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JSE to Probe Aspen Trading After Biggest Drop in 5 Years

South Africa’s stock exchange will investigate Aspen Pharmacare Holdings Ltd. (APN) after shares in the continent’s largest generic drugmaker fell the most in five years after a conference call it hosted.

“The exchange’s market-regulation division is reviewing trading ahead of the conference call and the subsequent decline in Aspen’s share price” on June 27, the Johannesburg-based bourse that’s run by JSE (JSE) Ltd. said in an e-mailed statement today. “If there is any trading that it believes warrants further investigation, this will be referred to the Directorate of Market Abuse at the Financial Services Board as is standard practice.”

Owen Nkomo, an executive partner at Inkunzi Investments Ltd. and investor in Aspen, today said he planned to send a formal complaint to the Johannesburg Stock Exchange following the drop last week. Aspen’s stock retreated 6.2 percent, the biggest decline since April 2009, to 288 rand on June 27, the day of the call. The stock rose 3.8 percent to 298.89 rand at the close in Johannesburg today.

Aspen’s South African unit “had a disappointingly lower second half,” Deputy Chief Executive Officer Gus Attridge said on the conference call, a recording of which can be found through the company’s website. “The anti-retroviral tender values have been significantly down on expectations. This has not only affected revenue but impacted on margins.”

‘No Idea’

The company released a statement today saying it had hosted a pre-closed period conference call with members of the investment community and highlighted the link to the recording, which is available until tomorrow.

“We are a holder of Aspen stock and when it started moving on Friday, we had no idea what was going on as we had not been invited to the conference call,” said Nkomo. “The smaller participants were prejudiced, especially because emphasis was made of a deteriorating environment and margins. This was translated to indicate that things had gotten worse after their last update.”

The two Aspen executive directors who hosted the conference call disclosed no price-sensitive information, Aspen said in today’s statement. The company will release a trading update for the year ended June 30 as soon as “the directors have reasonable certainty on earnings per share and headline earnings per share,” it said.

The JSE will “as a matter of course contact and follow up” with Aspen, John Burke, the exchange’s director of listings, said by phone. While the JSE would prefer a company to release a regulatory statement before speaking to “anyone,” a company only contravenes JSE rules if unpublished and price-sensitive information is selectively given, Burke said.

“As a matter of principle, this issue is important,” Nkomo said by phone from Johannesburg. “The question is, how does the JSE avoid this happening in future?”

Aspen supplies medicines in more than 150 countries and last year bought injectable thrombosis brands, including a manufacturing site and inventory, from London-based GlaxoSmithKline Plc for 700 million pounds ($1.2 billion).

To contact the reporters on this story: Janice Kew in Johannesburg at jkew4@bloomberg.net; Christopher Spillane in Johannesburg at cspillane3@bloomberg.net

To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net Ana Monteiro, John Viljoen

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