Shareholder Class Action Filed Against Connetics Corporation by the Law Firm of Schiffrin & Barroway, LLP

7 October 2006

The following statement was issued today by the law firm of Schiffrin & Barroway, LLP:

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Northern District of California on behalf of all common stock purchasers of Connetics Corporation (Nasdaq: CNCT) ("Connetics" or the "Company") from June 28, 2004 through July 9, 2006, inclusive (the "Class Period").

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Schiffrin & Barroway, LLP (Darren J. Check, Esq. or Richard A. Maniskas, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at info@sbclasslaw.com.

The Complaint charges Connetics and certain of its officers and directors with violations of the Securities Exchange Act of 1934. More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company would be unable to obtain FDA approval for its new acne drug Velac due, in part, to high incidence of tumors in a carcinogenicity study; (2) that, as a result of the foregoing, defendants' statements concerning Velac's approvability and future financial expectations from its success were lacking in any reasonable basis when made; (3) that the Company improperly accounted for rebates; (4) specifically, that the Company, among other things, understated its rebate reserves; (5) that the Company lacked adequate internal controls; (6) that the Company's financial statements were presented in violation of Generally Accepted Accounting Principles; (7) that, as a result of the foregoing, the Company would be unable to achieve its forecasted operating results; and (8) that, as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.

On April 26, 2005, Connetics stunned investors when the Company announced that the FDA had requested additional information concerning the Company's new drug to treat acne, Velac. On this news, shares of Connetics plummeted $5.27, or 19.1 percent, to close, on April 27, 2005, at $22.30 per share, on unusually heavy trading volume. On June 13, 2005, Connetics, before the market opened, further shocked investors when the Company announced that it had received a non-approvable letter from the FDA for Velac. On this news, shares of Connetics sank $5.64, or 27.2 percent, to close, on June 13, 2005, at $15.13 per share, on unusually heavy trading volume.

On March 28, 2006, the SEC announced that it had filed suit in the United States District Court for the Southern District of New York against defendant Alexander J. Yaroshinsky ("Yaroshinsky"), charging him with illegally trading on the basis of non-public, inside information after learning the FDA's preliminary reactions to a study relating to cancer tests of Velac, Connetics' new drug for the treatment of acne. On May 3, 2006, Connetics, after the market closed, announced that the Company's financial statements for the year ended December 31, 2005, and potentially additional periods, should no longer be relied upon, as the Company had determined that it understated its rebate reserves as of the end of 2005. The Company also stated that, for the second quarter of 2006, it projected total revenues of $50.5 million to $52.5 million, and total revenues between $211 million and $217 million for 2006.

On June 22, 2006, the SEC filed an amended Complaint against defendant Yaroshinsky, which included details of the study relating to cancer tests of Velac. The SEC also named one of defendant Yaroshinsky's neighbors as a defendant, alleging that the individual had traded on inside information received from defendant Yaroshinsky. On July 10, 2006, before the market opened, Connetics announced that the Company expected revenue and earnings per share for the second quarter, and for the full year 2006, to be materially below the amounts included in the guidance that the Company provided on May 3, 2006. On this news, shares of Connetics plunged $3.93, or 33.6 percent, to close, on July 10, 2006, at $7.76 per share, on unusually heavy trading volume.

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Schiffrin & Barroway, which prosecutes class actions in both state and federal courts throughout the country. Schiffrin & Barroway is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world. For more information about Schiffrin & Barroway, or to sign up to participate in this action online, please visit http://www.sbclasslaw.com.

If you are a member of the class described above, you may, not later than November 17, 2006, move the Court to serve as lead plaintiff of the class, if you so choose. 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 the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as "lead plaintiff." Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. You may retain Schiffrin & Barroway, or other counsel of your choice, to serve as your counsel in this action.

CONTACT: Schiffrin & Barroway, LLP

Darren J. Check, Esq.

Richard A. Maniskas, Esq.

280 King of Prussia Road

Radnor, PA 19087

1-888-299-7706 (toll free) or 1-610-667-7706

Or by e-mail at info@sbclasslaw.com

Source: prnewswire

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