POZEN focuses on development of drug therapies for the treatment of migraine headaches. Its lead product candidates included MT 100, a proprietary formulation containing metoclopramide hydrochloride and naproxen sodium; MT 300, a proprietary formulation of dihydroergotamine mesylate in a pre-filled syringe; and MT 400, which is being developed as a co-active acute migraine therapy.

The action alleges that POZEN failed to disclose the following adverse facts:

• That the defendants knew that its drugs MT 100 and MT 300 were unsafe and ineffective;

• That despite knowing these facts, it entered into various licensing agreements in order to book revenues and achieve positive cash flows;

• That as a result of booking revenues and achieving positive cash flows, the individual defendants were able to manipulate the company's stock price in order to attain large bonuses-- which were tied to the stock price rather than the success of the company's product pipeline;

• With respect to the drug MT 300, the defendants knew that the drug resulted in higher incidences of nausea and vomiting as compared to placebo in two Phase III trials and that the drug failed to show statistical superiority as compared with placebo with regard to controlling symptoms of migraines;

• With respect to the drug MT 100, defendants knew that MT 100's chances of being approved by the FDA were less than 50% because of concerns about several primary end points, particularly pain response to migraines at two hours, lack of data showing consistent two-hour pain response and symptom relief, and worries about the drug's carcinogenicity; and

• That MT 100 failed to show superiority to a placebo as measured by a two-hour response and two-hour symptom migraine relief.

On October 20, 2003, POZEN announced that it had received a not-approvable letter from the U.S. Food and Drug Administration related to its New Drug Application (NDA) for MT 300. The letter was issued based on the FDA's conclusion that while MT 300 achieved its primary end point, it failed to achieve statistical significance versus placebo for the relief at two hours of the secondary symptoms of migraine (nausea, sensitivity to light, and sensitivity to sound). On this news, shares of POZEN fell $5.83 per share, or 32.8%, to close at $11.94 per share on unusually high trading volume on October 20, 2003.

On June 1, 2004, POZEN announced that the FDA issued a not-approvable letter on Friday, May 28, 2004, concerning the Company's NDA for MT 100 for the acute treatment of migraine. In the FDA letter, the FDA cited the apparent lack of superiority of MT 100 over naproxen for sustained pain relief, which was the primary end point for the two component studies. Additionally, for the first time the FDA raised an approvability issue concerning the risk of tardive dyskinesia (TD) presented by the use of metoclopramide, one of the components of MT 100. In this regard, the FDA stated in their letter, "given the number of patients exposed to MT 100 for at least one year in your database (about 300), the absence of any detected cases is consistent with a true rate of TD of about 1%, an unacceptably high risk in the absence of any demonstrated advantage of the product." Further, the FDA mentioned that based on animal studies, there may be a potential risk of carcinogenicity, presumably due to metoclopramide. Shares of POZEN fell $3.69 per share, or 37.2%, to close at $6.23 per share on unusually high volume.

If you purchased securities issued by POZEN during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by August 3, 2004. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the court must determine that your claim is typical of the claims of other class members, and that you will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiffs. Your ability to share in any recovery is not affected by the decision whether or not to serve as a lead plaintiff. You may retain any counsel of your choice to serve as you in this action, or you may choose to do nothing, and remain in the class as a silent member.