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Lannett loses Jerome Stevens Pharmaceuticals supplier deal

Lannett announced earlier this week that its distribution agreement with Jerome Stevens Pharmaceuticals, or JSP, which expires on March 23, 2019, will not be renewed.

"The Steinlauf family advised us this past Friday evening that they will not renew our agreement to distribute three JSP products: butalbital, aspirin, caffeine with codeine phosphate capsules USP, digoxin tablets USP and levothyroxine sodium tablets USP, upon its expiration in March 2019," Tim Crew, Lannett's CEO, said. "The family has assured us of a continuous supply of the products through March of next year. These products remain valuable assets for us and are expected to significantly contribute to our financial performance in fiscal 2019."

"While we are disappointed, and intend to redouble our continuing efforts to explore options for addressing our capital structure, we have been preparing for this contingency, knowing that this outcome was a possibility. Accordingly, we have been focused on improving our already strong base commercial business of more than 100 currently marketed products," Crew said. "Since the beginning of this year, we added new products to our offering and expanded our customer base. We continued to streamline our operations. Specifically, we successfully launched eight new products in the first seven months of calendar 2018, which we estimate will add net sales in excess of $50 million in fiscal 2019, and in addition to our launches, we completed several transactions to add more than 25 market-ready or near-market-ready product lines to our pipeline. Importantly, we continue to make excellent progress advancing other previously approved products toward launch and plan to commence marketing a substantial number of them in the coming months and throughout fiscal 2019."

Crew also said the company already has submitted four drug applications associated with two product families, implemented a restructuring plan at its Cody Laboratories subsidiary and streamlined its product distribution function.

"Looking ahead, our team is actively evaluating a number of additional potential transactions to add even more products to our portfolio to grow revenues and profits, and diversify our business. We have more than 20 owned and partnered drug product applications currently pending at the FDA, and anticipate a significant number of product approvals in fiscal 2019," Crew said. "We also expect to expand restructuring initiatives to further reduce expenditures. Finally, we are evaluating the impact of this contract ending in March 2019 on our goodwill."

Lannett shares fell 60% after the announcement, according to a Wall Street Journal report. Shares fell from $8.15 to close at $5.35. The company also said it expects a fourth quarter per share loss of 30 cents to 32 cents on $171 million in revenue, according to the report.

This news follows on the heels of news that Lannett has entered into an exclusive perpetual licensing agreement with Andor Pharmaceuticals for a potential generic of Concerta ER (methylphenidate hydrochloride) extended-release tablets.
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