It's Easy To Be Skeptical Of Mylan, But Don't Ignore This Pending PDUFA Date

Commenting on Mylan N.V. MYL, Barclays said there's understandably reason to be skeptical that the company will win approval for its generic version of Copaxone now after years of promises. That said, the firm thinks Mylan's chances are better than current market expectations.

Analysts Douglas Taso and Morgan Williams noted that the market shrugged off the company's disclosure of a June FDA action date for Copaxone, as traders assumed that the management was attempting to use the announcement to mitigate the impact of the delays in Advair.

However, the analysts feel the chances of approval are now higher, given that the issuance of FDA guidance last year, providing roadmap for establishing bioequivalence. Additionally, the firm suggested that the June action date suggests quick review from last resubmission, suggesting manageable deficiencies.

The analysts see revenue opportunity around $180 million–$300 million in 2017, depending on whether Mylan's Copaxone generic is approved alone or with others. This, according to the analysts, would drive earnings toward the upper range of guidance.

Strong Base Business

Barclays believes Mylan's base business appears on a more solid footing, on stabilizing generic pricing, performance potential of Meda, resolution of Agila warning letters and expectation that Epipen would stabilize.

"We don't expect Teva Pharmaceutical Industries Ltd (ADR) TEVA to win AB-rating (ironically, the same questions on device interchangability that might block MYL's Advair ANDA will make approval of TEVA's product difficult," the firm said.

Upgrading On Favorable Risk/Reward

As such, Barclays upgraded shares of Mylan to Overweight, based on a favorable risk/reward, given opportunities for the company. Specially, the upgrade was hinged on the generic version of Copaxone winning approval this year, possibly as soon as the next month.

The firm said the reset to Street numbers since the first quarter disclosure of major deficiencies to Advair ANDA creates a buying opportunity.

The firm also clarified that its thesis doesn't rest on Copaxone since it sees other product catalysts, including gx Restasis, biosimilar Neulasta and Lantus.

"MYL's track record on complex products is likely underappreciated, noting approvals of generic Concerta and Lidoderma in recent years despite investor skepticism for those as well," the firm said.

The firm also lifted its price target to $50.

At the time of writing, Mylan shares were rising 0.92 percent to $38.29.

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