For Akorn, when it rains, it monsoons. The sterile and generics maker, whose $4.3 billion buyout by Fresenius was swept away because of manufacturing failures, has received its second warning letter this year, even as it is in the process of renegotiating its loans with lenders.
The FDA has issued a written thrashing for its Somerset, New Jersey manufacturing facility tied to an inspection last summer, the drugmaker announced today. That comes after the agency in February issued a warning letter for Akorn’s headquarters facility in Lake Forest, Illinois, and slapped a Form 483 on its plant in Amityville, New York, last year.
CEO Douglas Boothe said the company has confidence in the products coming out of the New Jersey plant and expects to keep production going while it responds to the FDA.
“Earlier this year, Akorn launched a companywide action plan to improve the timing and effectiveness of our operations, quality systems and compliance enhancement initiatives, with an emphasis on transparency and quality,” Boothe said in a statement. “We believe the execution of this action plan, which has already begun to yield tangible results, will strengthen and further standardize our quality systems across the entire Akorn network.”
Germany’s sterile drugmaker Fresenius handed Akorn a $4.3 billion buyout offer in 2017, touting the acquisition as a “strategically complementary combination” that would diversify its portfolio and expand its Fresenius Kabi sterile manufacturing capacity. But the deal imploded after Fresenius got inside info that Akorn routinely violated FDA drug-development standards.
Akorn filed suit to try to force Fresenius to complete the deal, but a Delaware judge ruled that the German company was entitled to walk away. Days later, then-Akorn CEO Raj Rai stepped down and Boothe was brought in to repair the damage.
The warning letter comes at a tenuous time for Akorn, which is negotiating a standstill agreement with lenders. It has said it must meet specific milestones while it renegotiates terms of its loans. If the milestones are not met, or a new agreement is not struck by Nov. 15., Akorn can be declared in default.
In Q1 the drugmaker reported that its net loss for the quarter was $82 million, much higher than the $29 million it lost in the same quarter last year but a vast improvement over the $215 million that it hemorrhaged in Q4 2018. Adjusted EBITDA was $10 million, compared to a negative $25 million in the prior year quarter.
