Alkermes focuses on the development of controlled-release drug delivery technologies and their application to existing or new drug therapies. The class action alleges that during this time period, the defendants issued a series of materially false and misleading statements about the company's New Drug Application for Risperdal Consta.

The action alleges that the true facts, which were known by each of the defendants during the class period but were concealed from the investing public, were as follows:

1. In an attempt to decrease development expenses and speed the product to market, the defendants concealed the deficient nature of the manufacturing process for Medisorb polylactide-glycolide polymer used to manufacture Risperdal Consta, resulting in quality management issues and delays in the development program.

2. In order to conceal lot-to-lot variations resulting from the manufacturing process for Medisorb polymer, the defendants minimized process development and validation requirements, including the establishment of specifications and analytical tests necessary to control those variations.

3. Significant quality issues for the manufacture of Risperdal Consta existed at the company's Wilmington, Ohio, facility, impacting the company's ability to meet clinical development timelines for Risperdal Consta.

4. In order to avoid disclosure of the serious deficiencies of the Medisorb manufacturing process, particularly the lot-to-lot variation in molecular weight for Medisorb polymer, and in order to find a way to fix the desired molecular weight of the Risperdal Consta finished drug product, the defendants patented a method to degrade the finished product to the desired molecular weight.

5. The defendants' revenue projections for Risperdal Consta were grossly inflated based on the defendants' concealment of the fact that Risperdal's adverse effects and safety or tolerability issues worsen when Risperdal was formulated using Medisorb technology and used as intended.

6. The defendants concealed that due to the combined effect of the financial agreements reached with its joint venture partner, Janssen, Risperdal Consta would not be profitable unless it achieved the high end of sales projections, an unlikely outcome because of the worsening of Risperdal's adverse effects and safety or tolerability issues when the drug is formulated using Medisorb technology and used as intended.

7. The serious safety concerns for Risperdal "oral" and Risperdal Consta "depot" products, such as cerebrovascular effects in elderly patients, extrapyramidal symptoms, QT interval prolongation and diabetes, which were detected in clinical trials that went unreported to worldwide regulatory authorities for long periods, in some cases for studies completed well before the beginning of the class period, were negatively impacting the regulatory review process.

8. For one or more reasons related to the known but unmet manufacturing, safety or efficacy requirements for the drug, the New Drug Application for Risperdal Consta would not be approved on July 1, 2002.

9. The failure to disclose the defective nature of the Risperdal Consta chemical and manufacturing controls, clinical program, safety and other issues preventing the company from realizing product approval would prevent investors from learning the extent of the misrepresentations made to them during the class period.

As a result of the defendants' allegedly false statements, Alkermes stock traded at inflated prices during the class period, increasing to as high as $70.06 on February 16, 2000, when the company sold $200 million worth of its own securities. On July 1, 2002, the defendants announced the receipt of a non-approvable letter for Risperdal Consta. As a result of this announcement, Alkermes' stock price dropped precipitously over the next two days to a low of $4.04, or a loss of 93% from its class-period high of $98 per share, on total volume of 29 million shares.