BANGALORE (Reuters) - Drugmaker K-V Pharmaceutical Co KVa.N KVb.N, which had been barred from making and marketing its own drugs, got a huge boost as U.S. regulators approved its drug to reduce the risk of preterm birth.
K-V shares -- that had lost over 90 percent of their value since regulators raised questions about its manufacturing practices in November 2008 -- more than doubled on Friday to their highest levels in over two years.
The company said it expects that the worldwide rights to the drug, Makena, will be transferred to it by February 11 as part of an existing agreement with Hologic Inc (HOLX.O).
K-V had bought the rights to the drug -- previously known as Gestiva -- from a Hologic unit for $92 million in cash plus delayed payments of $107.5 million.
Makena is a hormone medicine that reduces the risk of a preterm delivery in women who have delivered prematurely in the past.
The drug is administered by a healthcare provider via a weekly intramuscular injection and is not intended for use in women with multiple gestations or other risk factors for preterm birth.
Friday’s approval was based on a study of 463 women that showed that treatment with Makena reduced the proportion of women who delivered preterm at less than 37 weeks.
The approval comes at a crucial time for St. Louis, Missouri-based K-V, which -- plagued by lawsuits and the suspension of all drug shipments -- had expressed doubts about its ability to continue as a going concern.
Since early 2009, the company has had to stop producing all its products on recurring manufacturing issues with oversized tablets, while its management faced several class-action lawsuits alleging misconduct.
K-V’s class A shares were up 153 percent to $3.88 in heavy trade on Friday afternoon on the New York Stock Exchange. They touched a high of $4.22 earlier in the session.
More than 2 million class A shares changed hands by 1246 ET, more than 22 times their 10-day moving average volume.
Reporting by Esha Dey; Editing by Unnikrishnan Nair, Anthony Kurian and Gopakumar Warrier