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Akorn gets another FDA warning letter, shares slide

(Reuters) – Akorn Inc said on Tuesday it received a warning letter from the U.S. Food and Drug Administration regarding its manufacturing facility in New Jersey, the latest in a string of setbacks for the generic drugmaker, sending its shares down nearly 13%.

The FDA warning is the second such that Akorn has received this year and follows an inspection of the company’s Somerset, New Jersey-based plant in July and August 2018.

RBC Capital Markets analyst Randall Stanicky said the warning letter would likely require Akorn to carry out inspections, but should not impact production at the facility.

In January, the agency issued a warning letter for Akorn’s Decatur, Illinois manufacturing plant after the drugmaker did not resolve previously highlighted violations such as failure to follow procedures to prevent contamination of drugs produced at the plant.

The FDA had also raised concerns about an Akorn manufacturing facility in Amityville, New York, earlier this year.

RBC’s Stanicky said the New Jersey plant is linked to less than 10% of products manufactured by Akorn, and the company’s primary focus would remain on moving past the warning letter it received for its Illinois facility.

Last year, the Delaware Supreme Court upheld a lower court’s decision to allow Germany’s Fresenius SE & Co KGaA to walk away from its planned $4 billion acquisition of Akorn.

Since then, Akorn announced the retirement of its chief executive officer, Raj Rai, and named Douglas Boothe to the helm.

Akorn on Tuesday said it will work to resolve all issues raised in the agency’s letter and that it expects to continue production at the Somerset facility.

Akorn shares were trading down 3.8% at $4.55 in premarket trading. The company shares have fallen 70.5% over the past 12 months.

Reporting by Aakash Jagadeesh Babu in Bengaluru; Editing by Shailesh Kuber

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Source: Reuters.com