AVANIR PHARMACEUTICALS, INC.

Summary of Case: Summary of the Case:

A securities class action has been filed against Avanir Pharmaceuticals, Inc. (LDAKA; AVN; AVNR) (" Avanir" or the "Company") on behalf of all securities purchasers from July 1, 1995 through October 31, 2006, inclusive ("Class Period"), in the United States District Court for the Southern District of California.

The complaint alleges that Avanir Pharmaceuticals, Inc. (formerly known as Lidak Pharmaceuticals) is focused on acquiring, developing, and commercializing novel therapeutic products for the treatment of chronic diseases. Its lead product candidate, Zenvia, is being developed for the treatment of pseudobulpar affect ("PBA"), a neurological disease that causes sudden and unpredictable episodes of crying, laughing, or other emotional displays.
 
On October 31, 2006, Avanir disclosed that the FDA had issued an "Approvable Letter" indicating that Avanir's New Drug Application ("NDA") for Zenvia was approvable, subject to Avanir satisfying the FDA's concerns about the safety and efficacy of Avanir. This Approvable Letter, which Avanir's then CEO called a "negative surprise", was a far cry from the statements defendants made during the relevant time period, in which defendants all but guaranteed that the FDA would approve the NDA for Zenvia. Not surprisingly, when the truth was revealed, the price of Avanir's shares collapsed to as low as $3.98 per share, down 54% from the previous day's closing of $7.40 per share. Today, Avanir's stock trades around $1.80 per share and over the last few years has been dangerously close to being de-listed.
 
The FDA's approvable letter was hardly a "surprise". Avanir had known for months that the FDA had serious concerns about Zanvia's safety and efficacy. Avanir hid this information from the Company's shareholders because after suffering a serious setback on one of its other drugs, Avanir was on the verge of collapsing. Avanir had a very small revenue stream and was dependent on financing its operations through sales of its stock. In order to stoke investor confidence in the Company, Avanir needed to paint a positive picture as to the prospects of Zenvia. If Avanir disclosed to its shareholders that the FDA had safety issues with Zenvia, the resulting reaction from the marketplace would have been devastating to Avanir's share price.