(ENDP) Endo Health Solutions Sees FDA Setback on Opana ER

Endo Health Solutions Inc. (ENDP) recently suffered a setback with the US Food and Drug Administration (FDA) turning down its request to prevent the entry of generic versions of the company’s painkiller Opana ER.

We remind investors that Endo had filed a Citizen Petition (CP) with the FDA in 2012. Through the CP, the company had sought a formal determination whether the original version (non-tamper resistant) of the drug was voluntarily removed from the market in 2012 for safety reasons (involving its abuse).

We remind investors that the new formulation of Opana ER, which is designed to resist attempts of crushing, breaking, pulverizing or making a powder of the product, was approved by the FDA in 2011.

Through the CP, Endo had requested the FDA not to clear non-tamper resistant generic versions of the painkiller. Endo had also requested the FDA to suspend the approvals of the currently available generic versions of the painkiller.

However, the FDA turned down Endo’s CP. The decision by the FDA implies that the generic formulations of the original version of Opana ER will continue to be available in the market.

The FDA also declined to approve Endo’s supplemental new drug application (sNDA) regarding Opana ER in the current form and issued a complete response. Through the sNDA, Endo was seeking a modification in the label of the drug to describe its abuse-deterrent properties

Endo expects the FDA decision to impact its 2013 guidance adversely. While issuing the 2013 guidance in Jan 2013, Endo had assumed that the generic versions of its painkiller would be removed from the market by the FDA by mid-2013. The FDA decision would however further intensify the generic competition for Opana ER.

The company expects the adverse FDA ruling to reduce 2013 total net sales of Opana ER by up to $120 million. Moreover, Endo’s 2013 adjusted earnings per share outlook is expected to be hurt by approximately 55 cents following the FDA verdict.

While announcing its first quarter 2013 results a couple of days back, Endo had stated that it expects adjusted earnings per share for 2013 in the range of $4.40–$4.70 per share and revenues in the range of $2.80–$2.95 billion. The Zacks Consensus Estimate for 2013 pegs earnings at $4.52 per share on revenues of $2.89 billion.

With the FDA rejecting its CP on Opana ER, Endo intends to throw more light regarding its 2013 guidance in the coming months.

Endo currently carries a Zacks Rank #3 (Hold). Companies such as Lannett, Inc. (LCI), Cubist Pharmaceuticals Inc. (CBST) and Celgene Corporation (CELG) appear to be more attractive with a Zacks Rank #2 (Buy).
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