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CRL for Endo Health's Aveed - Analyst Blog

Posted
6/3/2013 6:27:00 PM
By: Zacks.com
Referenced Stocks:ACT;CRL;ENDP;JAZZ;SNTS

The US Food and Drug Administration (FDA) recently issued a complete response letter (CRL) for Endo Health Solutions ' ( ENDP ) new drug application on Aveed. The company is looking to get Aveed (a long-acting testosterone undecanoate injection) approved as a treatment for male hypogonadism.

The FDA declined to approve the new drug application for Aveed in the present form, as it is apprehensive about the risks and complications which may emanate after the injection of the drug. While issuing the CRL, the US regulatory body asked Endo to develop a medication guide.  Specifically, the FDA asked Endo to ensure that the Risk Evaluation and Mitigation Strategy includes the guide in addition to Elements to Assure Safe Use to address the safety issue mentioned above.

However, the US regulatory body did not ask the company to conduct additional studies on Aveed. The requirement of additional trials would have pushed up its research and development costs. Endo intends to respond to the CRL by the end of the third quarter of 2013.

We note that the Aveed setback is not the first one for Endo this year. Last month, Endo suffered a blow with the FDA turning down its request to prevent the entry of generic versions of its painkiller, Opana ER. 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.

Endo expects the FDA decision to impact its 2013 guidance adversely. 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, Endo stated that it expects adjusted earnings per share for 2013 in the range of $4.40-$4.70 per share and revenues of $2.80-$2.95 billion. The Zacks Consensus Estimate for 2013 pegs earnings at $4.31 per share on revenues of $2.8 billion. Endo intends to throw more light on its 2013 guidance in the coming months.

Moreover, another painkiller at Endo, Lidoderm is expected to face generic competition later in the year from Actavis, Inc. ( ACT ). This will hamper sales of the drug significantly.

Endo currently carries a Zacks Rank #3 (Hold). Jazz Pharmaceuticals ( JAZZ ) and Santarus, Inc. ( SNTS ) appear to be more attractive with a Zacks Rank #1 (Strong Buy) each.



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