Eagle Pharmaceuticals sees ‘one or more’ material weaknesses

In a regulatory filing, Eagle Pharmaceuticals said that on September 27, the Audit Committee of the Board of Directors of the company, based on the recommendation of, and after consultation with, the company’s management, concluded that revenue previously recognized related to a sale of PEMFEXY in the second quarter of 2022 did not meet certain criteria of Financial Accounting Standards Board Accounting Standards. The company previously recognized revenue upon delivery to a wholesale customer but has now determined that revenue from this transaction should be deferred and recognized in later periods to the extent certain criteria have been achieved. As a result, the Audit Committee determined that the company’s audited financial statements for the fiscal year ended December 31, 2022, and unaudited financial statements for the quarters ended June 30, 2022, September 30, 2022, and March 31, 2023, as previously filed with the SEC, should no longer be relied upon and should be restated. The company has been preparing a restatement of its financial statements for the three and six months ended June 30, 2023. In addition, as previously disclosed, the company’s review and preparation of its financial statements for the quarter ended September 30, 2023, the year ended December 31, 2023 and the quarters ended March 31, 2024 and June 30, 2024 have been delayed and remain ongoing. As a result of the foregoing, the company expects to conclude that one or more material weaknesses related to the foregoing matters existed in the company’s internal control over financial reporting and that the company’s disclosure controls and procedures were not effective for each of the fiscal periods within the Non-Reliance Period, and as of September 30, 2023 and December 31, 2023. In addition, as previously disclosed, the company has identified material weaknesses in its internal control over financial reporting that existed as of June 30, 2023 and concluded that the company’s disclosure controls and procedures were ineffective as of June 30, 2023. The company is continuing to evaluate its internal control over financial reporting and its remediation plan with respect thereto. The company is completing its review of the foregoing matters and any other potential items for correction as needed. The company has not yet determined the impact in each quarter and will re-evaluate the net revenue recognized related to certain sales of PEMFEXY, beginning in the second quarter of 2022 and through the Non-Reliance Period.