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Connetics Hit With Shareholder Lawsuit Over Failed Drug

Law360 (September 21, 2006, 12:00 AM EDT) -- Connetics Corp., a pharmaceutical company specializing in dermatological products, has been hit with a securities class action over allegations that it concealed a finding on a new drug which eventually caused the Food and Drug Administration to reject it.

The suit alleges that after a six-month study on mice, Connetics concealed the discovery that 55% of the mice treated with Velac, a new acne medication, developed tumors.

The company also falsified financial reports by failing to properly reserve for rebates, so that it could cash in...
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