Robbins LLP: Salix Pharmaceuticals, Ltd. (SLXP) Misled Shareholders According to a Recently Filed Class Action
Robbins LLP announces that an investor of Salix Pharmaceuticals, Ltd. (NASDAQGS: SLXP) has filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of New York. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between November 8, 2013 and November 6, 2014. Salix is a pharmaceutical company that focuses on treatments for digestive system diseases and disorders.
Salix is Accused of Weak Financial Controls
According to the complaint, shares of Salix declined $47.08, or nearly 34%, to close at $91.47 per share on November 7, 2014, after the company issued a number of devastating revelations about its business prospects. The downfall began with an announcement of the sudden resignation of Salix’s Chief Financial Officer of fourteen years and continued with the revelation of massive stock piles of Salix’s leading drug Xifaxan. Specifically, the company disclosed that its third quarter results released September 30, 2014 were lower than expected due to a nine month stockpile of Xifaxan despite previously having stated that demand was at times exceeding the supply. In connection with this disclosure, Salix announced that its audit committee sought to engage outside counsel to investigate the discrepancies in the supply of Xifaxan and the company’s other drugs. Finally, Salix announced that it had reduced its guidance for full year 2014 from a projected $1.6 billion in net product revenues and $475 million in earnings to $1.4 billion and $400 million, respectfully.
The complaint further alleges that Salix knew and failed to disclose that: (i) business prospects and demand for Xifaxan and its other drugs were materially deteriorating; (ii) an overstatement of its inventory led to an overstatement of net revenue and earnings per share estimates; and (iii) the company lacked adequate internal controls over financial reporting.
Salix Shareholders Have Legal Options
Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.