Concordia Healthcare Corp. T.CXR.R

RE:RE:RE:RE:RE:Hey, "Securities Lawyer" Lumberfeverlong....

[Shortingtozero2]

Excellent post.  Thank you for sharing this.  I understand that the company's legal counsel was served on Friday Dec 9

DeathPool wrote: I am bumping my own post before Lumber tries to bury it in his excuses.  

DeathPool wrote: A small part of the lengthy filing that was accepted by the court on Friday Dec 9th.  This shows that it is the company that is misleading investors, imo and not any "work" by the shorts as Lumber is suggesting.  Shorts have piled on for a reason....    Anyone who thinks that this is not going to be followed up by the SEC or OSC is Delusional and you deserve everything that is coming your way.  Including those who believe Lumberfeverlong amd who claims to be a Securities Lawyer but yet all his information has just lost investors loads of money.


CUT AND PASTE FROM THE LEGAL FILING, from pacer.monitor.com

You need a subscription to see the filing, I purchased one, and you would think that if you were a Securities Lawyer like Lumberfeverlong claims to be, they would have a subscription !   LOL!!!!

52. Sometime in January, 2016, Concordia hired Ashfield to create a sales staff in the U.S., mostly to sell Donnatal. Concordia executives were intimately involved in the hiring of Ashfield’s Donnatal Salespeople. According to FE1,17 in January 2016, before Ashfield hired him, it flew him to San Antonio, Texas to meet with Aaron Hullett, Concordia’s Director of Sales. Hullett approved FE1’s hiring, telling him he was “young and passionate,” and “would do well.”

53. According to FE1, on Friday, May 13, 2016, without warning, Ashfield convened an “emergency conference call” and fired all 75-80 of its Donnatal salespeople, effective immediately. Blake Kelley, Ashfield’s Vice President of Sales, led the call. Concordia hired him

17 FE1 worked for Ashfield to market Donnatal from January to May of 2016. FE1 reported to Ashfield’s VP of Sales, Blake Kelly. Kelley is now the Director of Sales for Defendant Concordia within one month of that May 13 call as its Director of Sales. Three Concordia representatives were on the call. No reason for the termination was provided. Following the call, all of the Donnatal salespeople immediately received emails with termination paperwork, and were instructed to return their company cars.

54. Other Donnatal salespeople who were fired during the conference call confirm FE1’s account of the brief call to fire the entire Ashfield Donnatal staff. FE2, an Ashfield pharmaceutical representative from January, 2016, to May, 2016, who sold Donnatal in the Sacramento, California area, stated that Ashfield and Concordia fired 80 salespeople without explanation, then immediately transmitted emails with required paperwork and instructions for returning their company cars. FE3, another Ashfield pharmaceutical sales representative who sold Donnatal from January, 2016, to May, 2016, stated that the firings during the May 13, 2016 Ashfield conference call came “out of the blue.” FE4 sold Donnatal as an Ashfield contract worker from January, 2016, to May, 2016.18 According to FE4, each of the Ashfield contract salespersons was assigned separate sales territories. Again, according to FE4 the contract was supposed to be 18-24 months in length. FE4 confirmed that a Concordia representative who supervised Ashfield’s Donnatal salespeople participated in the May 13, 2016 call. According to FE4 Ashfield also fired all of the Ashfield District Managers during the call, and that 78 Donnatal salespeople were fired in total.

55. The same day that Ashfield and Concordia fired 75-80 Donnatal salespersons, May 13, 2016, Concordia’s executives held an earnings conference call (“May 13 Conference Call”). During that call, Concordia not only failed to state that it was firing, immediately, a large percentage of its Donnatal sales force, but specifically touted the progress of that same sales force.

18 FE4 reported to a District Manager who reported to Blake Kelley, Ashfield’s VP of Sales.

56. During the call, in which all of Concordia’s senior executives participated, Defendant Edward Borkowski, a Concordia Director and Executive Vice President, addressed the issue of the Company’s Donnatal sales force. Presenting a positive, but false, assessment, Borkowski stated that “[o]ur 175 person sales team continued to make progress with Donnatal.... Our sales team is executing our initiatives and we expect the impact will ramp up during the next two quarters.” Omitting mention of the firing of between 43-46% of the sales force he claimed was “executing our initiatives” – a sales force Defendants had caused to be fired that very day – Defendant Borkowski continued, stating “[a]nd we expect as it has in the past Donnatal will respond to our promotional efforts in the coming months.”

57. During the question and answer period of the May 13 Conference Call, Defendant Borkowski doubled down on the positive sales outlook, not only failing to mention the firings that occurred that same day, but affirmatively stating that the sales force was doing good work whose fruits would be realized during the rest of 2016. Responding to a question from Scotiabank analyst Alan Ridgeway (“Ridgeway”), requesting elaboration on what the Company was “seeing and hearing in [the] market... just on Donnatal,” Defendant Borkowski stated that “I think from our sales force... the renewed processes is kind of new still, but I think it’s encouraging....” He continued “I think reminding the docs that Donnatal is an adjunct therapy is taking effect slowly and we would expect that to build through the year, as we said before we expect it to take probably at least another two quarters before we really see the full impact of those efforts.”

58. Analyst Ridgeway followed up, asking “so you guys are committed for at least another quarter or two until you get a good look at how this is impacting [Donnatal] sales, is that fair to think about?” Defendant Borkowski tripled down on his false statement and omission,stating that “[y]es, there is no reason at this point to do anything different, and we do believe it is going to respond.”

59. On August 12, 2016, Concordia released a 6-K discussing its Q2 2016 results, signed by Defendant Thompson. The Company filed its “Management’s Discussion and Analysis” (“MD&A)” as Exhibit 99.2 to the 6-K. In the MD&A, Concordia announced that Donnatal sales declined 31% in Q2 2016 compared to Q2 of 2015. The Company blamed this decline on “lower product demand as a result of competitive pressures.” The filing makes no mention of the firing of the contracted Ashfield Donnatal sales force on May 13, 2016.

60. During an earnings conference call held that same day, August 12, 2016 (“August 12 Conference Call”), Defendants cited declining Donnatal sales as a main reason for taking a $567 million impairment, cancelling a planned dividend of $0.75, and lowering Concordia’s 2016 revenue forecast. Defendant Borkowski cited “competition within the therapeutic class” for “adjunctive treatment for irritable bowel syndrome”19 as the reason for declining Donnatal sales. Once again, Defendants omitted that they caused Ashfield to fire 75-80 Donnatal salespersons on May 13, 2016.

61. In fact, there was no increased “competition within the “therapeutic class,” and certainly not for “adjunctive treatment for irritable bowel syndrome.” Donnatal is in the therapeutic class “Belladonna Alkaloids” and/or “Antispasmodics and GI Motility.” According to the National Institutes of Health’s website, “DailyMed,” which lists all drugs marketed in the United States, as well as the date on which marketing began, no Donnatal equivalents were introduced to the market in either 2015 or 2016. Other treatments for irritable bowel syndrome,

19 Adjunctive treatment is “an additional substance, treatment or procedure used for increasing the efficacy or safety of the primary substance, treatment, or procedure or for facilitating its performance. See https://medical-dictionary.thefreedictionary.com/adjunctive.such as Xifaxan, are neither “Belladonna Alkaloids” nor “Antispasmodics and GI Motility,” instead falling into the therapeutic class of “Anti-infectives.” Nor are they adjunctive treatments

62. Defendant de Saldanha confirmed that Defendant Borkowski was not referencing any newer drugs in different therapeutic classes when discussing competition that had hurt Donnatal sales. In colloquy with TD Securities analyst Lennox Gibbs (“Gibbs”), de Saldanha was clear that competition from new products was not eroding Donnatal’s market share:

Gibbs: Okay. And this is flat in terms of market share and you’re fairly confident that it – that did not likely to see erosion from the newer product in terms of market share?

de Saldanha: Yes. New – we see new products are growing the market rather than eroding Donnatal’s share.

63. Defendant Borkowski continued, stating that “[r]ecent trends indicate that Donnatal is not being prescribed as frequently,” then stated the company’s belief that sales would not grow in the second half of 2016. In fact, Defendant Borkowski again led investors and analysts to believe that the Donnatal sales force remained unchanged, stating that “we are looking at options for our contract sales teams” and that “[w]e still believe in the value of promotional support for Donnatal,” never acknowledging that the entire contract sales team had been fired three months earlier.

64. Responding to a question from Scotiabank’s Ridgeway, Defendant Borkowski stated that half of the decline in revenue – $50 million – was due to the anemic Donnatal sales. Defendant Kreppner continued the charade of a robust Donnatal sales force, stating that the Company “had obviously forecasted some significant growth in the second half for Donnatal, based on our sales effort. . .” when Defendants knew or recklessly disregarded that on the day the Class Period began, Concordia caused Ashfield to fire 75-80 Donnatal salespeople.

65. The quarter-over-quarter selling and marketing expense of Concordia’s North America segment supports that Concordia fired its contract sales team. On August 12, 2016, Defendants disclosed that Concordia North America’s “selling and marketing” expense fell from $4.973 million in the quarter ended March 31, 2016 to $3.342 million in the quarter ended June 30, 2016, a 32% decline from quarter-over-quarter.

66. Thus, by the beginning of the Class Period, Defendants knew or recklessly disregarded that they had seriously and materially curtailed their Donnatal sales efforts. Even as Defendants had decided to, and had, scaled back Concordia’s financial and personnel commitment to grow or maintain Donnatal sales, to market the drug, they reassured investors that their commitment not only remained unchanged, but specifically that their commitment to the Company’s Donnatal sales force would remain unchanged for the remainder of 2016.