Endo: More Upside After FDA Reviews Cellulite Treatment

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Source: Barron's

Endo International (ENDP) remains one of the market’s most-confounding stocks. The company 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.

In the meantime, all Endo has done was deliver solid revenue in the face of declining generics and pain-related drugs, generate consistent cash flow and solid margins, and smash earnings expectations quarter after quarter. One would think that consistent earnings beats would have caused the stock to spike.

However, the opioid crisis has taken center stage. Endo, Teva (TEVA), Mallinckrodt (MNK), Johnson & Johnson (JNJ). There are several unknowns about Endo’s ultimate liability for opioid litigation or when it will be resolved. The market does not like uncertainty, hence, this explains why ENDP is down over 60% Y/Y. The opioid overhang caused ENDP to from opioid exposure caused ENDP to dip below $2 in early September. The stock has more than doubled since then. The company’s fortunes are about to change further after the FDA accepted its Biologics License Application for collagenase clostridium histolyticum (CCH) for the treatment of cellulite. The company’s CCH for cellulite is closer to becoming reality. Read more:

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