"In its lawsuit, K-V said the FDA was addressing the financial concerns of insurance companies that cover the cost of medications instead of the needs of patients in declining to stop pharmacies from making cheaper versions of the Makena drug. By law, the FDA is only allowed to make decisions based on science, not cost.Since it seems unlikely that this lawsuit can be resolved in KV's favor before September, when their next interest payment is due and will be very low on cash, it seems almost certain that the company will need to file BK. At that point, I would expect the share and sub bond prices to collapse to near zero, given the substantial other claims senior to them, and the uncertainty about the enterprise value.
K-V said Makena's sales are not enough for the company to satisfy its creditors, and it would go bankrupt within three to six months if the FDA failed to act, according to the lawsuit filed on Thursday in the U.S. District Court for the District of Columbia."
I view it as unlikely that the FDA would settle this lawsuit quickly by changing its behavior, and more likely that they would stonewall and take it all the way. Presumably, this situation has been hashed out behind the scenes ad nauseam between KV and FDA. It doesn't seem like FDA is willing to budge on it.
The tests of compounded product failed to show a serious safety concern, which was the political cover that FDA would need to upset the Medicare and insurance payers, doctors, and White House.