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BY OUR PHARMA CORRESPONDENT
31 August, 2005: Able Laboratories will be delisted from the Nasdaq Stock market. The company has received notice from the Nasdaq Listing Qualifications Department that its securities should be delisted from the Stock Market, an Able release announced.
Nasdaq sent in a letter to Able dated 19th July 2005 based on Nasdaq Marketplace Rule 4450, which enables the firm to suspend or terminate an issuer's securities should the issuer file under any of the sections of the US Bankruptcy Code, and Rule 4300, which gives Nasdaq discretionary authority over continued inclusion of securities in the Nasdaq Stock Market.
According to the letter, the decision to delist the company was based on Able's filing of a petition to reorganise under Chapter 11 of the US Bankruptcy Code on 18th July 2005, the Nasdaq staff's concerns regarding the residual equity interest of the existing listed securities, and the company's ability to sustain compliances with all requirements for continued listing on the Nasdaq Stock Market.
Effective of the opening of business on 21st July 2005, the company's trading symbol for its common stock on the
Nasdaq Stock Market was changed from "ABRX" to "ABRXQ". The company's securities were subsequently delisted at the opening of business on 28th July 2005.
However, the company did not contest the determination, the release added.
On 2nd August 2005, Able announced it had filed a motion with the US Bankruptcy Code in the US Bankruptcy Court for the District of New Jersey, Trenton Division, requesting that the court approve procedures to protect the company’s net operating loss carryforward. Based on current projections, it expected to use a substantial portion of its net operating loss carryforward to offset future income and reduce its federal income tax liability, subject to limitations.
On 16th August 2005 Able said a decision had been taken by its Board of Directors following discussions with the FDA regarding its ongoing review of laboratory practices and related issues.
Since voluntarily recalling its products on 23rd May 2005 and identifying and reporting its concerns over the integrity of the underlying data, Able has been working with the FDA to find the best way forward to return its products to the market. It proposed to the FDA that it be permitted to re-validate the product development data included in its previously approved ANDAs, when under new management and with the data being verified by an independent outside consultant.
Able was aiming to be allowed to relaunch its products without the need for a full FDA review and approval of all the data supporting each ANDA. The proposal would have represented a departure from the FDA's usual policies in such situations, but Able felt this was justified because of its voluntary actions, the release noted.
However, the FDA declined the proposal. The agency noted the company's actions, but advised nonetheless that in order to relaunch its products, Able would need to withdraw them, and resubmit them with new data in order for the FDA to review the ANDAs for products Able wished to manufacture in the future.
Able's management concluded that this course of action could take up to 18 months in each case. The company now believes it will not be able to return any of its products to market, and consequently will not be able to produce any revenue or cash flow, for a significant period of time.
Its reorganisation plan had depended on the company being able to obtain significant external financing, which in turn depended on it being able to return certain products to the market in a timely manner. With the FDA's decision, however, this reorganisation plan is not feasible. Instead, Able has determined that its best course of action to preserve value for its creditors and others will be to immediately reduce overhead and expenses as much as possible and to initiate the process of selling the company's business and assets to third-party purchasers.
While it was possible that its shareholders of common stock would be able to receive proceeds from any such sales, there could be no guarantee that this would happen. Able holds the view that this would be unlikely, because it believes the aggregate sales would be insufficient to pay all of the liabilities owed to secured and unsecured creditors, said the release.
Able Laboratories is one of the USA’s smaller generic companies, although it grew rapidly in the 2002-04 period. Able’s research and development strategy was to focus on generic drugs that have large, established markets, niche products with limited or no competition, and challenging products that require expertise such as suppositories and extended-release formulations.
Sales amounted to US$103.2 million in 2004, compared with US$77.6 million in 2003 and US$19.6 million in 2001. Results for the first quarter of 2005 were again encouraging, with strong growth over 2003.
In 2003 and 2004, the company was one of the most active in terms of ANDA approvals. Able was granted 13 ANDAs in 2003, of which two were ‘first to file’ products. In 2004, this rose to 15 ANDAs, of which four had ‘first to file’ status. No ANDAs have so far been approved in 2005, however 2005 has turned out to be a severely problematic year for Able. Serious concerns regarding manufacturing processes have led to a voluntary total product recall and manufacturing suspension, announced towards the end of May. Able’s Chairman and CEO resigned, and the company has reduced its workforce by nearly half. Able’s share price dropped from around US$25 to around US$5 on the announcement of the recall.
BY OUR PHARMA CORRESPONDENT
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