KV Pharmaceutical Company Announces New Board Members and Restructuring of Senior Executive Management
ST. LOUIS, June 11 /PRNewswire-FirstCall/ -- KV Pharmaceutical
Company (NYSE:KVa/KVb) , a specialty pharmaceutical
company, conducted its Annual Meeting of Shareholders on June 10,
2010 for the fiscal year ended March 31, 2009.
At the Annual Shareholders' meeting, Mark A. Dow, Gregory
Bentley and Joseph D. Lehrer were newly elected as directors, with
one-year terms. Messrs. Dow, Bentley and Lehrer combine extensive
public company expertise in the pharmaceutical industry and in the
areas of transactions, finance and law. Also re-elected to the
Board of Directors at today's meeting by a majority vote of the
shareholders were Chairman Terry Hatfield and current Board members
John Sampson, David Hermelin and Marc Hermelin. The Board meets all
corporate governance requirements for independence, with Messrs.
Hatfield, Sampson, Dow, and Lehrer qualifying as independent
The Company believes that the Board elected to serve at
yesterday's Annual Meeting should be well equipped to help KV
complete its turnaround, as well as plan for the growth anticipated
from the future re-launch of certain approved products and the
launch of Gestiva(TM) upon FDA approval. The new Directors are
expected to strengthen the existing Board in areas including
financial management as well as adding expertise to the Board in
areas of legal, regulatory and quality systems. The KV Board is now
maximized relative to pharmaceutical industry experience to work
towards rebuilding and refocusing the Company's resources to
prepare and position KV for the future.
The Company and the Board of Directors expresses its
appreciation to former Directors Kevin Carlie, Norm Schellenger,
Jonathan Kilmer and Jean Bellin for their tireless efforts during
their terms of service as members of KV's Board.
Among the Directors who were reelected in today's Shareholders'
Meeting was Marc S. Hermelin, who served as KV's Chief Executive
Officer from 1975 until December 2008 and as a Director of KV's
Board continuously since the middle of the 1970s. During this
period of time, KV transitioned from a small contract manufacturer
of pharmaceuticals to a leader in drug delivery technology and a
marketer of specialty pharmaceutical products.
Mr. Hermelin has advised the Company that he will not return to
KV in any officer or employee capacity. His stated goal is to
assist building a highly functioning world-class Board of Directors
of KV that will help to rebuild and monitor the Company's business
as it returns to full profitability and growth. He plans to serve
on the KV Board on a transitional basis for the short period of
time that he anticipates it will take to ensure that KV has
weathered the challenges it currently faces.
The three other Directors who were reelected by the shareholders
in yesterday's meeting are Terry Hatfield, who has served as
Chairman since December 2008, John Sampson, who joined KV's Board
in January 2010, bringing more than 30 years of experience in
pharmaceutical sales, marketing and research, and David Hermelin,
who has served as Director since 2004 and who formerly served as
KV's Vice President of Corporate Growth and Strategy.
The Board's primary focus is two-fold: to continue to work with
the Food and Drug Administration to reinstate KV to Good
Manufacturing Practice compliance; and to continue to explore a
variety of financial alternatives currently under review as a means
with which to strengthen the Company's cash position.
At a Board meeting immediately following the Fiscal 2009 Annual
Meeting of Shareholders, the Board initiated a restructuring of
senior executive management of the Company.
Mr. David Van Vliet, who was appointed on December 5, 2008 as
Interim President and Interim Chief Executive Officer is no longer
with the company. The Board has made the decision to focus on its
efforts to identify external chief executive candidates who have
many years of pharmaceutical experience. Until such time a
candidate can be identified and hired, the Board has appointed Mr.
Gregory J. Divis to act as the new Interim President and Interim
Chief Executive Officer of the Company.
Mr. Divis has and will to continue to serve as President of
Ther-Rx Corporation, the branded pharmaceutical subsidiary of the
Company. Prior to joining KV, Mr. Divis, over a period of nearly 18
years, served in a variety of Commercial and General Management
leadership positions with successful large pharmaceutical companies
such as Schering-Plough Corporation and Sanofi-Aventis. This
included direct responsibility for entire country operations in the
UK and Ireland, extensive Business Development experience, and
significant commercial leadership experience for large
multi-national corporations. Since July 2007, Mr. Divis has served
as President of Ther-Rx Corporation. Mr. Divis holds a Bachelors
Degree from the University of Iowa.
The Board believes that with his extensive pharmaceutical
experience and the experience garnered during his tenure at KV, Mr.
Divis will serve as a qualified and effective Interim President and
Interim Chief Executive Officer and will support him in his efforts
to move the Company forward.
Mr. Divis stated, "It has been a difficult period for KV, one
which will only serve to strengthen our efforts to ensure that we
are without question focused on the compliance, quality, safety and
timely supply of our customers once KV has corrected all of its
deficiencies and has become an approved pharmaceutical company by
the Food and Drug Administration. I and other KV team members will
continue to work closely with both Lachman and Associates and the
FDA to ensure that we meet all the requirements to fulfill and
sustain our commitment to the FDA. The entire KV team has worked
many long and hard hours to get the Company 'back to business' and
look forward to working closely with the FDA to achieve our goal to
return the organization to a state of GMP compliance. I and the
Board of Directors are committed to doing all that we can to
restore KV's revenue stream and shareholder value."
Background on Newly Elected Directors
Mark A. Dow is a CPA who retired from a 36-year career at
PriceWaterhouse Coopers, LLP in June 2008 where he was the leader
of its middle market tax practice. In this capacity, Mr. Dow
provided tax and business advice to rapidly growing companies and
to private equity groups. He, therefore, has experience in merger
and acquisition structuring, tax due diligence and sell-side
transaction services. His other specialties include IRS dispute
resolution, inventory and other accounting methods. His client base
has primarily consisted of manufacturers, distributors, retailers
and early stage technology companies. Mr. Dow provided advice to KV
in the 1990's when Coopers & Lybrand served as KV's external
auditors. He also served for three years on the Advisory Board of
Bock Pharmacal, a branded pharmaceutical marketer specializing in
women's health until the time of Bock's purchase by Sanofi.
Mr. Dow has a B.B.A. in Accounting from Eastern Michigan
University. He currently serves on two Boards of Directors of
non-public companies, both with revenues of approximately $600
million and growing.
Gregory Bentley, JD is an attorney with more than 32 years of
experience in matters relating to corporate, commercial,
pharmaceutical compliance, securities, Sarbanes Oxley,
transactional (mergers and acquisitions), FDA regulatory matters
and antitrust, with extensive experience in the management of civil
litigation. Mr. Bentley has spent 15 years as General Counsel or
Vice President, Regulatory and Quality, for FDA-regulated companies
in the pharmaceutical, pharmaceutical development services, and
medical devices fields. He also spent 9 years working as an
antitrust and corporate attorney in Shearman & Sterling, a
major Wall Street law firm, before becoming Associate General
Counsel and lead mergers and acquisition counsel for Siemens
Corporation. In 1994, Mr. Bentley joined Siemens Medical Systems, a
large medical devices company, as Vice President of Regulatory and
Quality to lead its efforts to correct FDA GMP problems that had
resulted in a consent order that had shut down several businesses.
Mr. Bentley succeeded in that role and restored its GMP compliance
and its credibility and reputation with the FDA, allowing the
businesses to reopen. In 1999, he joined aaiPharma Inc., a drug
development services company that was expanding into
pharmaceuticals. After many years of growth, Mr. Bentley led the
legal efforts for this company's reorganization when it developed
severe financial difficulties. Between 2006 and early 2009, he was
Senior Vice President and General Counsel of the Company.
Mr. Bentley was awarded a B.S. in Applied Physics and an M.S. in
Economics from Tufts University in 1971. He earned his J.D. from
Columbia Law School in 1977.
Joseph D. Lehrer, currently serves as Chairman of the Corporate
Department for Greensfelder, Hemker & Gale, P.C., a business
law firm headquartered in St. Louis, Missouri, with approximately
170 lawyers. Mr. Lehrer was formerly the President of that
In his 37 years of practice, Mr. Lehrer has represented numerous
clients in merger, acquisition and divestiture transactions and in
regard to venture capital and private financing transactions. Mr.
Lehrer has also represented the Board of Directors of both publicly
traded registered corporations and substantial privately held
corporations with respect to corporate governance matters, and has
acted as the Board's special transaction counsel. He has also
served on the Board of Directors of both private and publicly
traded corporations, including as Chairman of the Board, Chairman
of the Audit Committee, Chairman of the Compensation Committee, and
a member of the Executive Committee of various public companies. In
one of these companies, in addition to his Board membership, Mr.
Lehrer participated in the turnaround of a failing company that was
successfully sold to a private investment group.
Mr. Lehrer has experience relating to the pharmaceutical
industry. In particular, Mr. Lehrer was the lead attorney in the
successful initial public offering of Jones Medical (JMED),
formerly a St. Louis based pharmaceutical marketer, and
participated in his Firm's representation of Jones Medical in
connection with its merger with King Pharmaceuticals, Inc. (KG).
Further, Mr. Lehrer was the primary counsel for Bock Pharmacal
Company, formerly a St. Louis based pharmaceutical marketer
specializing in women's health, and served on its Advisory Board of
Mr. Lehrer is an Adjunct Professor of Law at Washington
University School of Law, teaching business law. He has also been a
panel member or moderator on national legal education panels
discussing issues related to corporate governance, mergers and
acquisitions and the Sarbanes-Oxley Act. Mr. Lehrer received his
undergraduate degree from Washington University in 1970 and his
J.D. from Washington University in 1973.
About KV Pharmaceutical Company
K-V Pharmaceutical Company is a fully-integrated specialty
pharmaceutical company that develops, manufactures, markets and
acquires technology-distinguished branded prescription products.
The Company markets its technology-distinguished products through
Ther-Rx Corporation, its branded drug subsidiary.
For further information about K-V Pharmaceutical Company, please
visit the Company's website at www.kvpharmaceutical.com.
Safe Harbor Statement
The information in this release may contain various
forward-looking statements when the meaning of the United States
Private Securities Litigation Reform Act of 1995 ("PSLRA") and
which may be based on or include assumptions concerning the
Company's operations, future results and prospects. Such statements
may be identified by the use of words like "plans", "expects",
"aim", "believe", "projects", "anticipates", "commit", "intend",
"estimate", "will", "should", "could", and other expressions that
indicate future events and trends.
All statements that address expectations or projections about
the future, include without limitation, statements about the number
of preterm births for which Gestiva(TM) may be prescribed, its
safety profile and side effects profile, and the Company's strategy
for growth, product development, product launches regulatory
approvals, market position, acquisitions, revenues, expenditures
and other financial results, are forward-looking statements. All
forward-looking statements are based on current expectations and
are subject to risk and uncertainties. In connection with the "safe
harbor" provisions, the Company provides the following cautionary
statements identifying important economic, political and technology
factors, which among others, could cause actual results or events
to differ materially from those set forth or implied by the
forward-looking statements and related assumptions. Such factors
include (but or not limited to) the following:
1. the ability to continue as a going concern; 2. difficulties and uncertainties with respect to obtaining additional capital, as more fully described in Part I, Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in the Quarter Report on Form 10-Q for the quarter ended June 30, 2009 (the first quarter of fiscal year ending March 31, 2010 (the "Form 10-Q"); 3. the consent decree between the Company and the FDA and the Company's suspension of the production and shipment of all of the products that it manufactures and the related nationwide recall affecting all of the products that it manufactures, as well as the related material adverse effect on its revenue, assets and liquidity and capital resources, as more fully described in Part I, Item 2 - "Management's Discussion and Analysis of Financial Condition and Results of Operations - Background - Discontinuation of Manufacturing and Distribution; Product Recalls; and the FDA "Consent Decree" in the Form 10-Q; 4. the possibility of further reducing the Company's operations, including further reductions of its employee base and significantly curtailing some or all of its efforts to meet the consent decree's requirements and return its approved products to market in order to maintain and attempt to increase its limited cash and financial resources, and related costs and accounting charges from taking such actions; 5. the plea agreement between the Company and the U.S. Department of Justice and the Company's obligations therewith, as well as the related material adverse effect, if any, on its revenue, assets and liquidity and capital resources, as more fully described in Note 20 - "Subsequent Events" of the Notes to the Consolidated Financial Statements in the Form 10-Q; 6. changes in the current and future business environment, including interest rates and capital and consumer spending; 7. the difficulty of predicting FDA approvals, including timing, and that any period of exclusivity may not be realized; 8. the possibility of not obtaining FDA approvals or delay in obtaining FDA approvals, including with respect to Gestiva(TM); 9. acceptance of and demand for the Company's new pharmaceutical products; 10. the introduction and impact of competitive products and pricing, including as a result of so-called authorized generic drugs; 11. new product development and launch, including the possibility that any product launch may be delayed; 12. reliance on key strategic acquisitions; 13. the availability of raw materials and/or products manufactured for the Company under contract manufacturing agreements with third parties; 14. the regulatory environment, including regulatory agency and judicial actions and changes in applicable laws or regulations; 15. fluctuations in revenues; 16. the difficulty of predicting international regulatory approvals, including timing; 17. the difficulty of predicting the pattern of inventory movements by the Company's customers; 18. the impact of competitive response to the Company's sales, marketing and strategic efforts, including introduction or potential introduction of generic or competing products against products sold by the Company and its subsidiaries; 19. risks that the Company may not ultimately prevail in litigation, including product liability lawsuits and challenges to its intellectual property rights by actual or potential competitors or to its ability to market generic products due to brand company patents and challenges to other companies' introduction or potential introduction of generic or competing products by third parties against products sold by the Company or its subsidiaries including without limitation the litigation and claims referred to in Note 18 - "Commitments and Contingencies" of the Notes to the Consolidated Financial Statements in the Form 10-Q; 20. the possibility that our current estimates of the financial effect of certain announced product recalls could prove to be incorrect; 21. whether any product recalls or product introductions result in litigation, agency action or material damages; 22. failure to supply claims by certain of the Company's customers, including CVS Pharmacy, Inc., that, despite the formal discontinuation action by the Company of its products, the Company should compensate such customers for any additional costs they allegedly incurred for procuring products the Company did not supply; 23. the satisfaction or waiver of the terms and conditions for the acquisition of the full U.S. and worldwide rights to Gestiva(TM) set forth in the previously disclosed Gestiva(TM) acquisition agreement, as amended; 24. the series of putative class action lawsuits alleging violations of the federal securities laws by the Company and certain individuals, as more fully described in Note 18 - "Commitments and Contingencies - Litigation and Governmental Inquiries" of the Notes to the Consolidated Financial Statements in the Form 10-Q; 25. the possibility that insurance proceeds are insufficient to cover potential losses that may arise from litigation, including with respect to product liability, failure to supply or securities litigation; 26. the informal inquiry initiated by the SEC and any related or additional government investigation or enforcement proceedings as more fully described in Note 18 - "Commitments and Contingencies - Litigation and Government Inquiries, of the Notes to the Consolidated Financial Statements in the Form 10-Q; 27. the possibility that the pending investigation by the Office of Inspector General of the Department of Health and Human Services into potential false claims under the Title 42 of the U.S. Code as more fully describe ed in Note 18 - "Commitments and Contingencies - Litigation and Government Inquiries" of the Notes to the Consolidated Financial Statements in the Form 10-Q could result in significant civil fines or penalties, including exclusion from participation in federal healthcare programs such as Medicare and Medicaid; 28. delays in returning, or failure to return, certain or many of the Company's approved products to the market, including loss of market share as a result of the suspension of shipments, and related costs; 29. the ability to sell or license certain assets, and the terms of such transactions; 30. the possibility that default on one type or class of the Company's indebtedness could result in cross default under, and the acceleration of, its other indebtedness; 31. the risks that present or future changes in the Board of Directors or management may lead to an acceleration of the Company's bonds or to adverse actions by government agencies or our auditors; and 32. the risks detailed from time-to-time in the Company's filings with the SEC.
This discussion is not exhaustive, but is designed to highlight
important factors that may impact the Company's forward-looking
Because the factors referred to above, as well as the statements
included elsewhere in this press release, could cause actual
results or outcomes to differ materially from those expressed in
any forward-looking statements made by the company or on the
Company's behalf, you should not place undue reliance on any
forward-looking statements. All forward-looking statements
attributable to the Company are expressly qualified in their
entirety by the cautionary statements in this "Cautionary Note
Regarding Forward-Looking Statements" and the risk factors that are
included under Part I, Item 1A - "Risks Factors" in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2009
and Part II, Item 1A - "Risk Factors" in the Form 10-Q, as
supplemented by the Company's subsequent SEC filings.
Further, any forward-looking statement speaks only as of the
date on which it is made and the Company is under no obligation to
update any of the forward-looking statements after the date of this
press release. New factors emerge from time-to-time, and it is not
possible for the Company to predict which factors will arise, when
they will arise and/or their effects. In addition, the Company
cannot assess the impact of each factor on its future business or
financial condition or the extent to which any factor, or
combination of factors, may cause actual results to differ
materially from those contained in any forward-looking
Source: KV Pharmaceutical Company
CONTACT: Catherine M. Biffignani, Vice President, Investor
Web Site: http://www.kvpharmaceutical.com/
Posted: June 2010