Shares of Lannett (LCI 5.60, -7.90, -58.5%) lose more than half of their value on a move to worse than five-year lows this afternoon due in part to news that an agreement with family-owned Jerome Stevens Pharmaceuticals, which expires on March 23, 2019, would not be renewed. Additionally, the company gave lower than expected preliminary fourth quarter results.

Lannett released news this morning that JSP had informed the company it would not renew its agreement to distribute three JSP products: Butalbital, Aspirin, Caffeine with Codeine Phosphate Capsules USP, Digoxin Tablets USP, and Levothyroxine Sodium Tablets USP upon its expiration in March 2019.

The announcement comes as JSP has already chosen a replacement, Amneal Pharmaceuticals (AMRX 23.54, +2.02, +9.4%). Amneal this morning announced a 10-year license and supply agreement for Levothyroxine sodium tablets with JSP. The agreement is effective March 22, 2019. The agreement includes an upfront milestone payment upon commercialization and a profit share on future sales of Levothyroxine. Further terms of the agreement were not disclosed. AMRX shares cracked 11-month highs today, pushing its two-week advance to 20.5%.

The family has assured Lannett of a continuous supply of the products through March of next year. Lannett noted that these products remain valuable assets for the company and are expected to significantly contribute to its financial performance in fiscal 2019.

Lannett management attempted to quell investor concern about the deal expiration, stating that it was disappointed and intends to redouble its continuing efforts to explore options for addressing its capital structure.

Since the beginning of this year, Lannett notes it has added new products to its offering and expanded its customer base. The company will continue these streamlining efforts. Specifically, Lannett successfully launched eight new products in the first seven months of calendar 2018, which the company estimates will add net sales in excess of $50 mln in fiscal 2019. The company also noted it has completed several transactions to add more than 25 market-ready or near-market-ready product lines to its pipeline.

In addition, in the company’s current fiscal year, it has already submitted four drug applications associated with two product families, implemented a restructuring plan at its Cody Laboratories subsidiary.

In terms of the preliminary results, Lannett expects net sales in the fourth quarter of approximately $171 mln and adjusted EPS between $0.62-0.64. Also, for the fiscal 2018 full year, net sales are expected to be approximately $685 mln, at the low end of the company’s previously provided $685-695 mln range. Also, adjusted EPS attributable to Lannett is expected to be between $3.08-3.10.

In parting, Lannett management offered that its financial performance was within its expected range, with revenue and adjusted net income solidly improved over last year. And, based on the preliminary results, the company highlights that it remains well within its debt financial covenant, and it expect to continue to meet these requirements throughout fiscal 2019.

Lannett will report full financial results for its fiscal 2018 fourth quarter and full year on Tuesday, August 28 after the market closes. Lannett management will host a conference call that same afternoon at 4:30 p.m. ET.