Pomerantz LLP announces that a class action lawsuit has been filed against Lannett Company, Inc. ("Lannett" or the "Company") and certain of its officers. The class action, filed in United States District Court, Eastern District of Pennsylvania, and docketed under 18-cv-3635, is on behalf of a class consisting of all persons other than Defendants who purchased or otherwise acquired Lannett securities between February 7, 2018 through August 17, 2018, both dates inclusive (the "Class Period"), seeking to recover damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials.
Lannett develops, manufactures, packages, markets, and distributes solid oral (tablets and capsules), extended release, topical, and oral solution finished dosage forms of drugs that address a wide range of therapeutic areas. Lannett also produces, through its subsidiary Cody Laboratories, Inc., active pharmaceutical ingredients. Lannett derives the majority of its revenue from the sale of drugs that are bioequivalent to certain patented drugs once their patent expires.
At all relevant times, Lannett has had an exclusivity agreement with its primary supplier, Jerome Stevens Pharmaceuticals ("JSP"), owned and operated by the Steinlauf family, set to expire on March 23, 2019. JSP's products have historically accounted for at least one-third of Lannett's sales.
The Complaint alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose that: (i) Lannett faced a substantial risk of the loss of its exclusivity agreement with JSP; (ii) accordingly, Lannett's reported revenues were unsustainable, and (iii) as a result, Lannett's public statements were materially false and misleading at all relevant times.
On August 20, 2018, prior to market open, Lannett announced that its distribution agreement with JSP will not be renewed upon its expiration in March 2019. Lannett stated that it "intend[ed] to redouble our continuing efforts to explore options for addressing our capital structure."
On this news, Lannett's share price fell $8.15, or 60.3%, to close at $5.35 on August 20, 2018.