This week, the FDA posted a warning letter to Akorn, Inc (NASDAQ:AKRX) dated October 2, warning the company that it is manufacturing an unapproved drug, Pilocarpine Hydrochloride Ophthalmic Solution. The letter states that there are no FDA-approved applications on file for these products, and requires AKRX to take prompt action, noting that Akorn will need an aNDA to continue manufacturing Pilocarpine Hcl. Akorn marketed the product in the 1990’s but only restarted production of Pilocarpine HCl again in the first quarter of this year. Bausch and Lomb was also warned for its unapproved version of the ophthalmic solution, and according to the FDA’s approved drug list, that leaves Alcon (NYSE:ACL) as the only approved manufacturer of the niche product. Whether or not Akorn continues to produce the solution remains to be seen, but the FDA requires the company to halt shipping within 180 days or face further enforcement. Sales of the product totaled less than $700k between April and August, a minute number compared to Akorn’s $137M in 2011 revenue. It is worth noting that the FDA cited no manufacturing concerns.
While this is an incremental negative for Akorn, analysts are maintaining previous ratings on the $1.25B company, which has climbed 67% since this time last year. Piper Jaffray reiterated a $21 price target Wednesday morning, referring to the letter as “no cause for alarm.” Shares today made up some of the losses in early trading, but hover around net-even at noon.
