Short Lannett Company If Its On Track for a Strong Year?

Small cap generic pharmaceutical stock Lannett Company, Inc (NYSE: LCI) is thesecond most shorted stock on the NYSE with short interest of 55.65% according toHighshortinterest.com. Lannett Company was founded in 1942 anddevelops, manufactures, packages, markets and distributes generic pharmaceutical products for a wide range of medical indications and therapeutic areas. The Company believes its ability to select viable products for development, efficiently develop such products (including obtaining any applicable regulatory approvals), vertically integrateitself into certain specialty markets and achieving economies in production are all critical for its success in the generic pharmaceutical industry in which it operates.

However, Lannett Company has facedproblems multiplied by a debt financed $1.23 billion acquisition ofKremers Urban Pharmaceuticals more than a year ago that has not proven to be as lucrative as originally expected. The FDAs decision to withdraw approval of Lannett Company’s ability to sell a generic version ofConcerta for attention deficit hyperactivity disorder caused problems.

On the other hand, shares have been rising since summer:

A look at recent news shows some positive news over the past few months:

Dec 21, 2017 – Lannett Appoints Timothy C. Crew As CEO Dec 1, 2017 – Lannett Announces FDA Acceptance Of 505(b)(2) New Drug Application For Cocaine Hydrochloride Topical Solution, A Proprietary Anesthetic Product Nov 29, 2017 – Lannett Announces Agreement For Authorized Generic Version Of Toprol-XL庐 Nov 1, 2017 – Lannett Comments On Amended Civil Complaint Oct 30, 2017 – Lannett And Celgene Enter Into Settlement And License Agreement Related To Thalomid庐 Oct 2, 2017 – Lannett Receives Two FDA Approvals For Lansoprazole Delayed-Release Capsules USP, One Each For Full Prescription And OTC Sep 27, 2017 – Lannett Receives FDA Approval For Oxycodone And Acetaminophen Tablets USP, 5 mg/325 mg And 10 mg/325 mg Sep 26, 2017 – Lannett Receives Approval For Dexmethylphenidate Hydrochloride Tablets, 2.5 mg, 5 mg And 10 mg Sep 26, 2017 – Lannett Announces Dismissal Of Class Action Lawsuit Sep 22, 2017 – Arthur Bedrosian, Lannett CEO, Prevails In Lawsuit With Internal Revenue Service

In November, Lannett Companyreported financial results for its fiscal 2018 first quarter ended September 30, 2017 with the CEOmaking these optimistic comments:

“In recent weeks, we announced a number of very positive developments that position our company for continued near- and longer term growth. These include the filing of our first 505(b)(2) New Drug Application for C-Topical, five product approvals, the dismissal of a class action lawsuit and the signing of a license agreement that will allow us to market generic Thalidomide. Regarding our fiscal 2018 first quarter performance, we reported solid financial results, rebounding well from challenges in the preceding fourth quarter. Key contributors to the quarter were strong sales across several product categories, which led to an 11% increase compared with the fourth quarter of fiscal 2017.

“Looking ahead, we are on track for a strong year and have raised our full-year guidance. We continue to expect to launch in the current fiscal year a number of previously approved products. In addition, we successfully coordinated with our partners and customers to prevent a potential drug shortage and avoid a disruption in the supply to patients of two important medications.”

Guidance was given as the following:

GAAP

Adjusted

Net sales

$710 million to $720 million, up from $655 million to $665 million

$710 million to $720 million, up from $655 million to $665 million

Gross margin %

46% to 47%, unchanged

51% to 52%, unchanged

R&D expense

$46 million to $48 million, unchanged

$46 million to $48 million, unchanged

SG&A expense

$78 million to $80 million, up from $75 million to $77 million

$77 million to $79 million, up from $73 million to $75 million

Integration and restructuring related expense

$4 million to $5 million, unchanged

$-

Interest expense

$85 million to $86 million, down from $88 million to $89 million

$66 million to $67 million, down from $67 million to $68 million

Effective tax rate

Approximately 35%, unchanged

Approximately 35%, unchanged

Capital expenditures

$65 million to $75 million, unchanged

$65 million to $75 million, unchanged

Leave a Reply

Your email address will not be published. Required fields are marked *