KV Pharmaceutical Suspends Product Manufacturing, Shipping
(NYSE: KVa/KVb) has voluntarily suspended the manufacturing and shipping of
all of its products, other than certain products that it distributes but does
not manufacture. The suspension began on
Additionally, the company will conduct a voluntary recall of most of its
products. The scope and depth of the recall are currently under discussion
with the U.S. Food and Drug Administration (FDA).
These actions are being taken in cooperation with the previously announced
inspection by the FDA of the company’s operations and inventory, which began
in December. To resume shipments as quickly as possible, the company is
working with a third-party consulting group, Lachman Consultant Services,
Inc., to review manufacturing and packaging processes.
“The new leadership team at KV realizes that we are in a very challenging
time for the company,” said interim President and CEO
committed, however, to resolving these issues and resuming production as soon
as possible by working closely with the FDA and the independent experts from
Lachman Consultant Services.”
KV expects these actions to have a material adverse effect on its
financial condition, and as a result, may not be in compliance with one or
more covenants included in a credit agreement with its lenders. As of
31, 2008
The company’s Board of Directors has appointed a special committee
consisting of the following members of the Board:
Carlie
Hatfield, the Chairman of the Board, has been appointed to serve as the
Chairman of the special committee. The special committee was formed in
response to the initiation of a series of putative class action shareholder
lawsuits alleging violations of the federal securities laws by the company and
certain individuals as well as the receipt of an informal inquiry from the
SEC. The company, at the direction of the special committee, is fully
cooperating in all governmental matters, including the SEC informal inquiry.
The company is also responding to requests for information from the Office of
representatives working with that office. The special committee was delegated
by the Board the authority to act on behalf of the Board with respect to these
and all related government inquiries and litigation matters. The special
committee has retained independent legal counsel.
A detailed description of these events is contained in a Form 8-K that is
being filed today with the SEC. The text of that document is available at the
SEC’s EDGAR website at www.sec.gov.
About KV Pharmaceutical Company
KV Pharmaceutical Company is a fully integrated specialty pharmaceutical
company that develops, manufactures, markets, and acquires technology-
distinguished branded and generic/non-branded prescription pharmaceutical
products. The company markets its technology distinguished products through
ETHEX Corporation, a national leader in generic pharmaceuticals and Ther-Rx
Corporation, its branded drug subsidiary.
Safe Harbor
The information in this release may contain various forward-looking
statements within the meaning of the United States Private Securities
Litigation Reform Act of 1995 (“PSLRA”) and which may be based on or include
assumptions concerning KV’s operations, future results and prospects. Such
statements may be identified by the use of words like “plans”, “expect”,
“aim”, “believe”, “projects”, “anticipates”, “commit”, “intend”, “estimate”,
“will”, “should”, “could” and other expressions that indicate future events
and trends.
All statements that address expectations or projections about the future,
including without limitation, product development, product launches,
regulatory approvals, market position, acquisitions, revenues, expenditures,
resumption of distribution of tablet-form products and the impact of the
recall and suspension of shipments on revenues, and other financial results,
are forward-looking statements.
All forward-looking statements are based on current expectations and are
subject to risk and uncertainties. In connection with the “safe harbor”
provisions, KV provides the following cautionary statements identifying
important economic, political and technology factors, which among others,
could cause actual results or events to differ materially from those set forth
or implied by the forward-looking statements and related assumptions.
Such factors include (but are not limited to) the following: (1) changes
in the current and future business environment, including interest rates and
capital and consumer spending; (2) the difficulty of predicting FDA approvals,
including timing, and that any period of exclusivity may not be realized; (3)
acceptance and demand for new pharmaceutical products; (4) the introduction
and impact of competitive products and pricing, including as a result of so-
called authorized-generic drugs; (5) new product development and launch,
including the possibility that any product launch may be delayed or that
product acceptance may be less than anticipated; (6) reliance on key strategic
alliances; (7) the availability of raw materials and/or products manufactured
for the Company under contract manufacturing arrangements with third parties;
(8) the regulatory environment, including regulatory agency and judicial
actions and changes in applicable law or regulations; (9) fluctuations in
revenues; (10) the difficulty of predicting international regulatory approval,
including timing; (11) the difficulty of predicting the pattern of inventory
movements by the Company’s customers; (12) the impact of competitive response
to the Company’s sales, marketing and strategic efforts, including the
introduction or potential introduction of generic or competing products
against products sold by the Company and its subsidiaries; (13) risks that the
Company may not ultimately prevail in litigation, including challenges to our
intellectual property rights by actual or potential competitors or to our
ability to market generic products due to brand company patents and challenges
to other companies’ introduction or potential introduction of generic or
competing products by third parties against products sold by the Company or
its subsidiaries including without limitation the litigation and claims
referred to in Note 16 of the Notes to the Consolidated Financial Statements
in the Company’s Form 10-Q for the quarter ended
possibility that KV’s current estimates of the financial effect of certain
announced product recalls could prove to be incorrect; (15) whether any
product recalls or product introductions result in litigation, agency action
or material damages; (16) the possibility that the findings of the Audit
Committee inquiry referenced in the Company’s Form 10-Q for the quarter ended
have a material impact on the Company’s financial results; (17) the
satisfaction or waiver of the other closing conditions in the previously
disclosed Gestiva(TM) acquisition agreement; (18) the possibility that the
auction rate securities held by the Company may not return to liquidity or at
their face value; (19) the Company’s voluntary suspension of the production
and shipment of substantially all of the products that the Company
manufactures and the related nationwide recall affecting substantially all of
the products that the Company manufactures as well as the expected material
adverse effect on the Company’s revenue, assets and liquidity and capital
resources, all as more fully described in this press release and in the
Company’s Form 8-K filed with the SEC on
putative class action lawsuits alleging violations of the federal securities
laws by the Company and certain individuals, all as more fully described in
this press release and in the Company’s Form 8-K filed with the SEC on
26, 2009
additional governmental investigative or enforcement proceedings, including
actions by the FDA and the U.S. Department of Justice, all as more fully
described in this press release and in the Company’s Form 8-K filed with the
SEC on
Company’s filings with the SEC. This discussion is by no means exhaustive, but
is designed to highlight important factors that may impact the Company’s
outlook. We are under no obligation to update any of the forward-looking
statements after the date of this release.
SOURCE KV Pharmaceutical Company