Mallinckrodt (MNK), Lannett (LCI) Price Targets Lowered at Deutsche Bank After FDA Proposes to Withdraw ANDAs for Methylphenidate ER

Deutsche Bank maintained a Buy rating on Mallinckrodt plc (NYSE: MNK) but lowered its price target to $78.00 (from $82.00). Lannett (NYSE: LCI) was maintained a Hold and its price target was lowered to $26 (from $32). Earlier the FDA proposed to withdraw approval of ANDAs for methylphenidate ER, and the update price targets reflect removing methylphenidate ER contribution. Analyst Gregg Gilbert also thinks Teva Pharma (NYSE: TEVA) should benefit from removal of the BX-rated products.

"FDA disclosed that it proposes to withdraw approval for MNK and LCI’s ANDAs (generic applications) for methylphenidate ER. Recall that FDA previously changed the therapeutic equivalence (TE) rating for these products from AB (substitutable) to BX in 2014 based on concerns that the generics may not be bioequivalent or therapeutically equivalent to Concerta. Following additional consideration, the agency is now proposing to withdraw approval for both products. While the companies have the opportunity to request a hearing to dispute the decisions, we are taking the step of removing contribution from our MNK and LCI models (see below). We note that this development could benefit TEVA (markets the only AB-rated generic of Concerta) in the near term, and IPXL (seeking approval for an AB-rated generic) in the longer term," said the analyst.

Commenting on Teva, the analyst said, "TEVA (previously Actavis) markets an authorized generic (AG) of Concerta, which is the company’s largest generic and the only AB-rated product on the market. TEVA’s AG accounts for ~78% of prescriptions, while MNK and LCI’s BX-rated generics account for ~11% and ~4%, respectively. TEVA also recently received tentative approval for its own AB-rated generic, which the company could launch after its agreement with JNJ ends at the end of 2017."

For an analyst ratings summary and ratings history on Mallinckrodt plc click here. For more ratings news on Mallinckrodt plc click here.

Shares of Mallinckrodt plc closed at $65.82 yesterday.

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