The lawsuit alleges that, throughout the applicable period, Taro told the market that it had successfully expanded its product line to include proprietary drugs and novel drug delivery systems. Unbeknownst to investors, the company allegedly experienced undisclosed adverse difficulties that had a negative impact on its financial performance and condition. Among other things, the action alleges that Taro failed to report that it: (1) was unable to maintain profitability in its generic drug division; (2) failed to generate free cash flow from the introduction of higher margin proprietary products sufficient to offset the expense of its new product launches; (3) failed to properly record the full expense of developing new proprietary drug products; (4) made false statements that the roll-out of its new proprietary drugs would not adversely affect its near- or long-term profitability; and (5) understated the negative effects of increasing competition on its financial performance. As a result of these statements, the defendants allegedly lacked any reasonable basis to claim that Taro was operating according to plan or that it could maintain profitability in the near-term.

The truth emerged on July 29, 2004, when Taro announced a second-quarter loss of $0.31 per share, far below the company-guided analyst consensus estimate of $0.44 per share earnings. At that time, it announced that drug sales had dropped to $49.1 million from $74.8 million in the prior second quarter. On this news, Taro’s share price fell more than $11.50 per share to a new low of $18.68 per share.

If you purchased securities issued by Taro during the applicable period, you may request appointment by the court as a lead plaintiff if you do so by October 4, 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 you in this action, or you may choose to do nothing, and remain in the class as a silent member.