Caraco in its typical earnings reporting style released their earnings right before Sun Pharma’s issuance. Caraco doesn’t care even care if the earnings release happens on a Sunday. Well the Sunday release had some good news for us:
On September 29, 2009, Caraco voluntarily entered into a Consent Decree with the FDA regarding the Company’s drug manufacturing operations. Under terms of the Consent Decree, the cessation of manufacturing operations will continue until Caraco receives written notification from independent experts and the FDA that it is in compliance with cGMP and can resume operations. The Company submitted a remediation work plan to the FDA and this work plan has been approved by the FDA. Remediation activities are ongoing under the supervision of cGMP experts. The Company has subsequently recalled some of the laid-off employees in conjunction with its efforts to restart its manufacturing activities.
In the Q3 earnings report, we heard that the company had submitted the plan to the FDA and the company was working with the FDA to resolve some concerns. It is great news that the company has now resolved all of FDA’s concerns. The company now has a plan that will allow the company to get back into cGMP compliance and restart manufacturing.
The cash burn for Q4 wasn’t good. The company had $76M of cash at Q3. At Q4 the cash was at $65M. A big drop from what I was expecting. Although the company still has plenty of cash to make it through until manufacturing restarts, I dislike seeing cash burned.
It seems like the company is very close to restarting production. I’m quite excited about the next couple of months, I expect them to restart manufacturing very soon.