Shares of Lannett Company (LCI) plummeted 17.09% on the news that the Connecticut Attorney General has issued a subpoena related to the pricing of its generic version of the cardiovascular drug Lanoxin (digoxin). The drug is marketed for treating mild-to-moderate heart failure in adults. It increases left ventricular ejection fraction and improves heart failure symptoms.
Lannett stated in its press release that the AG’s office is conducting an enquiry as to whether there was anyone responsible for the fixing, maintaining or controlling the price of the drug.
According to the subpoena, the office is also enquiring whether there were attempts aimed at allocating and dividing customers or territories pertaining to the sale of digoxin, not in accordance with the Connecticut antitrust law. Lannett however stated that its actions pertaining to the drug were in line with the applicable laws. It will lend full support to the investigations. The receipt of the subpoena is a setback for the stock since it derives a substantial portion of its revenues from the sale of cardiovascular drugs. We expect investor focus to remain on updates regarding the investigations on the cardiovascular drug.
We remind investors that Lannett reported encouraging results in the third quarter of fiscal 2014 (ended Mar 31, 2014) earlier in the year on the back of strong sales driven by increased demand. The company expects net sales in fiscal 2014 in the range of $261 million to $267 million.
Lannett carries a Zacks Rank #3 (Hold). Better-ranked stocks in the health care sector include The Medicines Company (MDCO), Actelion Ltd. (ALIOF) and Biogen Idec Inc. (BIIB), each carrying a Zacks Rank #1 (Strong Buy).
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