KV No Longer A Going Concern
Here is a disclosure that, while disturbing to KV Pharma investors and employees, may hearten those who charged the drugmaker with price gouging for its Makena med for premature births. After winning FDA approval under the Orphan Drug Act, KV Pharma began charging $1,500 for a form of progesterone that had been sold for decades by compounding pharmacies for $10 to $20 a week.
The price was lowered to $690 per injection after the fracas (see this).
Now, though, KV Pharma may be on the ropes. In a filing with the US Securities and Exchange Commission, the drugmaker discloses that various “conditions raise substantial doubt about the company’s ability to continue as a going concern.” The list is long, but includes a need to generate more revenue from Makena.
What are the other problems confronting the controversial drugmaker? Introducing or re-introducing drugs; the suspension of shipments of all meds and assorted requirements under a consent decree with the FDA; the possibility that more capital is needed despite a recent private placement; government investigations; the ability to comply with terms of bank loans, and mounting losses.
“If the company is not able to obtain the FDA’s clearance to resume manufacturing and distribution of certain or many of its approved products in a timely manner and at a reasonable cost, and/or if the company is unable to successfully launch and commercialize Makena, and/or if the company experiences adverse outcomes with respect to any of the governmental inquiries or litigation, its financial position, results of operations, cash flows and liquidity will continue to be materially adversely affected,” KV Pharma writes in its filing (see pages 14 and 15 here).
To cope, the drugmaker is eyeing scaling back operations to reduce costs - which would include layoffs - and there is also mention of selling its generic business to focus on branded meds. But the outlook for such a move, or at least obtaining the needed return, appears uncertain, at best, KV Pharma execs concede.
Meanwhile, KV Pharma is hoping the FDA will take action against compounding pharmacies. The drugmaker hired investigators to obtain data about compounded versions of progesterone and gave the data to the agency, which is now conducting an investigation into various samples that apparently raised concerns about the quality of the active pharmaceutical ingredients and finished products (look here).
This turn of events amounts to a substantial reversal of fortune for KV Pharma, which was supposed to have been transformed with a new infusion of investors and management in the wake of the spectacular crash-and-burn drama that surrounded the previous owners, the Hermelin family. Makena, in particular, was to have been the centerpiece of this projected turnaround.
For those who may not recall, former chair and ceo Marc Hermelin pleaded guilty to presiding over the production and distribution of oversized tablets. Last year, he was banned from participating in federal health care programs, such as Medicare and Medicaid in connection with the violations. Meanwhile, KV Pharma is now suing him to avoid paying $37 million in retirement benefits (read this).
There was still more fallout last week, when KV Pharma agreed to pay $17 million to resolve allegations that its Ethex defunct subsidiary violated the False Claims Act by failing to advise the Centers for Medicare and Medicaid Services that two of its drugs were unapproved and, therefore, did not qualify for coverage (look here).
Here is a disclosure that, while disturbing to KV Pharma investors and employees, may hearten those who charged the drugmaker with price gouging for its Makena med for premature births. After winning FDA approval under the Orphan Drug Act, KV Pharma began charging $1,500 for a form of progesterone that had been sold for decades by compounding pharmacies for $10 to $20 a week.
The price was lowered to $690 per injection after the fracas (see this).
Now, though, KV Pharma may be on the ropes. In a filing with the US Securities and Exchange Commission, the drugmaker discloses that various “conditions raise substantial doubt about the company’s ability to continue as a going concern.” The list is long, but includes a need to generate more revenue from Makena.
What are the other problems confronting the controversial drugmaker? Introducing or re-introducing drugs; the suspension of shipments of all meds and assorted requirements under a consent decree with the FDA; the possibility that more capital is needed despite a recent private placement; government investigations; the ability to comply with terms of bank loans, and mounting losses.
“If the company is not able to obtain the FDA’s clearance to resume manufacturing and distribution of certain or many of its approved products in a timely manner and at a reasonable cost, and/or if the company is unable to successfully launch and commercialize Makena, and/or if the company experiences adverse outcomes with respect to any of the governmental inquiries or litigation, its financial position, results of operations, cash flows and liquidity will continue to be materially adversely affected,” KV Pharma writes in its filing (see pages 14 and 15 here).
To cope, the drugmaker is eyeing scaling back operations to reduce costs - which would include layoffs - and there is also mention of selling its generic business to focus on branded meds. But the outlook for such a move, or at least obtaining the needed return, appears uncertain, at best, KV Pharma execs concede.
Meanwhile, KV Pharma is hoping the FDA will take action against compounding pharmacies. The drugmaker hired investigators to obtain data about compounded versions of progesterone and gave the data to the agency, which is now conducting an investigation into various samples that apparently raised concerns about the quality of the active pharmaceutical ingredients and finished products (look here).
This turn of events amounts to a substantial reversal of fortune for KV Pharma, which was supposed to have been transformed with a new infusion of investors and management in the wake of the spectacular crash-and-burn drama that surrounded the previous owners, the Hermelin family. Makena, in particular, was to have been the centerpiece of this projected turnaround.
For those who may not recall, former chair and ceo Marc Hermelin pleaded guilty to presiding over the production and distribution of oversized tablets. Last year, he was banned from participating in federal health care programs, such as Medicare and Medicaid in connection with the violations. Meanwhile, KV Pharma is now suing him to avoid paying $37 million in retirement benefits (read this).
There was still more fallout last week, when KV Pharma agreed to pay $17 million to resolve allegations that its Ethex defunct subsidiary violated the False Claims Act by failing to advise the Centers for Medicare and Medicaid Services that two of its drugs were unapproved and, therefore, did not qualify for coverage (look here).