Why Egalet Investors Should Expect FDA Approval On Arymo By Year-End

Egalet Corp’s EGLT proprietary abuse-deterrent extended-release morphine formulation, Arymo ER, will likely be approved by the end of this year, Cantor Fitzgerald’s Chiara Russo said in a report.

She maintained a Buy rating on the company, with a price target of $21.

Arymo’s potential approval by year-end fits “the FDA's pattern of taking their time to tailor each AD opioid label,” Russo wrote. Once the approval comes, Egalet would need to invest an additional $40 million in debt financing on the commercial front in order to begin internalizing its salesforce.

If approved, Arymo should have “the broadest label of the currently approved ER morphine formulations, which we maintain will be a commercial competitive advantage,” Russo commented.

The analyst expects shareholders to focus on Egalet’s top-line revenue in the next 12-months as well as the Phase 3 readout of Egalet-002, which is scheduled for the first half of 2017.

Egalet reported its Q3 revenue at $4.7 million, in-line with expectations. EPS came in at ($1.10), missing Cantor’s estimate of ($0.83).

“The difference was mainly due to one time increase in R&D spend and interest expenses dues to debt extinguishment,” Russo noted. Egalet ended the year with $101.2 million in cash.