Caraco Pharma (CPD) Products Seized
Recently we blogged about Caraco Pharma (CPD) and considered this company worth a look based on the sector (generic pharma) and the price which we attributed to pressure from an FDA Warning Letter from mid 2008.
News releases from the company had stated the issues had been addressed and they were waiting for final FDA Approval for the changes. Apparently this problem for Caraco Pharma had not been resolved as current news releases suggested and today the FDA Seized products from the company. Below is a copy from Briefing.com with some of the highlights from news releases.
3:51PM Caraco Pharma: Additional detail on earlier headline about marshals seized drug products manufactured by it at Michigan plants (CPD) 1.90 -2.28 : U.S. Marshals, at the request of the FDA, seized drug products manufactured by the co, at the co’s Michigan facilities in Detroit, Farmington Hills, and Wixom. The seizure also includes ingredients held at these same facilities. “The FDA is committed to taking enforcement action against firms that do not manufacture drugs in accordance with our good manufacturing practice requirements,” said Janet Woodcock, M.D., director of the FDA’s Center for Drug Evaluation and Research. “Compliance with these standards prevents harm to the public.” This action follows Caraco’s continued failure to meet the FDA’s current Good Manufacturing Practice (cGMP) requirements, which assure the quality of manufactured drugs. Through this seizure, the FDA seeks to immediately stop the co from further distributing drugs until there is assurance that the co complies with good manufacturing requirements. Since January 2009, Caraco has initiated voluntary recalls of drug products to protect the public from potentially defective medications. The recalls involved manufacturing defects, including oversized tablets and possible formulation error. The FDA has determined that the seizure of Caraco’s drugs may create a shortage of one product, choline magnesium trisalicylate oral tablets, which are commonly used as pain relievers… Today’s seizure is intended to lead to major changes at Caraco’s facilities. If the FDA identifies further significant problems, which pose risks to patient safety with any Caraco drug products on the market, the agency will take appropriate additional regulatory action and immediately notify the public.
Of course there can be and probably are circumstances that will develop later that may support the company’s efforts to right itself with the FDA but until there is more news and some facts from the FDA about Caraco Pharma, we no longer consider this company as a possible for our “companies worth a look” in the Generic Pharma related companies.
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From the Street.com :
Caraco Pharmaceutical(CPD Quote) saw three of its plants raided by federal agents and its products seized after the Food and Drug Administration declared the company in violation of its “Good Manufacturing Practice requirements.”
The Thursday raid was yet another indication that new FDA chief, Margaret “Peggy” Hamburg, appointed by President Obama, has taken to cracking the regulatory whip more vigorously than her recent predecessors.
In a press release, the FDA said it completed an investigation of the company’s facilities in May. Caraco had already voluntarily submitted to a recall of some of its drugs in January.
The current action affects all 33 of Caraco’s various product types, the agency said, adding that the seizure “may create a shortage of one product, choline magnesium trisalicylate oral tablets, which are commonly used as pain relievers.”
Caraco’s already beaten-down Amex-listed shares lost almost half their value Thursday, plunging, $1.85, or 44%, to $2.33, on 10-times the daily average volume
http://www.thestreet.com/_yahoo/story/10527699/1/caraco-stock-plunges-on-fda-raid-seizure.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA
Another Biotech that got hammered today was INSM:
Mid-stage genetic disorder study fails to show efficacy
* Study did not mean majority functional goals
* Shares dropped 50 pct
June 25 (Reuters) - Insmed Inc (INSM.O) said a mid-stage trial that was testing its drug Iplex for the treatment of a genetic disorder failed to show efficacy and did not meet the majority of the functional goals of the study.
Shares of the company were down more than 50 percent to $1.16 in pre-market trade from their Wednesday’s close of $2.33 on Nasdaq.
Iplex, which is already approved for treating a growth hormone deficiency, was being tested by the company as a potential treatment for myotonic muscular dystrophy (MMD), a genetic disorder that results in various symptoms across multiple body systems.
Insmed said Iplex did not improve the functional measure of endurance in the six-minute walk test, muscle function, muscle strength or quality of life, and the company was unable to reach any conclusions regarding the effects of the drug on those goals.
The company plans to apply for a grant from the Muscular Dystrophy Association for an additional mid-stage trial focused on a subset of MMD patients with severe insulin resistance who may be more likely to benefit from Iplex treatment.
For the alerts, please click [ID:nWNAB2121] (Reporting by Esha Dey in Bangalore; Editing by Jarshad Kakkrakandy)
DETROIT, June 25 /PRNewswire-FirstCall/ — Caraco Pharmaceutical Laboratories, Ltd. (NYSE Amex: CPD) announced that U.S. Marshals, at the request of the Food and Drug Administration, today arrived and seized drug products manufactured in its Michigan facilities. The seizure also included ingredients held at these same facilities. The FDA’s most recent inspection of Caraco’s Detroit facility, completed in May 2009, found unresolved violations of cGMP requirements as previously disclosed in our last SEC filing on Form 10-K filed June 15, 2009. The Company believes that corrective actions have been made and continual improvements are in process. The FDA has only seized products manufactured in its Michigan facilities. Products distributed by Caraco that are manufactured outside of these facilities are not impacted. While we have not fully determined the impact of this action by the FDA on our financial condition, we believe that it may have a material adverse effect on our near term operations. We anticipate working with the FDA to resolve these concerns as effectively and expeditiously as possible. The Company will provide updates as information becomes available. http://finance.yahoo.com/news/Caraco-Pharmaceutical-prnews-2323166051.html?x=0&.v=1
New update from them. No way anyone could have seen yesterday’s turn of events coming.
Source: Caraco Pharmaceutical Laboratories, Ltd.
On Friday June 26, 2009, 9:15 am EDT
DETROIT, June 26 /PRNewswire-FirstCall/ — Caraco Pharmaceutical Laboratories, Ltd. (NYSE Amex: CPD), in an effort to update our shareholders, is providing additional information in regards to our financial position in light of the recent FDA action. The products in our inventory related to the FDA action are currently being identified. The early estimated value of this inventory is in the range of $15 to $20 million.
The products subject to seizure do not impact products on hand manufactured by third parties under their own label or manufactured for Caraco under the Caraco label. It also does not impact products recently sold into the market manufactured by Caraco.
Based on the estimated sales of distributed products and Caraco products manufactured by third parties, we believe that the profit generated from those products will cover our estimated ongoing expenses. Further, our cash balance as of June 25, 2009 is approximately $64 million which includes a loan of $18 million. Accordingly, we expect that our financial position will allow the Company the time to resolve its pending FDA issues.
Detroit-based Caraco Pharmaceutical Laboratories, Ltd., develops, manufactures, markets and distributes generic and private-label pharmaceuticals to the nation’s largest wholesalers, distributors, drugstore chains and managed care providers.
http://finance.yahoo.com/news/Caraco-Pharmaceutical-prnews-610362744.html?x=0&.v=1
Caraco did manage to bounce back a $1.00 today to close at $3.39 so would have made for a good day trade but longer term will need some assure from the FDA that the manufacturing facility is up to par.