Mylan NV (NASDAQ:MYL)
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From May 2019 to May 2024

Mylan Inc. (MYL) reported strong second-quarter results and raised its 2009 earnings outlook, as it continues to assert that the Food and Drug Administration has determined that recent allegations of misconduct at its West Virginia plant are unfounded, despite the agency's ongoing investigation.

The potential quality-control issues came to light in a recent Pittsburgh Post-Gazette report. Confusing statements from the company and regulators have created volatility in the generic drug maker's stock price.

In a statement at the beginning of the Pittsburgh company's second-quarter conference call Thursday, Chief Executive Robert Coury implied that unspecified parties were exacerbating the situation.

"There are some outside the company who attempt to speak on behalf of Mylan to the point that statements being made were purposely being mischaracterized in an attempt to further incite the overreaction that we witnessed earlier in the week and even to go so far as to attempt to pit us against the regulatory agency," Coury said.

Mylan declined to answer questions on the issue, and analysts on the call didn't raise the issue with the company.

"The FDA is in the process of reviewing the investigation findings, and we have not concluded the investigation," an agency spokeswoman said Thursday. She declined to provide a timeline for the inquiry's conclusion.

Mylan's stock fell 13% to $12.10 on Monday but then rose as much as 10.5% on Tuesday after the company said the FDA "determined that all accusations were unfounded." The FDA later disclosed that the investigation is ongoing and "statements to the contrary are untrue."

Mylan shares closed up 22 cents, or 1.7%, at $13.13 Thursday.

About 24% of Mylan's float is sold short, meaning those shareholders expect the stock price to decline, which can add to price volatility.

On Sunday, the Pittsburgh Post-Gazette reported that Mylan had launched an internal probe into workers routinely overriding computer-generated warnings about the drugs being produced at the plant.

Coury said reporting in that article was "highly irresponsible" and "sensational" and contained allegations that were "false, misleading and unfounded."

He emphasized the company's reputation for manufacturing quality, a factor that many on Wall Street have stressed in recent days. Analyst Corey Davis with Natixis Bleichroeder said Mylan has had only one product recall since 2005, compared with 19 from Teva Pharmaceutical Industries Ltd. (TEVA).

Several analysts hypothesized that the mix-up came from a communication breakdown between the local inspector, who may have made comments to company officials, and the official FDA assessment of the investigation as a whole.

Coury added weight to that scenario, saying that the FDA's inspection Monday ended with a "closeout meeting" and that the agency didn't issue a Form 483, which covers any findings in an inspection.

The FDA spokeswoman wouldn't confirm that information and said that any comments about the ongoing investigation would be premature.

Mylan President Heather Bresch said the FDA inspection cleared the Post-Gazette accusations, but declined to estimate the timing of the FDA's final report. Bresch said she is unaware of any additional related investigations by the agency.

Davis, of Natixis, also said Mylan has a "history of botched communications" that have led to a "management discount" in the stock price.

"The timing of this latest debacle is disappointing to us since Mylan was finally starting to overcome the discount after several straight quarters of highly respectable earnings reports," the analyst wrote.

For the three months ended June 30, Mylan earned $58.1 million, or 19 cents a share, compared with a year-ago loss of $16.3 million, or 5 cents a share, which included merger costs.

Excluding items, the company earned 32 cents a share, beating the average analyst estimate of 29 cents a share, according to Thomson Reuters.

Revenue rose 5.3% to $1.26 billion, surpassing expectations of $1.22 billion.

Mylan forecast a "much stronger second half" and raised its 2009 adjusted-earnings guidance range to $1.13 to $1.20 a share. It raised that view in April to 90 cents to $1.10 a share, while analysts currently project $1.08 a share.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com