Akorn Inc fka AKRXQ

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Fresenius' (FSNUY) CEO Stephan Sturm on Q1 2018 Results - Earnings Call Transcript

https://seekingalpha.com/article/4170405-fresenius-fsnuy-ceo-stephan-sturm-q1-2018-results-earnings-call-transcript

https://seekingalpha.com/article/4170405-fresenius-fsnuy-ceo-stephan-sturm-q1-2018-results-earnings-call-transcript?page=2

Prepared comments:

The evidence we have found, however, reveals that Akorn repeatedly and consciously violated the FDA CGMP and data integrity requirements and is in breach of a number of its representations and warranties and covenants provided in the merger agreement. Whilst neither our, nor Akorn's own investigation is complete, we had enough information to take the conscious and rational decision that exercising our right to terminate the merger agreement is in the best interest of our shareholders.

We were prepared to allow Akorn additional time to complete its own investigation and present any additional information it wanted us to consider, but Akorn rejected this offer. That refusal speaks volumes.

On April 23rd, Akorn sued us, requesting immediate closing of the transaction. Many of you will have read their complaint, as it became public last Friday. Obviously, it represents only Akorn's one-sided view. In its claim, Akorn argues that the true reason for our decision is their operating underperformance ever since we signed the agreement.

Now that's a predictable argument because it deflects attention. But you know that that's not the case. I have vigorously defended the underlying business rationale of the transaction, and we have diligently pursued FTC clearance. And we have spent millions on detailed planning and preparing for the integration of Akorn's business. These activities continued unabated deep into the last quarter. We even said we wanted to accelerate completion of the transaction in order to expedite operating improvements.

But that was before we learned of the breadth and the severity of Akorn's data integrity failures and misconduct. Think about it. We have a more than 100-year corporate history and take a very long-term view. Patients rely on us. We have built a reputation as a trustworthy, high-quality healthcare provider, not only in the U.S., but worldwide.

We take pride in what we do. Hence, there is zero tolerance when it comes to the very heart of our generics business, integrity of products, and their development. And let me be clear. Akorn's problems aren't just simple operating issues that can be fixed in a matter of months or quarters. These violations affect the core of Akorn's franchise, and they require a complete remediation of systems and data, and that will take years.

By now, a statement of our claims is also publicly available. It discusses our case in some detail, and we believe our statement demonstrates very clearly that we acted in the best interest of our shareholders when terminating the merger agreement. As the case is now in the hands of the Delaware court, I'm asking for your understanding that I will not comment on it in detail. Last night, the court has set a trial commencing on July 9.