The US Food and Drug Administration (FDA) has postponed its decision to approve KV Pharmaceutical’s premature birth prevention drug Gestiva.

The decision against the company, previously convicted of criminal charges relating to fraud, has reportedly cast further doubts over the US-based drugmaker’s ability to meet its obligations.

In March 2010, KV subsidiary Ethex pleaded guilty to two counts of criminal fraud after producing oversize tablets that could be harmful to patients and failing to inform the FDA.

As a result of product recalls and the federal investigation, KV stopped producing drugs for 18 months and laid off almost three quarters of its workforce. The company had posted revenue of almost $600m in 2008.

In November 2010, KV borrowed as much as $120m, but the bulk of the debt financing package contingent on the company reaching FDA-approval related milestones for Gestiva, as well as other drugs the company hopes to market.