) shares gained 3.65% on Friday after the company announced that
its pain drug, Pennsaid 2%, has been cleared by the U.S. Food and
Drug Administration (FDA). The FDA approved Pennsaid 2% for the
treatment of pain associated with osteoarthritis of the knee. The
company plans to launch the topical non-steroidal
anti-inflammatory drug (NSAID) shortly.
We remind investors that the company already markets Pennsaid
1.5% for the treatment of signs and symptoms of osteoarthritis of
the knee. Pennsaid 2% is touted as an extension of the Pennsaid
The company has another late stage pain candidate, Xartemis XR,
under review for the management of moderate-to-severe acute pain
where the use of an opioid analgesic is appropriate. On its
fourth quarter fiscal 2013 (ended Sep 27, 2013) earnings
conference call, Mallinckrodt discussed that it expected an FDA
decision on the candidate by the end of 2013 and had started
preparing for the launch. However, in Nov 2013, the FDA extended
the review period for the candidate by three months.
2014 is a critical year for the company with its key pain product
Exalgo losing exclusivity. The company expects Exalgo sales to
decrease in fiscal 2014. The drug generated $126.1 million in the
prior fiscal. We believe that both Pennsaid 2% and Xartemis XR
(if approved) will contribute modestly to fiscal 2014 revenues.
However, the contribution should improve in the long run.
Mallinckrodt carries a Zacks Rank #2 (Buy). Other players which
look attractive at current levels include
Impax Laboratories Inc.
). All the three stocks carry a Zacks Rank #1 (Strong Buy).
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