Akorn warned over GMP failings at Decatur plant

The warning letter, which has not yet been made public, was sent following a routine inspection of the Decatur facility, one of two operated by Akorn, between 12 September and 26 September 2006, the company noted in a Form 8-K filing with the Securities and Exchange Commission. The Form 8-K gave no further details on the GMP violations cited but noted that failure to correct them promptly "may result in legal action without further notice, including, without limitation, seizure and injunction". The FDA may also withhold approval of pending new applications listing the Decatur facility until the GMP problems are sorted out, Akorn said. The company has 15 working days from receipt of the letter (on 29 March) to notify the FDA of the specific steps it has taken to correct the violations. Akorn says it intends to meet that deadline "but will notify the FDA if we require more time to do so". As of 31 December 2006, the company had invested around US$22.4 million in expanding the Decatur site to incorporate lyophilisation (freeze-dry) manufacturing. Akon plans to develop an internal pipeline of generic lyophilised products and the expectation was that the necessary manufacturing capability would be in place by mid-2007. The company had set its sights on launching its first manufactured lyophilised injectable product, the intravenous dye IC-Green, in the first half of this year. Akorn now believes the FDA warning letter will "delay the in-service date for our lyophilisers and the launch of IC-Green", the Form 8-K states. The impact of the delayed IC-Green launch on first-half sales is expected to be around US$2 million; Akorn reported total revenues of US$71.2 million for 2006, 60 per cent higher than in the previous year. The company said it would immediately seek a contract manufacturer for IC-Green and did not anticipate any "other significant adverse impact on our business". Akorn has manufacturing facilities in Decatur and Somerset, New Jersey. The former services all three of the company's business segments: ophthalmics, hospital drugs and injectables, and contract manufacturing. The Somerset facility manufactures ophthalmic solutions and ointments. The Decatur site is no stranger to GMP problems. As Akorn notes in its latest Form 10-K, the FDA issued a warning letter to the company about cGMP deficiencies at the facility in October 2000. In response to the violations cited, Akorn implemented a "comprehensive systematic corrective action plan", hence avoiding enforcement action. It was not until December 2005, though, that the FDA gave the facility a clean bill of health and Akorn could source new product approvals from the Decatur plant.