Shares of Endo International (NASDAQ: ENDP) are soaring today, up 16.8% as of 11:20 a.m. EDT, after the pharma specialist announced on Thursday evening that it had finalized a settlement agreement with two Ohio counties in opioid-related litigation. The company revealed in August that it had reached a settlement in principle with Cuyahoga and Summit counties.
In addition, Endo announced Friday morning that it has filed for U.S. Food and Drug Administration (FDA) approval of collagenase clostridium histolyticum (CCH) for the treatment of cellulite in the buttocks. The FDA submission was based on positive results from two late-stage clinical studies.
Image source: Getty Images.
Investors were almost certainly more excited about Endo's legal settlement news than they were about the FDA filing for CCH. Worries about how ongoing opioid litigation could impact the company have caused the stock to be extremely volatile.
Endo agreed to pay a total of $10 million to Cuyahoga and Summit counties. The company will also provide up to $1 million of its Vasostrict and Adrenalin products free of charge to the counties.
The settlement with the two Ohio counties is good news for Endo. However, it's important to understand that this settlement represents just one battle in a much larger legal war that's being waged. Over 2,600 opioid-related lawsuits have been filed by individuals, hospitals, health systems, unions, third-party employers, Native American tribes, cities, counties, states, and other government-related entities.
Investors also shouldn't assume that the relatively modest cost for Endo with this settlement can be extrapolated to its other ongoing opioid-related litigation. It's possible that future settlements might be much more painful for the company.
It's now a waiting game to find out what will happen with Endo's other opioid lawsuits. The company also must wait for the FDA to accept its filing for CCH. The agency has a 60-day filing review period to determine whether the regulatory application for the drug is complete and can be reviewed for an approval decision.
Investing in pharmaceutical stocks often involves waiting for clinical results and regulatory approvals. But the anxiousness for Endo investors related to the opioid litigation is in a different league. Expect plenty of big swings for this stock for a while to come.
More From The Motley Fool
- 10 Best Stocks to Buy Today
- The $16,728 Social Security Bonus You Cannot Afford to Miss
- 20 of the Top Stocks to Buy (Including the Two Every Investor Should Own)
- What Is an ETF?
- 5 Recession-Proof Stocks
- How to Beat the Market
This article was originally published on Fool.com