million shares of common stock at an offering price of $21.75 per share, pursuant to a Prospectus declared effective by the SEC on April 18, 2002. In the prospectus, the Company failed to disclose material information relating to two products, Tanafed Suspension (a pediatric liquid and allergy product) and Prenate GT (a prescription prenatal vitamin) and instead boasted about the strong market for these products. However, the market for these products was severely declining and defendants had flooded wholesalers with Prenate GT inventory in the first quarter of 2002 in order to report strong sales prior to the secondary offering. Belatedly, defendants disclosed that due to price erosion arising from generic competition, First Horizon's products had not been widely accepted by the market. In addition, sales growth from the Company's newly acquired "Sular" drug line had failed to yield strong results, and a promised redeployment of First Horizon's sales force similarly failed to boost First Horizon's bottom line.
As a result of the defendants' misrepresentations, investors have sustained tremendous losses. On July 2, 2002, First Horizon shocked the market by revealing that the Company expected to report revenues of between $25 and $26 million, and earnings per share between $0.00 and $0.02, excluding a $2.2 million debt write-off, for the second quarter of 2002. For the full year, First Horizon revised its guidance to $0.34 a share, a significant drop from its earlier guidance of $0.56 to $0.57 a share. A July 2, 2002 press release attributed the massive shortfall mainly to "greater than expected erosion of sales in the second quarter" of Tanafed and Prenate GT, as well as "distraction" arising out of a sales force "realignment." In response to the Company's devastating news concerning the lack of acceptance of two of its key products, First Horizon's stock price plummeted by an astonishing 81%, falling $14.73 to close at $3.51 on volume of about 30 times the daily average.
If you bought the securities of First Horizon from April 24, 2002 through July 2, 2002, you may, no later than October 30, 2002, join in the action and/or move for appointment as lead plaintiff. In order to serve as lead plaintiff, you must meet certain legal requirements.
Plaintiff is represented by Chitwood & Harley, a law firm that concentrates its practice in representing victims of securities fraud and corporate mismanagement, as well as other complex litigation. Chitwood & Harley has been appointed lead counsel in major actions throughout the United States in both federal and state courts and has been instrumental in recovering billions of dollars on behalf of its clients.
If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, you may contact Nikole Davenport at 1-888-873-3999 (toll-free) or by e-mail at nmd@classlaw.com, CHITWOOD & HARLEY, 2900 Promenade II, 1230 Peachtree Street, N.E., Atlanta, Georgia 30309. For more information about Chitwood & Harley, please visit our website at www.classlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.