ST. LOUIS, Aug. 4, 2012 /PRNewswire/ -- K-V Pharmaceutical Company (NYSE: KVa/ KVb) ("K-V" or "the Company") and certain of its domestic subsidiaries today filed voluntary Chapter 11 petitions under the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, seeking the protection of Chapter 11 while it seeks to restructure its financial obligations.
The Company intends to continue to operate during the reorganization, subject to the supervision and orders of the Bankruptcy Court and in accordance with applicable provisions of the Bankruptcy Code, paying employees and vendors in the normal course of business for goods and services provided postfiling, and providing its women's health care products without interruption to meet the needs of the healthcare providers and patients it serves.
"K-V came to this decision to seek the protection of Chapter 11 reluctantly, after exploring a full range of options," said Greg Divis, President and CEO of K-V Pharmaceutical. "Prior to filing our petitions, our Company has worked tirelessly to address significant financial obligations, stemming from legacy regulatory and legal issues. The Company has been unable to realize the full value of its most important product, Makena® (hydroxyprogesterone caproate injection), because of a lack of enforcement of the orphan drug marketing exclusivity granted to K-V for Makena® by the Food and Drug Administration (FDA). The lack of enforcement has also led certain state Medicaid agencies to impose barriers to access to Makena® on low-income pregnant women at high risk for recurrent preterm birth, despite those states' legal obligation to cover FDA-approved drugs. The Chapter 11 filing is intended to provide K-V with the time needed to continue to conduct our business and restructure our financial obligations as we continue our efforts to ensure that all clinically-indicated patients have access to Makena®. It is our intention to emerge from this restructuring as a stable and competitive company, able to continue to provide quality products to support the health of women across the stages of their lives."
Further Background to K -V's Chapter 11 Petition The Company reported in its filing papers that restrictions on reimbursement imposed by a number of State Medicaid agencies, as well as significant restrictions on manufacturing and marketing of other K-V products imposed by a previous FDA Consent Decree agreed to by the Company in March 2009 have also had a major negative impact on its revenues and ability to meet short and long-term obligations.These obligations include a milestone payment under the terms of the Company's agreement with Hologic Inc. pursuant to which the Company purchased all rights to Makena®. The Company was unsuccessful prior to the filing in obtaining a renegotiation of the milestone payments owed to Hologic on terms that were acceptable to the Company. As a result, the Company was forced to file these Chapter 11 cases. The Company has enough cash on hand to operate its business in the near term and intends to seek new financing and use of cash collateral to provide additional time to enable the Company to continue operations, as it takes additional steps to restructure its financial obligations.