UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
Current Report
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
July 10, 2020
LANNETT COMPANY,
INC.
(Exact name of registrant as specified in
its charter)
Commission file
no. 001-31298
|
State of Delaware
|
23-0787699
|
|
(State of Incorporation)
|
(I.R.S. Employer I.D. No.)
|
9000 State Road
Philadelphia, PA 19136
(215) 333-9000
(Address of principal executive offices
and telephone number)
Check the appropriate box below if the Form
8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
(see General Instruction A.2. below):
|
¨
|
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
|
¨
|
Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
|
|
¨
|
Pre-commencement communications
pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
|
Indicate by check mark whether the registrant
is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2
of the Securities Exchange Act of 1934 (§240.12b-2 of this Chapter).
Emerging
growth company ¨
If an emerging
growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
|
Item 2.05
|
Costs Associated with Exit or Disposal Activities
|
On July 10, 2020, the Board of Directors
of Lannett Company, Inc. (the “Company”) authorized a restructuring and cost savings plan (the “2020 Restructuring
Plan”). The purpose of the 2020 Restructuring Plan is to enhance manufacturing efficiencies, streamline operations and reduce
the Company’s cost structure, and is being implemented, in part, as a result of previously anticipated near-term competition
and pricing pressure with respect to certain key products, including generic Fluphenazine, currently the Company’s largest
revenue product and one that has higher than average gross margins. The 2020 Restructuring Plan will include the consolidation
of the Company’s research and development (R&D) function into a single location in Philadelphia, PA, lowering operating
costs and reducing the workforce by approximately 80 positions, equal to approximately 8.5% of the Company’s total number
of employees. The 2020 Restructuring Plan (the workforce reduction) was initiated on July 13, 2020.
The Company estimates that it will incur
approximately $4.0 million in severance-related costs, primarily in the first quarter of Fiscal 2021, in connection with the 2020
Restructuring Plan. The Company expects the 2020 Restructuring Plan to result in annual cost savings in excess of $15.0 million.
This Item 2.05 contains forward-looking
statements, including information regarding the 2020 Restructuring Plan. These forward-looking statements are based on the
Company’s current expectations and’ inherently involve significant risks and uncertainties. The Company’s
actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a
result of these risks and uncertainties. A further description of the risks and uncertainties relating to the business of
the Company is contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2019, filed with
Securities and Exchange Commission (“Commission”) on August 28, 2019, and the Company’s subsequent current and
periodic reports filed with the Commission. The Company undertakes no duty or obligation to update any forward-looking statements
contained in this Item 2.05 as a result of new information, future events or changes in expectations.
Item 5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b) Departure
of Principal Accounting Officer
As a result of the 2020 Restructuring Plan,
the employment of G. Michael Landis, the Senior Director of Finance and Treasurer of the Company and the Company’s principal
accounting officer was terminated effective July 13, 2020.
(c) Appointment
of Principal Accounting Officer
The Board of Directors of the Company
appointed John Kozlowski the Company’s principal accounting officer effective July 13, 2020. Mr. Kozlowski, 48, is the
Vice President of Finance and Chief Financial Officer of the Company. Mr. Kozlowski joined the Company in 2009, was promoted
in 2010 to Corporate Controller, was promoted in 2016 to Vice President Financial Operations & Corporate
Controller, was promoted to Chief Operating Officer in 2017, was promoted to Chief of Staff and Strategy Officer in 2018 and
in 2019 was promoted to Vice President of Finance and Chief Financial Officer. Prior to joining the Company,
Mr. Kozlowski served in senior finance and accounting roles for Optium Corporation and Finisar Australia. He
earned a Bachelor of Arts degree in finance from James Madison University and a Masters of Business Administration degree
from Rider University.
There is no arrangement
or understanding between Mr. Kozlowski and any other persons pursuant to which Mr. Kozlowski was appointed as principal accounting
officer of the Company. There are no family relationships between Mr. Kozlowski and any director or executive officer of the Company,
and there are no transactions between Mr. Kozlowski and the Company that would be required to be reported under Item 404(a)
of Regulation S-K.
ITEM 9.01 Financial Statements and Exhibits
(d) Exhibits
SIGNATURE
Pursuant to the requirements
of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
|
LANNETT COMPANY
|
|
|
|
|
|
By:
|
/s/ Samuel H. Israel
|
|
|
|
Chief Legal Officer and General Counsel
|
|
|
|
Date: July 14, 2020
|
|
EXHIBIT INDEX
Exhibit 99.1
|
|
Contact:
|
Robert Jaffe
|
|
|
|
Robert Jaffe Co., LLC
|
|
|
|
(424) 288-4098
|
LANNETT ANNOUNCES RESTRUCTURING, COST
REDUCTION INITIATIVES
Philadelphia, PA – July 13, 2020 –
Lannett Company, Inc. (NYSE: LCI) today announced a restructuring and cost savings plan. The initiatives include consolidating
the research and development (R&D) function into a single location in Philadelphia and lowering operating costs. The company’s
workforce will be reduced by approximately 80 positions, equal to approximately 8.5% of the company’s total number of employees.
The company said that it expects these actions to result in cost savings in excess of $15 million annually.
“Our goal is to proactively strengthen our business by
enhancing our manufacturing efficiencies and improving our cost structure,” said Tim Crew, chief executive officer of Lannett
Company. “For the coming year, we expect to grow our topline, driven by a solid pace of new product introductions, as we
have done over the past couple of years. In our recently completed fiscal 2020 fourth quarter, we launched six new products, which
have already secured customer awards of approximately $15 million.
“At the same time, we had expected pricing pressure in
fiscal 2021 on certain key products, including generic Fluphenazine, currently our largest revenue product and one that has higher
than average gross margins. A competitor has recently received approval for this product and we believe will launch shortly. We
implemented the restructuring and cost savings plan, in part, to mitigate the impact of competitive pricing pressure.”
The company said the majority of the affected positions are
based at its Seymour, Indiana plant. Most of the reductions are effective as of today. “This is a necessary but difficult
move for the company,” Crew said. “The people of Lannett dedicate themselves to the business, and we appreciate all
of their contributions.” Affected employees will receive severance and other benefits.
Crew added that the company is on pace to submit an Abbreviated
New Drug Application (ANDA) for generic Advair DISKUS®, a partnered product, before the end of the current calendar
year. Pharmacokinetic (PK) studies for the product, which were delayed due to COVID-19, have resumed.
ADVAIR DISKUS® is a registered trademark of GlaxoSmithKline.
About Lannett Company, Inc.:
Lannett Company, founded in 1942, develops, manufactures, packages,
markets and distributes generic pharmaceutical products for a wide range of medical indications. For more information, visit the
company’s website at www.lannett.com.
This news release contains certain statements of a forward-looking
nature relating to future events or future business performance. Any such statement, including, but not limited to, achieving cost
reduction measures, enhancing manufacturing efficiencies, growing net revenues, a positive outcome of the pharmacokinetic studies
for generic Advair DISKUS® and submitting the ANDA for the product before the end of calendar 2020, successfully
commercializing new products, and maintaining overall profitability, whether expressed or implied, is subject to market and other
conditions, and subject to risks and uncertainties which can cause actual results to differ materially from those currently anticipated
due to a number of factors which include, but are not limited to, the risk factors discussed in the Company’s Form 10-K and
other documents filed with the SEC from time to time, including the prospectus supplement related to the proposed offering to be
filed with the SEC. These forward-looking statements represent the Company's judgment as of the date of this news release. The
Company disclaims any intent or obligation to update these forward-looking statements.
# # #