KV Pharmaceutical Dives After Halting Drug Shipments

-Bloomberg

12/23/2008- KV Pharmaceutical Co. lost half its value in New York trading after the drugmaker, announcing a third recall of medicines that may contain excess doses, stopped shipping prescription tablets.

The shares fell by $2.68 to $2.71 at 4 p.m. in New York Stock Exchange composite trading, a 12-year low and the biggest decline since Nov. 13, when the St. Louis-based company said it couldn’t file its quarterly earnings report. The indefinite shipping halt will “materially” hurt operating results, KV said today in a statement.

The company suspended shipments as it voluntarily recalled a production lot of the narcotic painkiller hydromorphone because an oversized tablet was reported. KV recalled drugs in October and November for the same reason and said extra-large pills could contain as much as double the medicine. KV said it will review its manufacturing and quality control during the shutdown.

“We’re not sure that there are any problems with these products,” said David Van Vliet, KV’s interim chief executive officer, in a conference call today with analysts. “We are just being cautious.”

The company said it doesn’t expect the manufacturing and quality assurance questions to be resolved by March 2009, the end of its fiscal year.

Fatal Dose

Hydromorphone is a morphine derivative to treat cough spasms and severe pain. Overdoses can kill. The drug is available from several manufacturers.

KV hired a consulting firm to help resolve manufacturing and quality problems, the company said. KV couldn’t say when it will resume shipping tablets or estimate the financial impact of the recall and shutdown.

“I don’t think we know” when shipments might resume, Michael Anderson, chief executive of KV’s Ethex Corp. subsidiary, said during the analyst call. “We’re just going to have to play this out and see how long it takes.”

KV, which makes brand-name and generic prescription drugs, had revenue of $602 million for fiscal 2008. That includes revenue of $159 million from the 12 products for which shipments have been suspended, according to the statement.

KV has informed the U.S. Food and Drug Administration of the recall, the company said. FDA officials already have been inspecting the company’s manufacturing facilities, Van Vliet said during the conference call.

Executive Shakeup

Van Vliet was appointed interim chief executive on Dec. 9, four days after the board of directors said it fired “for cause” Marc S. Hermelin, then the company’s chairman and chief executive.

Hermelin said then that he had retired before he was fired. KV said in August that its audit committee was investigating allegations of unspecified misconduct.

KV’s shares fell 59 percent Nov. 13, when the company couldn’t file its quarterly earnings statement with the U.S. Securities and Exchange Commission. A shareholder lawsuit was filed Dec. 2 in U.S. District Court in St. Louis accusing management of fraudulently inflating the value of the shares.

If you or a loved one have been injured by Ethex Morphine or Ethex Propafenone you may be entitled to compensation. Contact the attorneys of Ennis & Ennis, P.A. today for a free case evaluation by filling out the form on this page or calling the toll free number listed below. Our staff is standing by to answer any questions you may have about the Ethex Morphine Recall, Ethex Propafenone Recall, and potential Ethex Corporation lawsuits.