I'm going to have to listen to the CC to see what is said but these are not the results I expected.
Their sales numbers show nice growth but the bottom line is not what it should be. After a brief review of the BS and P&L I'm a little confused at the accounting.
A couple of things that had to have an effect that I can't find without the CC or 10K.
1) They are building 2 continuous suites in N.C. which are going through Qualifications right now. These are a relatively new concept in manufacturing so the testing and documentation is rather immense. They are now 2 quarters behind schedule in bringing this on-line. I don't know how the are accounting for these finances.
2) They had a rather large re-call of the Allergan / Teva diabetes drug Glipizide. When Teva took over Allergans Generic line for some reason they (TEVA) increased the size of the bottle and inserted a normal desiccant inside. Either the desiccant was too small or the desicannt reacted with the drug but the drug broke down after sitting on a shelf for a couple of months. I couldn't see where Patheon would have any liability here.
3) Patheon also had another rather large recall of the same diabetes drug because one component (2- component drug) dissolved too fast. Diabetes drugs should dissolve over a certain timeframe to maintain proper sugar levels. I'm not aware of who's responsibility this screw-up is but it wouldn't surprise me if Patheon took a hit.
4) Lastly there was a large re-call of an ENDO birth control pill which is another two-part drug. There was something wrong with one component. Again, I don't know where the liability lies.
I'll listen to the CC over the weekend and see if I find anything suspect.
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