Boost for Endo Pharma - Analyst Blog

Endo Pharmaceuticals' (ENDP) portfolio received a boost with the US Food and Drug Administration (FDA) clearing Fortesta Gel for treating men (above 18 years of age) with low levels of testosterone (low T or hypogonadism). The disease results from the failure of the body to produce normal amounts of the male sex hormone testosterone. The disorder is associated with erectile dysfunction and reduced sexual urge, fatigue, energy loss, depression, waning of secondary sexual characteristics in addition to osteoporosis. Following the approval, Endo Pharma intends to launch the product in early 2011.

The disorder affects approximately 14 million men in the US. However, only approximately 9% are being treated. The entry of Endo Pharma's newly approved product into the market will widen the treatment options for hypogonadism patients. 

Endo Pharma's gel, a clear, colorless, odorless gel, is prohibited to be applied to the upper body. The transdermal gel is meant to be applied only to the front and inner thighs to prevent it from being rubbed off to children and women. However, if they still happen to make contact with the area in which Fortesta Gel has been applied, the concerned area should be cleaned immediately. Endo Pharma's drug, which contains 2% testosterone, will compete mainly with Abbott Laboratories' (ABT) AndroGel and Auxilium Pharmaceuticals Inc.'s (AUXL) Testim.

The US approval of Fortesta Gel would further boost the portfolio at Endo Pharma which has been on an acquisition spree to expand its bussiness. Recently, Endo Pharma bought Qualitest Pharmaceuticals (a generic company) to diversify its business and bolster its position in the generic and pain drug markets. Prior to that, Endo Pharma acquired Penwest Pharmaceuticals Co. to sustain and drive growth in the area of pain management.  

Our Recommendation

Currently, we have a ‘Neutral' stance on the stock in the long-run, which is supported by the Zacks #3 Rank (short-term ‘Hold' recommendation) carried by the company.

 
ABBOTT LABS (ABT): Free Stock Analysis Report
 
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ENDO PHARMACEUT (ENDP): Free Stock Analysis Report
 
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