Eagle Pharma (EGRX) Sell Off Overdone - RBC

RBC Capital analyst, Randall Stanicky, noted that Eagle Pharma (NASDAQ: EGRX) shares were weak Friday on the disappointing Complete Response Letter update around KANGIO pushing the stock down -19%. He believes that from here, shares are pricing in a more conservative set-up into several more important near-term events that leave favorable risk/reward. No change to Outperform rating but the PT drops to $94 from $100 as KANGIO comes out of the model.

The analyst spoke with EGRX on Fri and he expects the company to talk to the FDA in the near-term, but it's going to be challenging to predict the timing and path to market. For now, he removed KANGIO to be conservative though presumably the product has value even in a worst case scenario where it enters late into a genericized market given its RTU differentiation.

BENDEKA J-code update will be the next catalyst followed by the TREANDA litigation decision which is the most important catalyst to date - bendamustine franchise worth $45 in NPV. Our 3/10 report (link) drilled into the scenario analysis and views from the consultants/experts we spoke to in detail. Specifically, the J-code update will come first likely Apr 15-17 and we think that the hurdle for a J-code is high based on our consultants which could add to more volatility. But we also think that is increasingly built into expectations. The more important update, in our view, will come from the litigation decision and that is expected in late April to early May. Our legal consultant sees a >65% likelihood of a favorable decision and if this is the case, there is no need for a J-code. The other important date to watch for is May 1 when we expect EGRX to launch its bendamustine 500ml product per its deal with TEVA. It's important to note that it is tentatively approved which should eliminate approval risk. Finally, TEVA will report May 9 and we will likely get a BENDEKA conversion update at that time.

For an analyst ratings summary and ratings history on Eagle Pharmaceuticals click here. For more ratings news on Eagle Pharmaceuticals click here.

Shares of Eagle Pharmaceuticals closed at $43.50 yesterday.

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