Akorn (AKRX) Gets FDA Warning Letter For Illinois Facility
Zacks Investment Research | Jan 10, 2019 02:54AM ET
Troubled generic maker, Akorn, Inc. (NASDAQ:AKRX) announced the receipt of a warning letter (dated Jan. 4) from the FDA related to an inspection of its Decatur, IL manufacturing facility in April and May of 2018.
The company will respond to the FDA letter within 15 working days.
Akorn shares have crashed 89.7% in the past twelve months compared with the 21.8% decline for the industry .
Shares have taken a beating as the company’s proposed merger with Fresenius Kabi AG has run into troubled waters. We remind investors that Akorn entered into a merger agreement with German entity Fresenius in April 2017. In July 2017, the company's shareholders voted to approve the merger agreement.
However, in April 2018, Fresenius decided to terminate the merger agreement, primarily due to Akorn’s failure to fulfil several closing conditions. Fresenius cited material breaches of FDA data integrity requirements relating to operations found, during the former’s independent investigation.
The latter had filed a complaint in the Court of Chancery of the State of Delaware for breach of contract and declaratory judgment. Thereafter, in October 2018, the Court of Chancery issued an opinion, denying Akorn’s claims for relief. The Court concluded saying Fresenius had validly terminated the merger agreement.
The woes do not seem to end for Akorn. Thereafter, Akorn stated that it will move forward and rebuild shareholder value as an independent company, following the disappointing decision from the Supreme Court of the State of Delaware upholding the lower court’s decision to allow Fresenius Kabi AG to terminate the April 2017 merger agreement.
CEO Raj Rai decided to retire following the failure of the merger. Last month, Douglas S. Boothe was named the new president and CEO effective Jan 1, 2019.
Zacks Rank & Key Picks
Akorn currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the healthcare space include Mallinckrodt plc (NYSE:MNK) , Mylan (NASDAQ:MYL) and Dr. Reddy’s Laboratories (NYSE:RDY) . While Mallinckrodt sports a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .
Mallinckrodt’s earnings per share estimates have increased from $7.36 to $7.44 for 2019 over the past 60 days.
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Mylan’s earnings per share estimates have increased by a cent to $5.09 for 2019 over the past 60 days.
Dr. Reddy’s earnings per share estimates have increased from $2.08 to $2.13 for 2019 over the past 60 days.
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