I am a major Endo (ENDP) bull. However, I would be remiss in not admitting that it has been one of the market’s most perplexing stocks. ENDP hit a 52-week high of over $18 in the second half of 2018. Investors were excited about the potential for Xiaflex to treat cellulite. Late stage clinical trials were extremely positive. The stock free fell after Q3 2018 earnings were announced. Analysts and investors fretted over the fact that an FDA application was not expected until 2019. Any FDA approval may not arrive until the second half of 2020.

The opioid epidemic has now taken center stage. The number of accidental deaths related to opioids and the number of people addicted to them have been on the rise. Some believe such accidental deaths have been spurred by a proliferation of opioid prescriptions. State attorneys general also claim that drug makers have, in certain instances, fraudulently misrepresented the serious side effects of opioid use. Short sellers have punished the stocks of companies like Johnson & Johnson (JNJ) and Cardinal Health (CAH) that face opioid litigation. Endo, Teva (TEVA) and Mallinkrodt (MNK) have been punished the most, likely because they have the smallest balance sheets.

MNK, ENDP and TEVA may be the stocks that shorts can manipulate the post. The bankruptcy narrative has been thrown around. It may apply to MNK and TEVA. I believe they have going concern risk outside of opioids, given that they may not have a moat. Read more:

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