What happened

Shares of Akorn (NASDAQ:AKRX) fell over 48% last month, according to data provided by S&P Global Market Intelligence. The news wasn't that surprising: On the first day of October, a judge ruled that German healthcare giant Fresenius could walk away from its bid to acquire the smaller drug company for $4.75 billion. The company's stock plunged almost 60% on the news and its market cap fell to $700 million.

So what

By now, investors are probably well aware of the details surrounding the mess that has become the proposed acquisition. To recap, although the merger had been agreed to, Fresenius' due diligence uncovered evidence that Akorn had falsified data submitted to the U.S. Food and Drug Administration to gain marketing approval for certain drug products. The company announced in April that it had decided to terminate the agreement as a result.

An investor pounding his fist in anger as a tablet displays a sharp stock decline.

Image source: Getty Images.

Akorn fought the allegations tooth and nail while bringing litigation against Fresenius for breaching the merger agreement. It was a last-ditch effort to save the acquisition, albeit on a technicality. But a judge found that the evidence uncovered during the due diligence process was more than enough to qualify as a "material adverse event," and therefore enough to nullify the agreement.

Now what

Shares of Akorn have actually climbed 39% since Oct. 2 -- the day after the litigation news was announced -- but are still down 77% since the beginning of the year. The company's market cap still sits below $1 billion. Investors can likely expect a long road to recovery ahead, as the business will need to invest a lot of resources attempting to regain the trust of regulators, doctors, and investors in addition to growing its portfolio of products. Given the uncertainty and a massive operating loss compiled thus far in 2018, investors are better off looking elsewhere for small-cap stocks to buy.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.