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.

Trump And The GE believes Endo has several levers to pull, and the company is fighting back. Trump And The GE: Endo’s Revenge highlighted how the company is fighting back and the stock is being hit with fear, uncertainty and destruction.

Shock Exchange: Friday ENDP fell 40% on rumors it was in talks with Alvarez & Marsal, a restructuring firm, to look at restructuring its debt amid thousands of opioid lawsuits and $8 billion in debt. They have faced thousands of opioid lawsuits for the past four years and have had $8 billion in debt over the past four years, so what’s changed? The stock fell 40% on over 40 million shares traded. A lot of what’s driving this is the fact that Judge Jerry Garguilo is expected to make a ruling on whether to render a default judgement against Endo in its New York opioid trial.

The plaintiffs’ lawyers Motley, Rice and Seeger & Weiss and the New York AG have asked the judge for a default judgement against Endo and its lawyers (Arnold & Port) … for delivering documents late … which, if they had gotten these documents earlier it may have changed their legal strategy, which I find hard to believe. Endo has been selling legal opioids for decades and everybody knows what their marketing practices have been. They settled with the New York AG office under Eric Schneiderman … Endo agreed to change its marketing practices based on advice from the New York AG and they agreed to pay a penalty if they did not adhere to that agreement.

They never paid a penalty, which implies they have adhered to that agreement. They have been exemplars pursuant to marketing of opioids … They took Opana off the market in 2017, so they don’t even sell opioids anymore.

There is no guarantee that Endo will not be hit with a default judgement. However, it does seem ironic that Endo has likely been considered “best-in-class” pursuant to marketing opioids, yet the plaintiffs are being extremely aggressive with the Endo. We believe these headwinds will eventually pass and Endo and plaintiffs will eventually come to a landing on an opioid settlement and get more funds to treatment and prevention of opioid addiction.


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