Just a day after aaiPharma announced its recently appointed chief operating officer was leaving, two law firms said that they had filed class action lawsuits against the company.
Schiffrin & Barroway of Bala Cynwyd, PA, and New York-based Cauley Geller Bowman & Rudman have both filed class action lawsuits against Wilmington-based aaiPharma, alleging securities violations, according to separate statements issued by the law firms on Feb. 13.
On Feb. 12, aaiPharma said David Hurley, who was promoted to the role of COO on Jan. 6, would his post to become president and chief executive officer of Artisan Pharmaceuticals. No plans have been made to fill the vacancy left by Hurley, aaiPharma said in a statement.
aaiPharma faces class action lawsuits, filed in the United States District Court for the Eastern District of North Carolina on behalf of investors who bought the company’s common stock from July 23, 2003 through Feb. 4, 2004. The complaints names the company, CEO Philip Tabbiner and Chief Financial Officer William Ginna as defendants.
Schiffrin & Barroway and Cauley Geller allege that the defendants issued statements concerning aaiPharma’s financial results, which failed to disclose or misrepresented several items, including that its “core business plan was deteriorating.”
The lawsuit also claims that aaiPharma was unloading inventory onto wholesalers in order to make sales because the company needed to keep its stock price up to fend off a third-party suitor. The two law firms that file the suit seek to recover “unspecified damages” on behalf of class members.
Shares of aaiPharma (Nasdaq: AAII) fell 23 percent, or $6.36 per share, to close at $21.24 on Feb. 5 following a disappointing fourth-quarter earnings report. It disclosed that the impact of product returns and additions to a reserve fund for product returns cut revenue for the period by nearly $16 million.
AAII stock continued to slide following the earnings report, closing below $19 on Feb. 12, when Hurley’s departure was announced. But the next day, despite the disclosure of legal action against the company, aaiPharma saw shares climb four percent, or 76 cents, to $19.46, after receiving FDA approval to market its methadone drug for patients with moderate to severe pain.