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Valeant (VRX) Decides to Extend Stay on Xifaxan’s ANDA


Valeant Pharmaceuticals International, Inc. VRX and Actavis Laboratories, Inc., which is now a part of Teva Pharmaceuticals Inc. TEVA announced that both the companies have agreed to stay outstanding litigation and extend the 30-month stay regarding the latter’s Abbreviated New Drug application (ANDA) for a generic version of Xifaxan (rifaximin) 550 mg tablets. The mutual decision was taken at Actavis’ request.

We note that Valeant initiated the litigation against Actavis in Mar 2016. Additionally, Valeant filed a Citizen Petition with the FDA in Oct 2016, requesting changes to previously recommended standards for approval of generic versions of Xifaxan.

Thereafter, in Mar 2017, the FDA answered the Citizen Petition and issued its revised draft guidance regarding the recommended standards for approval of ANDAs for generic versions of Xifaxan.

As a result, legal action is stayed through April 30, 2018 and cannot be lifted prior to Oct. 31, 2017. In addition, all currently scheduled litigation activities, including the January 2018 trial date, have been indefinitely removed from the court docket. The court has ordered that Actavis' 30-month regulatory stay shall be extended from Aug. 12, 2018 until no earlier than Feb. 12, 2019 and could be longer if the litigation stay lasts for more than 6 months.

Xifaxan was added to Valeant’s portfolio through the Salix acquisition. The drug is approved for irritable bowel syndrome. The company recruited and launched a new primary care sales force for Xifaxan which should boost the weak sales somewhat. A potential generic entry will impact sales.

After a tumultuous period, Valeant started a rebuilding process with its new CEO, Joseph C. Papa. Even though it is still early to comment on the rebuilding process, but the company’s efforts to sell non-core assets and pay down huge levels of debt is commendable and should bode well in the upcoming quarters.

We note that the shares of Valeant have underperformed the Zacks classified Medical-Drugs industry in the last year. The stock lost 48.7% as compared to the industry’s gain of 14.5%.

Zacks Rank & Key Picks

Valeant currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the health care sector include VIVUS, Inc. VVUS, and Aeglea BioTherapeutics AGLE. While VIVUS and MEI Pharma sport a Zacks Rank #1 (Strong Buy), Aeglea carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’s loss per share estimates narrowed from 50 cents to 39 cents for 2017, over the last 30 days. The company posted positive earnings surprises in all of the four trailing quarters with an average beat of 233.69%.

Aeglea’s loss per share estimates narrowed from $3.64 to $2.48 for 2017, over the last 60 days. The company posted positive earnings surprises in three of the four trailing quarters with an average beat of 20.75%.

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