Valeant: FDA News Coming Fast And Furious

| About: Valeant Pharmaceuticals (VRX)

Summary

FDA Advisory Committee approves brodalumab.

FDA approves oral Relistor.

VESNEO (latanoprostene bunod) on deck.

Valeant Pharmaceuticals International, Inc. (NYSE:VRX) is experiencing a nice bull run from its lows after its horrendous earnings call last quarter, and the Brexit shock to the market. The stock has run from a low of $18.55 to close at $23.54 on Tuesday, July 19, 2016, an almost 27% gain over a little over half a month. This comes as the bad news seems to be overly exaggerated and immaterial going forward (previous article) while the good news comes in small, but material, doses that fit Valeant CEO Joseph Papa's plan to stabilize the company before a turnaround. As market sentiment starts to shift on Valeant, the good news continues to roll in as VRX takes the much needed steps back into the good graces of the market.

The FDA's Dermatologic and Ophthalmic Drugs Advisory Committee backed the approval of brodalumab for plaque psoriasis in adults contingent on adequate product labeling and post-marketing/risk management obligations by an amazing 18-0 vote (article). The FDA has already scheduled a Prescription Drug User Fee Act (PDUFA) action date of November 16, 2016. The FDA is known to regularly follow the advice of its advisory committees especially when the vote of the committee is unanimous for approval. The potential product labeling and risk management obligations should limit some of the upside of the product going forward, but they should not hinder brodalumab from being successful in the marketplace as Valeant seeks to market it in the U.S. next year if it gets the expected FDA approval later this November.

Valeant and Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) also today announced FDA approval of an oral form of Relistor (article). The tablets are indicated for treatment of opioid-induced constipation in adults with chronic non-cancer pain. The subcutaneous injection form was approved back in 2008, and Valeant currently owns the development and commercialization rights to Relistor and plans to start commencing sales of the oral drug in Q3 of 2016. Sales of Relistor in Q1 2016 were $16.6 million according to Valeant's last earnings call.

Finally, Valeant has a new drug application (NDA) under review with the FDA for VESNEO (latanoprostene bunod) coming up with a PDUFA action date scheduled for Thursday, July 21, 2016 (website). Nicox (OTCPK:NICXF) licensed the drug rights to Bausch + Lomb originally in March of 2010. The drug is indicated for use in lowering intraocular pressure for patients with open angle glaucoma or ocular hypertension. Nicox expected the drug in the past to have annual peak sales in the U.S. of around $500 million and globally around $1 billion (article). Sales might take a little bit to ramp up due to a crowded market with generic options, but time will tell how successful sales will be if the drug gets its expected approval Thursday.

Conclusion

While none of these drugs will immediately shrink Valeant's giant debt load of $30+ billion, they are potential additional future revenue streams that will help the company stabilize and turn around its business. In the short term, they should help Valeant continue to rally until it nears its next earnings call scheduled for August 9, 2016. The earnings call will be the key upcoming catalyst for Valeant's shares as they have a high probability of a big upward or downward move depending on how the company is doing in its stabilization plans. I am still a believer that the Valeant falling knife is landing (article), and plan to ride out the volatility through the upcoming earnings call. Good luck to all.

Disclosure: I am/we are long VRX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.