Lannett develops, manufactures, packages, markets, and distributes generic versions of branded pharmaceutical products in the United States.
The complaint alleges that throughout the Class Period Defendants made false and/or misleading statements and/or failed to disclose that: (1) Lannett's drug pricing relied on unsustainable pricing methodologies; (2) the Company lacked effective internal controls concerning its drug pricing methodologies; (3) as a result, Lannett's public statements were materially false and misleading at all relevant times and spurred ongoing investigations by the State of Connecticut Office of the Attorney General and the U.S. Department of Justice. Additionally, media outlets reported that the underlying conduct would likely lead U.S. prosecutors to file criminal charges against Lannett by the end of 2016 for suspected price collusion.
On July 16, 2014, the Company issued a press release and filed a Form 8-K with the SEC, announcing that the Company received interrogatories and a subpoena from the State of Connecticut Office of the Attorney General concerning its investigation into the Company's pricing and customer division of digoxin.
On this news, shares of Lannett fell $8.05 or over 17%, on unusually heavy volume, to close at $39.04 on June 16, 2014.
On November 6, 2014, the Company filed a Form 10-Q for the period ended September 30, 2014 revealing that "the Senior Vice President of Sales and Marketing of the Company was served with a grand jury subpoena relating to a federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act."
On this news, shares of Lannett fell $2.98 per share, or approximately 5.6%, over two trading days to close at $50.17 per share on November 7, 2014, damaging investors.
On December 8, 2014, during aftermarket hours, the Company filed a Form 8-K with the SEC revealing that "the Company was served with a grand jury subpoena related to the continuing federal investigation of the generic pharmaceutical industry into possible violations of the Sherman Act."
On this news, shares of Lannett fell $6.08 per share, or approximately 12.6%, over two trading days to close at $41.92 per share on December 10, 2014, damaging investors.
On November 3, 2016, Bloomberg published an article titled "U.S. Charges in Generic-Drug Probe to Be Filed by Year-End", revealing that in connection with the DOJ's investigation of a dozen companies, including Lannett, U.S. prosecutors may file criminal charges by the end of 2016 for suspected price collusion.
On this news, shares of Lannett fell $6.25 per share, or approximately 27%, from its previous closing price to close at $17.25 per share on November 3, 2016, damaging investors.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members. See www.pomerantzlaw.com.
Robert S. Willoughby
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SOURCE Pomerantz LLP