Caraco Pharmaceutical Swings Back To Profit
Detroit-based Caraco Pharmaceutical Laboratories Ltd. (NYSE AMEX: CPD) reported net income of $1.2 million in the first quarter of its fiscal year, compared to a loss of $9.4 million a year earlier.
Last fiscal year, the company put up an $8.4 million reserve during the quarter for inventory seized by the United States Food and Drug Administration when it shut down the company's Michigan production over quality concerns.
Sales were $130 million, up sharply from $48.1 million a year earlier.
The company generated cash from operations of $3.3 million in the quarter, up from $1.4 million a year earlier. Selling, general and administrative expenses during the first quarter were $5.8 million, up 60 percent from $3.7 million a year earlier. The company said most of the increase was due to professional consultation fees pertaining to FDA issues.
Total research and development expenses incurred for the first quarter were $2.1 million, down sharply from $7.1 million during the prior year period. The company said that R&D expenses have decreased in the current period due to the focus of the company on remediating FDA concerns, they are likely to increase once the company refocuses on new product filings and approvals with the FDA.
Caraco said it "has been actively working with cGMP (current good manufacturing practices) consultants towards the resumption of manufacturing activities at its Michigan plants. The consultants were appointed by the company in accordance with a previously disclosed consent decree, which Caraco entered into with the FDA Sept. 29, 2009. The FDA approved the company's work plan on March 17, 2010, and the company is in the process of implementing the corrective actions and remedial measures as stipulated in the work plan.
On June 24, the FDA notified Caraco that its protocol for third party cGMP certification, detailing the activities to be conducted by the cGMP experts, was acceptable. Caraco's cessation of manufacturing operations will continue until it receives written notification from independent experts and the FDA that it is in compliance with the consent decree and regulations and can resume operations.
Caraco intends to continue to work with the FDA to resolve its concerns as effectively and expeditiously as possible. However, there is no assurance that the steps being taken will be successful or result in resolution of the FDA complaint.
On June 25, the FDA released certain previously seized raw materials which had been opened solely for the purpose of sampling.
Caraco develops, manufactures, markets and distributes generic pharmaceuticals to the nation's largest wholesalers, distributors, drug store chains and managed care providers.
More at www.caraco.com.
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