(Adds general counsel dismissal in fifth paragraph; updates
Jan 26 Embattled drugmaker KV Pharmaceutical
KVa.N KVb.N said it stopped making and selling all its
products, and may not be in compliance with one or more
covenants in a credit agreement with its lenders, wiping out
more than three-fourths of its market value.
The company, which said the outstanding balance under the
line of credit was about $30 million, will also voluntarily
recall most of its products.
The recall as well as the suspension of manufacture and
sales of its products, except a few that it distributes but
does not make, follows an inspection that began in December by
the U.S. Food and Drug Administration of the company's
operations and inventory.
The company, which has been plagued with several
manufacturing issues that resulted in oversized tablets, is
facing a series of class-action lawsuits that allege its
officers made false statements to inflate the company's stock
KV Pharmaceutical on Jan. 16 fired its senior vice
president and general counsel, Gregory Bentley, a regulatory
filing on Monday showed.
The company, which is also facing an informal enquiry from
the U.S. Securities and Exchange Commission, had in December
ousted its chief executive after it recalled several products.
The company also said Gestiva, a drug to prevent preterm
birth in women with a history of preterm delivery will not be
approved by the FDA until additional data was provided and part
of the patients in a post-approval study are enrolled before
the drug gets a regulatory nod.
In January last year, KV Pharmaceutical had agreed to buy
U.S. and worldwide rights to Gestiva from Hologic Inc (HOLX.O)
for $82 million in cash upon the drug's approval. The drug had
been given an orphan drug status by the FDA and was expected to
receive final approval by late 2008.
On Monday, KV Pharmaceutical said it does not expect
revenue from sales of Gestiva during the financial year ending
March 31, 2009.
KV Pharma's Class A shares fell to a lifetime low of 49
cents, before paring some losses to trade down $1.70 at 54
cents Monday afternoon on the New York Stock Exchange.
(Reporting by Vidya L Nathan and Aradhana Aravindan in
Bangalore; Editing by Pratish Narayanan)