Impax Laboratories (IPXL) and Teva Pharma (TEVA) Seen as Beneficiaries of Mylan's (MYL) EpiPen Woes - RBC

August 24, 2016 1:26 PM EDT
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Price: $12.05 --0%

Rating Summary:
    8 Buy, 16 Hold, 3 Sell

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    Up: 24 | Down: 17 | New: 14
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Impax Laboratories (NASDAQ: IPXL) and Teva Pharma (NYSE: TEVA) are up 4.5% and 0.8%, respectively Wednesday, as they are seen as potential beneficiaries as Mylan (NYSE: MYL) gets beaten up by politicians and the media related to its EpiPen pricing.

RBC analyst Randall Stanicky continues to anticipate and model a late 2017 TEVA generic EpiPen approval. "There are varying views around likelihood TEVA will make it to market given challenges getting its generic version through FDA," he commented. "TEVA indicated it had received a CRL on 2/29 which management attributed to “certain major deficiencies” (link). However, as recently as June, the company did say that while significant work was needed that it has found a way forward and that FDA is not against a "generic" EPIPEN. It pegged timing at late 2017 to early 2018 for potential approval. While intuitively, negative headline around MYL's brand pricing should have positive read-through to FDA progress on TEVA's generic, it's not clear to us that it will. In other words, we make no change to current assumptions built into both models which reflect an interchangeable generic with P&L opportunity for TEVA more incremental (~$0.10 or 1%)."

On IPXL, the analyst views it as an under-appreciated beneficiary on its lower priced epinephrine auto-injector / Adrenaclick. "IPXL's epinephrine auto-injector was acquired through Core Pharma and can be substituted in 21 states for EPIPEN. When IPXL acquired it last year the product was at a ~2% share and now stands at ~7% and we expect that to continue to grow (~5% of revenue currently in our model). IPXL also expects share to grow with no real view on what the ceiling is but supply continues to be the primary hurdle. There are initiatives in place to increase supply with the company well underway of a 12-15 month project that will boost supply next year though it continues to increase quarterly as does share. Broader point is that there are lower priced alternatives already in the market and TEVA may be adding another in late 2017 to early 2018."

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