Akorn receives good news after manufacturing network blow

By Ben Hargreaves contact

- Last updated on GMT

(Image: Getty/Zoinlerek)
(Image: Getty/Zoinlerek)

Related tags: Akorn, Fresenius, India

Akorn announces fraud case launched by Fresenius has been denied by US courts, shortly after fourth quarter financials revealed problems within its manufacturing network.

The public issues Akorn has been experiencing over the last year have dragged its share price down from $18 (€15.89), one year ago, to $3.98 (€3.51), today.

The biggest challenge Akorn faces is how to recover after Fresenius aborted its move​ to acquire the company.

During the legal case that Fresenius pursued to extract itself from the deal, damaging allegations were made regarding potential Akorn’s internal issues, such as alleged material breaches of US Food and Drug Administration (FDA) data integrity requirements.

However, Akorn received positive news from the on-going litigation regarding the deal, after the Delaware Court of Chancery denied Fresenius its request to bring a fraud claim against the company.

Newly appointed CEO, Douglas Boothe, said, “We are pleased that the court has ruled in our favour on this motion. This is an important development for us, as we focus on our future and on strengthening the business to enhance shareholder value.”

Financials

At the end of last week, Akorn released its fourth quarter and full year financials, which showed that the company’s revenues had decreased compared to the previous year – both in terms of fourth quarter and year-on-year activity.

Revenues for Q4 were $153.4m, representing a decrease of 17.6% on the previous year’s results. While for the financial year ending December 31, 2018, the company experienced a 17.5% overall decrease in revenue compared to the same period in 2017.

Manufacturing troubles

Compounding its financial difficulties was the announcement, made during an investor call, that its site in Amityville, US, had received four observations, after a US Food and Drug Administration (FDA) inspection.

The observation of the facility, from January 23 to February 13, 2019, noted that records were not kept for the maintenance, cleaning, sanitising and inspection of equipment.

Additional issues included deficient aseptic processing, and failure to follow its written stability testing program. None of the problems identified were repeat observations.

Regarding the FDA’s findings, Boothe stated, “We are very pleased with the outcome of this inspection.”

He clarified, “We are hyper-focused on improving our product availability and customer service levels, reducing failure to supply penalties that materially impact our financials and ultimately working to get our products through our facilities with greater efficiencies.”

In further news on its manufacturing network, Boothe revealed that the company is looking to explore ‘strategic alternatives’ to exit its facility in Himachal, India.

Related topics: Regulatory & Safety, Regulations, QA/QC

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