Shares of Akorn (NASDAQ:AKRX), a generic drug manufacturer, are getting beaten down following a hint that an acquisition announced last April simply won't happen. The news has pressured Akorn's stock price 25.6% lower as of 12:36 p.m. EST on Thursday.
Fresenius SE (OTC:FSNU.F) agreed to acquire Akorn at a premium last April, just as the bottom was falling out from under generic drug prices in the U.S. market. Fresenius has since terminated the merger agreement, citing Akorn's failure to fulfill closing conditions.
Today's losses would have been much heavier if the stock hadn't already fallen by about half since a judge agreed that Fresenius properly exercised its rights to withdraw at the beginning of October. Some investors were still holding on to hope that Akorn's appeal might succeed, but reports from the ongoing hearing suggest the odds of success are slim to none.
Fresenius executives admitted that they probably jumped the gun and cited several hair-raising issues since discovered at Akorn plants, including anesthetic that FDA inspectors found tainted with metal shavings. Moreover, Fresenius alleged that Akorn's computer security was poor enough that anyone in one of Akorn's facilities could alter test data.
Akorn's appeal is beginning to look like a desperate last attempt. If it fails, as expected, the company will probably need to ask investors for another handout soon. The company finished September with just $275 million in cash and cash equivalents after operations lost a whopping $192 million during the first nine months of the year.