If Ferris Bueller worked at Able Laboratories Inc., it would have come as no surprise to the FDA.

As the main character in the 1986 movie, "Ferris Bueller's Day Off," the teenager hacked into his high school computer system to change his days absent from nine to two, keeping himself within range of the graduation requirements.

That sounds a little like what might have gone on at Parsippany, N.J.-based Able, which managed to get FDA approvals for several generic products without meeting all of the pre-requisites.

Able recalled all of its products earlier this year and has since filed for bankruptcy and announced its plans to liquidate. The company's stock traded at $25 in early May. Its shares (Pink Sheets:ABRXQ) closed Friday at 18 cents, up 2 cents.

The FDA's 483 inspection report is the key to understanding what happened at Able.

"The 483, that really explains it," said Kevin Starke, an analyst with Greenwich, Conn.-based Weeden & Co. "You can see that they had committed fraud, and that fraud must have been pervasive. And the exit of former management is a pretty clear indicator of that."

The trouble started in May when Able voluntarily did a nationwide recall of all of its manufactured drugs, including those that contained acetaminophen, because of concerns that they were not produced according to quality assurance standards. The company ceased all production, and inspectors visited the plant 29 times between early May and July 1.

During those visits, and according to the 483 inspection report, the FDA found that out-of-specification (OOS) drug samples were routinely resampled, re-injected or reprocessed.

"Annual reports for [abbreviated new drug applications] that were submitted to FDA did not include out-of-specification results," the 483 states. "Only passing data points were submitted."

Able also allegedly failed to review electronic data and provide training to analytical chemists, leading to the release of drug product batches that did not meet in-process, finished product and stability specifications.

In the quality unit's notebooks and binders, inspectors noticed missing data, such as OOS results, chromatograms, sample weights and processing methods.

"OOS results were substituted with passing results by analysts and supervisors," according to the 483. "The substitution of data was performed by cutting and pasting of chromatograms, substituting vials, changing sample weights and changing processing methods."

Able's management declined to speak with BioWorld Today.

Generic drugs must be therapeutically equivalent to their approved counterparts, and the company must comply with cGMP standards. Not following those rules could lead to the seizure of drug products, significant delays in ANDA approvals, and civil penalties. Worse than that, criminal suits can follow. Is that the case with Able?

"The general perception is, that is very likely," Starke said.

A week before the recall, Able Chairman and CEO Dhananjay Wadekar resigned, and the company's president and chief operating officer, Robert Mauro, assumed the role of interim CEO.

A few days after the recall, Able reduced its staff of 421 full-time employees by 200 positions, essentially cutting it in half. Two weeks later, it announced further staff reductions, and in early July, Mauro quit as CEO. That news was followed by the release of the 483 report, Able filing for Chapter 11 bankruptcy, its delisting from the Nasdaq National Market and the eventual decision two weeks ago to sell the business.

That decision came after the FDA made it clear that the company needed to resubmit ANDAs for each of its products. A review would take up to 18 months in each case.

"In order to survive in bankruptcy they would have needed to get fast-track approval of a consent decree and find a new investor," Starke said. "The failure to achieve the one has cast doubt on the ability to achieve the second."

Starke is a "distress" analyst, meaning he takes on stocks of companies that are in trouble. "You have a whole cast of characters in the hedge fund world who look for these types of things," he said. Sometimes it works out: A company manages to re-organize, and the stock moves up.

But Starke is skeptical about Able.

"They're unlikely to survive in any form like the current entity," he said. "I'm not sure what is of value to a potential acquirer - maybe some machinery, some customer relationships. But Able as an entity is likely to disappear. The stock is likely also to be cancelled."

Wholesalers such as Cardinal Health, McKesson Corp. and AmerisourceBergen are all owed more than $30 million, Starke said. On top of that, there are several class-action lawsuits against Able, and the company had about $7 million in balance sheet liabilities at the time of the recall.

"So you're looking at probably $50 million in claims, at least," Starke said. "And can you sell the company for that much? No, probably not."

The company started out as Dynagen Inc. in 1988 and then acquired Able's generic drug development and manufacturing business in 1996. It took on the name Able in February 2001 when it divested its distribution operations to concentrate only on selling its generic products.

It manufactured the products at its South Plainfield, N.J.-based facilities, and sold them in solid oral dosage and suppository form. It has estimated that the U.S. generic or multisource drug markets have about $18 billion in annual sales.

Able sold its products directly to wholesalers, distributors and retail drug chains. In 2004, sales to McKesson and Cardinal Health were about 17 percent and 12 percent, respectively. During the year, Able manufactured more than 1.3 billion tablets, capsules and suppositories.

Since an acquiring company would have to start from scratch in gaining approvals, very little of Able's value comes from its generic drugs, which had sales of $103 million last year. There are several competitors that can supply their generic versions to wholesalers, making Able's products obsolete.

"There's nothing special about any of them," Starke said.

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