KV Pharmaceutical Co.(fka KVPHQ)

[mlkrborn]

KV-A $1.25 Why Did My Stock Just Die?

By Rich Duprey | More Articles
August 12, 2011 | Comments (1)
Baby blues
Specialty pharmaceutical KV Pharmaceuticals filed its quarterly report the other day, and the drain on its business that its overpriced drug Makena represents was still apparent.

To recap, KV outraged just about everyone earlier this year, when it announced a pricing scheme for the drug that made it look as if it was trying to profit off at-risk babies. To quell the uproar, KV first offered financial assistance to those who couldn't afford the $1,500-per-dose cost and then cut the price to $690 when that did little to mollify anyone.

The FDA then weighed in and said it wouldn't grant Makena exclusivity, meaning the original lower-cost options would still be available. The PR disaster was reflected in KV's quarterly results. Revenues were only 2% higher than a year ago, when it had no Makena sales, and it's shipped only 200 more vials than it did when it reported full-year results. It did note, though, that shipments per week rose 39% to 160 vials, compared with the 115 per week it recorded in the first weeks after the drug was launched.

High-priced drugs are sinking a number of pharmaceutical stocks these days, including Dendreon (Nasdaq: DNDN ) , which found it was unable to overcome the "buy-and-bill" method of reimbursement from Medicare. With doctors having to shell out $93,000 for Provenge first, with no guarantee of getting the money back, sales have been lackluster to say the least.

While I'm a little surprised that 93% of the CAPS members rating KV still think it will outperform the broad market averages, its low, two-star rating suggests that they also believe there's better places for your money. You can follow along on KV's progress by adding it to your watchlist, and let us know on the KV Pharmaceuticals CAPS page whether you think investors can afford to wait for sales to take off.
http://www.fool.com/investing/general/2011/08/12/why-did-my-stock-just-die.aspx