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Eagle Pharmaceuticals: New Clarity On Past Overhangs Reveals Solid Value Opportunity

Mar. 08, 2018 2:45 PM ETEagle Pharmaceuticals, Inc. (EGRX)
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Test Tube Capital


  • Ryanodex for EHS now has a clear regulatory path to a 2019 pre-summer launch.
  • Pending a deal, Pemfexy appears stalled until either fall of 2019 or 2022.
  • Fulvestrant is on track for a game-changing launch as early as late 2019.
  • At its current price, Eagle is riding on more certainty and asset value, making for a solid buy opportunity.

By J. Huang and C. Hsu

A few months ago, after Eagle Pharmaceuticals (NASDAQ:EGRX) received a complete response letter (CRL) for Ryanodex in external heat stroke (EHS), we discussed the future of Eagle’s remaining pipeline. With the stock trading as low as $46.62/share on August 7, 2017, we held an optimistic outlook on the stock’s growth potential. The risk and reward profile has dramatically changed since August of last year, and we believe that Eagle still holds potential for continued growth despite currently trading at the mid-50s.

In this piece, we flesh out considerations investors may want to take before opening new positions in EGRX, specifically providing commentary on the shifting trajectory of Ryanodex and updated evaluations of the future of Pemfexy.

The future of Ryanodex in EHS

The status of Ryanodex’s EHS indication has been in limbo for nearly six months now, and Eagle’s management has finally reported on the results of the FDA Type A meeting: a repeat clinical trial to be planned for the 2018 Hajj.

Out of the four days of the 2015 Hajj, Eagle’s trial only ran for a little over one day before the stampedes occurred, halting enrollment. In that time period, Eagle accrued 34 patients; according to Eagle’s CEO, the original accrual goal was around 120 patients. Though incidents at the Hajj are not uncommon, and the possibility of another incident in 2018 remains, we believe the likelihood of a repeat event is low. Indeed, the 2015 stampede stands as the deadliest Hajj incident in history, with nearly 1,500 deaths reported; no major incidents were reported in 2016 and 2017.

Thus, assuming the absence of a stampede on the scale of the 2015 Hajj, the 2018 Hajj trials are highly derisked. The two trials are identical save the removal of the 72-hour follow-up, which was important for

This article was written by

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Investment strategy group focusing on small and medium-cap biotech/pharma/life sciences companies.

Analyst’s Disclosure: I am/we are long EGRX. 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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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