This is a securities fraud class action against KV Pharmaceutical Company.
KV Pharmaceutical is a specialty pharmaceutical company that competes in the branded, generic/non-branded, and value-added, specialty ingredient market.
The class action lawsuit alleges that KV Pharmaceutical mislead investors about KV Pharmaceutical's compliance with federal regulations concerning the manufacture and marketing of certain generic drug products as well as KV Pharmaceutical's current and future financial prospects. KV Pharmaceutical failed to disclose:
(i) that KV Pharmaceutical's manufacturing facilities were in disarray resulting in the manufacture of unsafe drug products that would have to be recalled due to the fact that they may contain oversized tablets that may contain more than the intended levels of the active drug ingredient, which could result in patients receiving as much as about twice the expected dosage of these drugs;
(ii) that KV Pharmaceutical's management engaged in misconduct by failing to recall KV Pharmaceutical's unsafe drug products;
(iii) that KV Pharmaceutical's manufacturing facilities failed to comply with federal regulations, including FDA requirements and guidelines, generally referred to as current "Good Manufacturing Practices";
(iv) that manufacturing disruptions and inefficiencies were resulting in a material backlog of unshipped customer orders, thus further eroding KV Pharmaceutical's revenues and earnings;
(v) that KV Pharmaceutical failed to write off at least $24 million in inventories of discontinued products, seized by the U.S. Attorney for the Eastern District of Missouri due to KV Pharmaceutical's violation of FDA enforcement notices;
(vi) that KV Pharmaceutical's post-January 2008 sales of generics were being negatively impacted by material price erosion following the expiration of KV Pharmaceutical's exclusive sales period for the drug metoprolol succinate;
(vii) that KV Pharmaceutical's financial statements failed to comply with Generally Accepted Accounting Principles; and
(vii) that, based on the foregoing, KV Pharmaceutical lacked a reasonable basis for their current and future financial prospects.
Then, on November 13, 2008, KV Pharmaceutical announced that it would be unable to file its Form 10-Q for the quarter ended September 30, 2008 due to a continuing investigation by th KV Pharmaceutical's Audit Committee into allegations of management misconduct concerning recalls of KV Pharmaceutical's drug products. Following this statement, the price of KV Pharmaceutical common stock fell from $14.26 per share to $5.90 per share - a drop of nearly 59% - on extremely heavy volume of more than 6.6 million shares, 33 times the stock's average trading volume.
Name (Stock Symbol)
KV Pharmaceutical Company (KVA)
KV Pharmaceutical Company manufacturers generic drugs.
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