Tag Archives: teva

Generic Drug Stocks Crash, As Endo Warns Of Price Erosion

Drugmaker Endo International ( ENDP ) plunged 39% Friday after it delivered a hefty guidance cut driven by weakness in its generics business, dragging nearly every other generic-drug stock down with it. Endo actually beat analysts’ consensus in Q1, but it cut its full-year earnings guidance by 23% — now $4.50 to $4.80 a share — and trimmed the revenue outlook by 11% to a range of $3.87 billion to $4.03 billion. In the company’s earnings release, CEO Rajiv De Silva blamed “new competitive entrants, including for Voltaren Gel; greater-than-expected price erosion across the Generics sector; and delays on regulatory actions related to certain Endo products.” IBD’s Take: How healthy are shares of Endo and Teva and how do they stack up vs. rivals? Find out at IBD Stock Checkup It was the second factor that rattled the rest of the generics industry. Teva Pharmaceutical Industries ( TEVA ) stock fell 6.8% to 50.22, and hit a 19-month low of 50.01. Allergan ( AGN ), already staggering from the cancellation of its buyout by Pfizer ( PFE ), hit a two-year low of 195.50 and ended the day at 201.63, down 4.1%, even though it’s selling its generics business to Teva. Perrigo ( PRGO ), which cut its own guidance last month, fell 4.8%, to 92.42. Smaller drugmaker Akorn ( AKRX ), down as much as 20%, ended the day off 7.9%, at 22. Akorn, which has fallen way behind on its accounting due to internal issues, late Friday finally set dates for its Q4 and Q1 earnings releases, for May 9 and May 17, respectively. Leerink analyst Joseph Schwartz wrote in a research note that Endo’s problems read through most directly to Teva, Akorn and Perrigo, and more moderately to Allergan. Essentially, whoever’s done the most price-hiking on products representing more than 5% of generic sales lately is in the most trouble. Referring to industrywide data from IMS, Schwartz wrote: “Based on our analysis, Akorn has taken 13 price increases matching the above criteria (44% of IMS generic sales), Perrigo eight (18% of generic IMS sales) and Endo took 17 (17% of generic IMS sales).” Teva, meanwhile, is due to report its own Q1 earnings and guidance on Monday morning, and Allergan is due before the open the following day. Endo itself got at least four downgrades from Wall Street analysts Friday, mostly to neutral but one to underweight. It ended the day at 16.17, a seven-year closing low.

Allergan Touts Future Without Pfizer; Teva Deal Still On Track

The leadership of Allergan ( AGN ) moved to reassure investors Wednesday of the company’s bright future after its huge buyout by Pfizer ( PFE ) was canceled in the wake of new tax regulations. Allergan stock was up 3.5% in afternoon trading, near 245. On a conference call with analysts Wednesday morning, CEO Brenton Saunders maintained that the Treasury Department’s action against tax inversions will have no impact on the stand-alone Allergan, which redomiciled to Ireland through an inversion deal with Warner Chilcott three years ago. The company will retain its 14% corporate tax rate, he said, and it should also be free to deploy capital however it chooses. Saunders also said Allergan’s $40 billion sale of its generic unit Actavis to Teva Pharmaceutical Industries ( TEVA ) is unaffected by the spiking of the Pfizer deal and is on track to close in June. The timeline for that buyout was delayed from its original Q1 closing date, as Teva works its way through a multi-country regulatory clearance process, but Saunders said the two companies are determined to get it done. “Teva is doing a lot of work,” said Saunders. “They’ve restructured their company; they have named their entire leadership through a few levels that include 200 Allergan executives moving to Teva. … This is a great deal for Allergan, but also a great deal for Teva.” Teva stock was up almost 3% in afternoon trading on the stock market today , near 56. The closing of the Actavis sale should also give Allergan a big wad of cash, so many of the analysts’ questions on the call related to what it will do with the money. Several seemed to be rooting for share buybacks, given that Allergan stock is trading near a 52-week low in the wake of the Pfizer breakup. Saunders said all options are on the table, but he emphasized that Allergan’s “growth pharma” model means that it’s constantly on the hunt for growth assets. He said that Allergan’s business-development team has stayed active since the Pfizer deal was announced, and if the right opportunity came along “we could announce it tomorrow.” A couple of analysts raised the name of contact-lens giant Bausch & Lomb, with which Saunders has a personal history. He headed the company from 2010 until 2013, when it was sold to Valeant Pharmaceuticals International ( VRX ) for $8.7 billion. Given Valeant’s recent spectacular crackup , many on Wall Street have speculated that B&L might again go on sale, with Allergan a suitable buyer not only because of Saunders, but also because of Allergan’s large ophthalmology business. Saunders’ response to this seemed to be a swipe at Valeant’s infamously opaque financial reporting. “It sold for $8.7 billion four years ago, with a late-stage pipeline of 30-some programs, and a strong organic growth profile,” he said. “I can’t tell that any of those things today are still true. Based on public information, it’s impossible to tell that it’s worth more than it sold for four years ago.”

Allergan Price Target Cut On Merger Delay, Weak Q1 Forecast

Drugmaker Allergan ( AGN ) got a price-target cut from Canaccord Genuity Thursday after the company hit a delay in its merger with Pfizer ( PFE ), among other issues. Analyst Corey Davis noted that on Wednesday, the Federal Trade Commission (FTC) had asked for additional information on the Pfizer-Allergan merger , which was first announced in November. The companies also have to wait until Allergan finishes divesting its generic-drug business to Teva Pharmaceutical Industries ( TEVA ), which itself hit a delay this month that caused Teva to push the expected closing date from Q1 to June. Pfizer and Allergan still expect to close their $160 billion merger in the second half of this year. “In the meanwhile, we are lowering our Q1 estimates (EPS drops from $3.43 to $2.89) as it’s always the weakest quarter for specialty pharma, and we feel the rest of the Street is also too high,” Davis wrote in his research note lowering his price target on Allergan stock to 320 from 340. “This has been a trend in the past several years and is partly because of the reset of Medicare Part D.” Davis added that the merger of Target ( TGT ) and CVS Health ( CVS ) should hit Allergan’s distribution business to the tune of $500 million a year, and the launch of bowel-disease drug Viberzi has increased spending. Davis wrote that he is nonetheless maintaining his buy rating due to the high likelihood that the deal will close. There has been some skepticism among investors over whether the Pfizer-Allergan deal is going to close this year — besides the signals from Allergan’s falling stock price, a buy-side survey by Evercore ISI analyst Mark Schoenebaum this month found that a fifth of respondents place the odds at less than 50%. Along with the FTC’s backlog, there’s concern that the incoming president and Congress might do something to limit tax-inversion deals like this one, as some candidates have threatened to do. Pfizer’s leadership and Wall Street analysts have been more confident, however. On March 8, Deutsche Bank analyst Gregg Gilbert wrote that the gap between Pfizer’s offer price and Allergan’s stock price — then $47 — presents a buying opportunity as it will likely narrow as the deal closing nears. Allergan stock was down a fraction in morning trading on the stock market today , near 274.