Salix Pharmaceuticals Ltd (NASDAQ: SLXP) Investor Securities Class Action Lawsuit 11/07/2014

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Company Name(s): 
Salix Pharmaceuticals
Case Name: 
Salix Pharmaceuticals Shareholder Class Action Lawsuit 11/07/2014
Case Status: 
Lawsuit Filed
Case Status: 
Settlement Proposed
Affected Securities
NASDAQ: SLXP
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
11/07/2014
Class Period Begin: 
11/08/2013
Class Period End: 
11/06/2014
Court of Filing: 
U.S. District Court for the Southern District of New York
Deadline To File for Lead: 
01/06/2015
Date Settled: 
04/05/2017
Settlement Amount: 
$210,000,000
Deadline to Participate in Settlement: 
08/09/2017
Summary: 

April 5, 2017 - The court preliminarily approved the settlement.

March 24, 2017 - Parties filed a stipulation of settlement.

April 22, 2016 - The court denied defendants' motions to dismiss.

June 12, 2015 - Defendants filed motions to dismiss.

May 8, 2015 - The lead plaintiff filed an amended consolidated complaint.

March 23, 2015 - The lead plaintiff and lead counsel were appointed and all cases were consolidated.

January 6, 2015 - Lead plaintiff motions were filed.

November 7, 2014 - An investor in shares of Salix Pharmaceuticals Ltd (NASDAQ: SLXP) filed a lawsuit in the U.S. District Court for the Southern District of New York against Salix Pharmaceuticals Ltd over alleged violations of Federal Securities Laws in connection with certain allegedly false and misleading statements made between November 8, 2013 and November 6, 2014.

According to the complaint the plaintiff alleges on behalf of purchasers of Salix Pharmaceuticals Ltd (NASDAQ: SLXP) common shares between November 8, 2013 and November 6, 2014, that the defendants violated Federal Securities Laws.

More specifically, the plaintiff claims that between November 8, 2013 and November 6, 2014 the defendants made allegedly false and misleading statements and allegedly concealed material information regarding deteriorating demand for Salix Pharmaceuticals, Ltd top-selling drug Xifaxan and other Salix Pharmaceuticals, Ltd drugs and wholesaler inventory levels of Xifaxan and other Salix Pharmaceuticals, Ltd drugs, which were significantly greater and rising more rapidly than revealed to investors.

Furthermore, the plaintiff alleges that Salix Pharmaceuticals Ltd's reserves for outstanding inventory were understated and, because of this understatement, its reported quarterly and annual net revenue and earnings per share figures were overstated, and that Salix Pharmaceuticals, Ltd's disclosure controls and procedures and its internal controls over financial reporting and accounting were subject to material weaknesses.

In February 2014 Salix Pharmaceuticals Ltd reported its fourth quarter 2013 and FY 2013 results. Salix Pharmaceuticals Ltd reported that its annual Total Revenue rose from $336.97 million in 2010 to $933.84 million in 2013 and that its Net Loss of $27.06 million in 2010 turned into a Net income of $143.03 million in 2013. In May 2014 Salix Pharmaceuticals Ltd reported that its first quarter 2014 Revenue rose to $384.4 million compared to $202.6 million in 2013. Then on August 7, 2014, Salix Pharmaceuticals Ltd reported its second quarter 2014 results. Salix Pharmaceuticals Ltd reported that its second quarter Revenue rose from $235.40 million in 2013 to $382.00 million in 2014

Shares of Salix Pharmaceuticals Ltd (NASDAQ: SLXP) grew from $27.78 per share in September 2011 to as high as $169.17 per share in September 2014.

Then on November 6, 2014, Salix Pharmaceuticals, Ltd reported its third quarter 2014 results. While Salix Pharmaceuticals, Ltd announced that its third quarter Revenue rose from $238.2 million in 2013 to $354.7 million in 2014, its third quarter Net Income of $47.3 million in 2013 turned into a third quarter Net Loss of $88.60 million in 2014.

On the same day, Salix Pharmaceuticals Ltd announced that Adam C. Derbyshire, resigned as CFO at the Company and the appointment of Timothy J. Creech as Acting Chief Financial Officer of the Company, effective immediately.

Shares of Salix Pharmaceuticals, Ltd. (NASDAQ: SLXP) declined from as high as $141.79 per share on November 6, 2014, to as low as $86 per share on November 7, 2014.

The plaintiff claims that the true state of the demand for Xifaxan and other Salix Pharmaceuticals Ltd drugs and the consequences for Salix Pharmaceuticals Ltd's business were revealed on November 6 and 7, 2014, when Salix Pharmaceuticals Ltd disclosed that its longstanding Chief Financial Officer, Adam C. Derbyshire, had abruptly resigned, that its wholesaler inventory levels were three times greater than previously reported and the Audit Committee of Salix's Board of Directors had retained outside counsel as part of an inquiry into Salix Pharmaceuticals Ltd's reporting of wholesale inventory of Xifaxan and other drugs, and that its previously issued guidance for full-year 2014 revenues would not be met and needed to be reduced by 12.5 percent.

On November 7, 2014, Salix Pharmaceuticals Ltd (NASDAQ: SLXP) shares closed at $91.47 per share, which is significantly below its current 52 week High of $172.98 per share.