Priority Review for ENDP Drug – Analyst Blog

Recently, Endo Pharmaceuticals (ENDP) received a boost with the US Food and Drug Administration (FDA) deciding to review the New Drug Application (NDA) for the company’s oral formulation of long-acting pain drug oxymorphone on a priority basis. A response from the FDA is expected to be out by January 7, 2011. The NDA was submitted last month.

 

The new tablet formulation, a semi-synthetic opioid analgesic, is designed so as to resist attempts of crushing, breaking, pulverizing or making a powder of the product. The candidate aims to bring relief to patients suffering from moderate to severe pain and in need of continuous opioid treatment for an extended period of time.

 

We note that the US regulatory authority generally reviews those drugs on a priority basis which offer major advances in treating diseases having no adequate therapy. Applications for priority review designated drugs are reviewed by the FDA within six months of submission as against the usual ten months.

 

In another development, Endo Pharma recently completed an all-cash tender offer for all the outstanding shares of common stock of Penwest Pharmaceuticals Co. (PPCO). Last month, in a bid to sustain and drive growth in the area of pain management, Endo Pharma agreed to acquire Penwest for approximately $144 million or $5.00 per share in cash. Through this deal, Endo Pharma will gain full access to a painkiller, Opana ER, which was being co-developed by the companies. The drug aims to treat moderate to severe pain in patients requiring continuous opioid treatment.

 

At the close of the tender offer, 82.8% of Penwest’s shares were tendered validly and not withdrawn. Endo will buy the Penwest stock not bought in the tender offer through a second-step merger. That process is expected to be completed during the fourth quarter of 2010.

 

 

Even though Endo Pharma has a Zacks #2 Rank (Buy) in the short-term, we prefer to remain on the sidelines with a Neutral view on the stock in the long-run. The lack of estimate revisions, highlighting the absence of a clear directional pressure on the stock, further supports our long-term Neutral stance on Endo Pharmaceuticals.