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Hey, Lumber, please note that at no time does the law suit even mention short sellers as the reason for the stock demise. LOL. This is very disturbing information about third party payors, taken directly from the action filed on Friday: 7. By the end of 2015, Donnatal represented 33.9% of the Company’s North America segment’s revenue. ..... prior to the Class Period, third-party payors – insurers, pharmacy benefit managers, and managed care companies – began to exclude Donnatal from their prescription drug formularies. Having warned investors generally of this risk, Defendants failed to disclose the materialization of this trend of which they were aware or recklessly disregarded.
8. The third-party payors’ exclusion of Donnatal from prescription drug formularies coincided with Defendant Thompson’s pledge of his more than 2 million shares of Concordia common stock to secure personal loans. Investors were unaware of Thompson’s pledge. At the same time, just prior to the Class Period, at least one private equity firm inquired about purchasing Concordia, causing the Concordia Board of Directors to form a special committee to evaluate strategic alternatives. Defendants were, therefore, heavily motivated to maintain the price of Concordia stock and otherwise to project a positive picture of its cash flows – in particular from its most important, revenue-producing drug, Donnatal.
9. In the face of a decline in Donnatal sales resulting from formulary exclusion, however, Defendants sought to project then current and future sales success, touting the efforts of its sales force to market and sell the drug and their 2016 commitment to those efforts. This was a lie. At the beginning of the Class Period, on the very same day they touted Concordia’s 175-person Donnatal sales force and the impact they expected it to have on Donnatal sales in 2016, later that day, Defendants fired Concordia’s entire 75-80 person contract Donnatal sales force. Thus, in response to probing questions from securities analysts about Concordia’s continued commitment to its Donnatal sales efforts, Defendants told investors that they remained committed to their Donnatal sales efforts for the remainder of 2016 when they had actually materially curtailed Concordia’s efforts.
10. By mid-June, 2016, several major private equity firms had terminated talks to buy Concordia. On August 12, 2016, Concordia issued a press release, announcing its financial results for the second quarter of 2016 and disappointing investors with a reduction in its 2016 guidance “primarily due to” among other factors, “competitive marketplace pressures with respect to two key products: Donnatal® and Plaquenil®.” During the Company’s August 12, 2016 earnings conference call, continuing their lie about the Donnatal sales force, Defendants stated:
Borkowski: Recent trends indicate that Donnatal is not being prescribed as frequently as we had anticipated, and we do not believe that, we will see the growth we expected from the additional sales efforts in the second-half of 2016. While our contract sales team has had success targeting traditional Donnatal prescribers, the sales team has had limited impact in growing the brand with doctors, who have not traditionally prescribed the drug.
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Kreppner: Yes, I think, I guess, the big driver there was Donnatal. We had obviously forecasted some significant growth in the second- half for Donnatal, based on our sales effort and our smart sales effort. And given where we’re seeing Donnatal now, that sort of flat going forward, we’ve taken that growth out of the revised forecast going forward. (Emphasis added).
11. of a contract sales force that they had actually fired three months earlier. In fact, Defendants had knowingly significantly curtailed Donnatal sales efforts by the beginning of the Class Period.
12. On this news, Concordia’ stock price fell $6.33 per share, or 38%, to close at $10.03 per share on August 12, 2016, on unusually heavy trading volume.
13. As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s securities, Plaintiff and other Class members have suffered significant losses and damages.
A daily snapshot of everything from market open to close.