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Endo's (ENDP) Opana ER's Risk Benefit Evaluated by FDA

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Endo International plc ENDP announced that the FDA Drug Safety Risk Management and Anesthetic and Analgesic Drug Products Advisory Committees had voted in the ratio of 18 to eight and consented that the benefits of reformulated Opana ER (oxymorphone hydrochloride extended release) no longer outweigh its risks.

We note that shares of Endo have underperformed the Zacks classified Medical-Drugs industry in the last six months. Specifically, the stock lost 47.6% during this period in comparison with industry’s decline of 5.4%.

The FDA convened these Advisory Committees to discuss pre- and post-marketing data about the abuse of Opana ER, the product's overall risk-benefit profile, as well as the abuse of generic oxymorphone ER and oxymorphone immediate-release (IR) products. Few members stated that the benefits are now overshadowed by the continuing public health concerns around the product's misuse, abuse and diversion. As a result, a number of members on the committee were of the opinion that the drug can remain in the market with additional regulatory restrictions to mitigate the risks. 

Although the agency is not bound by the decision of the advisory committee, it generally follows the same.

We note that Opana ER is an opioid agonist indicated for the management of pain severe enough to require daily, around-the-clock, long-term treatment and for which alternative treatment options are inadequate.

In Dec 2011, the FDA approved a new formulation of Opana ER with INTAC technology. This formulation has the same dosage strengths, color and packaging and similar tablet size as original. Endo transitioned this formulation in Mar 2012 upon successfully acceleration production. However, generic competition for the non-INTAC technology formulation Opana ER from early 2013 has affected sales.

Sales of the drug amounted to $158.9 million in 2016, down from $175.8 million in 2015. 2017 will continue to be challenging for Endo as the generics base business and the legacy branded pain franchise are expected to decline further.

Zacks Rank & Stocks to Consider

Endo is a Zacks Rank #4 (Sell) stock.

Some better-ranked stocks in the health care sector include Heska Corp. HSKA, Anthera Pharmaceuticals, Inc. ANTH and Retrophin, Inc. RTRX. All the three stocks carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heska’s earnings estimates increased from $1.53 to $1.65 for 2017 and from $1.90 to $2.01 for 2018 over the last 30 days. The company posted a positive earnings surprise in all the four trailing quarters with an average beat of 291.54%. Its share price increased 34.2% year to date.

Anthera’s loss estimates narrowed from $1.49 to $1.17 for 2017 over the last 60 days.

Retrophin’s loss estimates narrowed from 85 cents 72 cents for 2017 and from 67 cents to 53 cents for 2018 over the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 80.55%.

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