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.
ENDP remains highly-undervalued, despite slowly settling opioid claims, diversifying its revenue stream, and winning an opioid trial in California. Trump And The GE believes the company has a fiduciary responsibility to buyback shares. Companies like Novavax (NVAX), that need to diversify revenue, are likely circling ENDP:
Shock Exchange: This could be a line of demarcation where Novavax’s shares and Moderna’s shares can’t keep rise because they are rising, just can’t keep going up because the Fed is printing money and buying stocks with it. Those companies … have to find a way to diversity their revenue. Novavax’s vaccine has not even received emergency use authorization. Merck’s (MRK) oral treatment could receive emergency use authorization before Novavax.
However, this all assumes Amazon (AMZN) does not get there first. Amazon wants to be a player in the generics drug space. It has the capital and the M&A expertise to structure a deal for ENDP. Trump And The GE: Barbarians At The Gate For Endo (Amazon) takes place this Saturday. The Shock Exchange will lay it out for T. Boone Mitchell to play it out.