2009 FEB 9 -- KV Pharmaceutical (NYSE:KVa/KVb) has voluntarily suspended the manufacturing and shipping of all of its products, other than certain products that it distributes but does not manufacture. The suspension began on January 22, 2009.
Additionally, the company will conduct a voluntary recall of most of its products. The scope and depth of the recall are currently under discussion with the U.S. Food and Drug Administration (FDA).
These actions are being taken in cooperation with the previously announced inspection by the FDA of the company's operations and inventory, which began in December. To resume shipments as quickly as possible, the company is working with a third-party consulting group, Lachman Consultant Services, Inc., to review manufacturing and packaging processes.
"The new leadership team at KV realizes that we are in a very challenging time for the company," said interim President and CEO David Van Vliet. "We are committed, however, to resolving these issues and resuming production as soon as possible by working closely with the FDA and the independent experts from Lachman Consultant Services."
KV expects these actions to have a material adverse effect on its financial condition, and as a result, may not be in compliance with one or more covenants included in a credit agreement with its lenders. As of December 31, 2008, the outstanding balance under this line of credit was approximately $30 million.
The company's Board of Directors has appointed a special committee consisting of the following members of the Board: Jean M. Bellin, Kevin S. Carlie, Terry B. Hatfield, Jonathon E. Killmer and Norman D. Schellenger. Mr. Hatfield, the Chairman of the Board, has been appointed to serve as the Chairman of the special committee. The special committee was formed in response to the initiation of a series of putative class action shareholder lawsuits alleging violations of the federal securities laws by the company and certain individuals as well as the receipt of an informal inquiry from the SEC. The company, at the direction of the special committee, is fully cooperating in all governmental matters, including the SEC informal inquiry. The company is also responding to requests for information from the Office of the United States Attorney for the Eastern District of Missouri and FDA representatives working with that office. The special committee was delegated by the Board the authority to act on behalf of the Board with respect to these and all related government inquiries and litigation matters. The special committee has retained independent legal counsel.
A detailed description of these events is contained in a Form 8-K that is being filed today with the SEC. The text of that document is available at the SEC's EDGAR website at www.sec.gov.
Keywords: , U.S. Food and Drug Administration, FDA, Regulatory Actions, KV Pharmaceutical Company, Pharmaceutical Business, Pharmaceuticals.
This article was prepared by Biotech Business Week editors from staff and other reports. Copyright 2009, Biotech Business Week via NewsRx.com.
