Endo To Enter A Year Of Recovery Following FDA Request To Pull Opana ER Off The Market

Shares of Endo International plc - Ordinary Shares ENDP were trading lower by more than 10 percent Friday morning in reaction to the U.S. Food and Drug Administration's request for the company to withdraw from the market its opioid painkiller called Opana ER.

Stifel's Annabel Samimy felt the FDA's request was sufficient to downgrade the stock's rating from Buy to Hold with a price target slashed from $22 to $15 even though the exact timing of the removal of Opana is unclear.

However, the removal of the therapy was a "reasonable possibility" after a March FDA AdComm panel voted 18–8 that the benefits of Opana no longer outweigh the risks. As such, the announcement shouldn't be surprising, especially when factoring in the FDA Commissioner's stance and priority on addressing the opioid epidemic.

Opana ER Was A Declining Asset

By the company's own admission, Opana was a declining asset and the analyst's main takeaway is that the removal of Opana shouldn't significantly impact future growth of the company.

Nevertheless, Endo was "running the product for cash" and the removal of Opana now puts management's ability to restructure its balance sheet "further to the back burner" (check out Annabel Samimy's track record).

"With this latest hit, we view that the recovery process for Endo just caught another headwind," the analyst stated.

A $15 price target is based on the analyst's sum-of-the-parts analysis of the Brand, Generics and International franchise.

At last check, shares of Endo were down 11.9 percent at $12.14.

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