Endo, Penwest Shares Rise on FDA Approval of Opana Pain Killer; Endo Cuts 2006 Outlook
NEW YORK -- Shares of drug maker Endo Pharmaceuticals Holdings Inc. and development partner Penwest Pharmaceuticals Co. surged Friday after they announced the Food and Drug Administration approved two forms of the painkiller Opana.
Endo shares rose even though the company cut its 2006 outlook, now that it will shoulder product launch costs without Penwest's help. Endo's share price jumped $1.72, or 6 percent, to $30.47 in midday trading on the Nasdaq on more than four times their average volume. Shares have traded between $21.06 and $33.96 over the past 52 weeks.
Penwest saw shares skyrocket $6.61, or 41 percent, to $22.70 on the Nasdaq on more than 13 times their average volume, approaching their 52-week high of $23.70.
The FDA approved an extended-release and immediate-release form of the opiate painkiller oxymorphone hydrochloride, which Endo will market as Opana ER tablets and Opana tablets, respectively. Both are indicated for the treatment of moderate-to-severe pain with Opana ER designed for chronic pain and Opana for acute pain.
Chadds Ford, Pa.-based Endo cut its adjusted earnings per share forecast for the year by 20 cents to a range of $1.55 to $1.60, but raised its projected revenue range to $880 million to $910 million from a previous $860 million to $880 million range. Estimates exclude stock option expenses and other charges.
Analysts surveyed by Thomson Financial currently expect earnings per share of $1.75 on revenue of $883.4 million. Estimates do not reflect the adoption of accounting rules for stock option expenses and treat them as a charge.
Peter A. Lankau, Endo's president and chief executive, said in an interview that Penwest hasn't indicated they will opt back into an arrangement -- originally included in their 1997 agreement -- in which Penwest could help with launch costs in exchange for a 60 percent cap on Endo's share of Opana ER's profits. Danbury, Conn.-based Penwest developed the controlled-release drug delivery technology for Opana ER.
While there is no deadline for Penwest to opt back in, Lankau said the closer the drug gets to seeing an operating profit, the more Penwest will have to make up in launch costs to get the cap.
Lankau said the company began recruiting 220 additional sales reps last month and will send out offer letters today. The company currently has a 370-person sales force. The new reps, which will not be dedicated exclusively to Opana, are expected to start in about two weeks and will be trained into August.
The company plans to release both forms of the drug in the coming weeks.
Jefferies & Co. analyst David Windley reiterated his "Buy" rating and $35 price target on Endo in a research note. The analyst said he plans to increase earnings per share estimates to reflect Endo's "aggressive sales force expansion in 2006."
NEW YORK -- Shares of drug maker Endo Pharmaceuticals Holdings Inc. and development partner Penwest Pharmaceuticals Co. surged Friday after they announced the Food and Drug Administration approved two forms of the painkiller Opana.
Endo shares rose even though the company cut its 2006 outlook, now that it will shoulder product launch costs without Penwest's help. Endo's share price jumped $1.72, or 6 percent, to $30.47 in midday trading on the Nasdaq on more than four times their average volume. Shares have traded between $21.06 and $33.96 over the past 52 weeks.
Penwest saw shares skyrocket $6.61, or 41 percent, to $22.70 on the Nasdaq on more than 13 times their average volume, approaching their 52-week high of $23.70.
The FDA approved an extended-release and immediate-release form of the opiate painkiller oxymorphone hydrochloride, which Endo will market as Opana ER tablets and Opana tablets, respectively. Both are indicated for the treatment of moderate-to-severe pain with Opana ER designed for chronic pain and Opana for acute pain.
Chadds Ford, Pa.-based Endo cut its adjusted earnings per share forecast for the year by 20 cents to a range of $1.55 to $1.60, but raised its projected revenue range to $880 million to $910 million from a previous $860 million to $880 million range. Estimates exclude stock option expenses and other charges.
Analysts surveyed by Thomson Financial currently expect earnings per share of $1.75 on revenue of $883.4 million. Estimates do not reflect the adoption of accounting rules for stock option expenses and treat them as a charge.
Peter A. Lankau, Endo's president and chief executive, said in an interview that Penwest hasn't indicated they will opt back into an arrangement -- originally included in their 1997 agreement -- in which Penwest could help with launch costs in exchange for a 60 percent cap on Endo's share of Opana ER's profits. Danbury, Conn.-based Penwest developed the controlled-release drug delivery technology for Opana ER.
While there is no deadline for Penwest to opt back in, Lankau said the closer the drug gets to seeing an operating profit, the more Penwest will have to make up in launch costs to get the cap.
Lankau said the company began recruiting 220 additional sales reps last month and will send out offer letters today. The company currently has a 370-person sales force. The new reps, which will not be dedicated exclusively to Opana, are expected to start in about two weeks and will be trained into August.
The company plans to release both forms of the drug in the coming weeks.
Jefferies & Co. analyst David Windley reiterated his "Buy" rating and $35 price target on Endo in a research note. The analyst said he plans to increase earnings per share estimates to reflect Endo's "aggressive sales force expansion in 2006."
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