Endo Health Scores Legal Victory - Analyst Blog

Endo Health Solutions (ENDP) scored a legal victory over Mylan Inc. (MYL) regarding the former's acute migraine drug Frova (frovatriptan). A district court in the U.S. upheld the validity of Endo Health's patent (5,464,864) on Frova and ruled that it would be infringed by Mylan's generic version of the treatment.

The court while ruling in favor of Endo Health stated that Mylan cannot sell its generic version of Frova in the U.S. before Nov 8, 2015 when the former's patent on the drug is scheduled to expire (pending possible appeal by Mylan). We note that the two companies had been entangled in a legal tussle on Frova since 2011 when Mylan filed an abbreviated new drug application (ANDA) with the U.S. Food and Drug Administration (FDA) seeking to sell its generic version of the therapy. The application was subsequently challenged by Endo Health.

We note that Endo Health recently failed in its attempt to extend its migraine portfolio beyond Frova when NuPathe Inc. (PATH) declined Endo Health‘s acquisition offer and accepted a more lucrative deal from another company. Endo Health would have added migraine drug, Zecuity, to its product portfolio had the acquisition of NuPathe gone through. With the deal being scrapped, Endo Health received termination fee worth $5 million from NuPathe.   

With the NuPathe deal not going through, we believe investor focus will be on the fate of Endo Health's proposed acquisition of Canadian specialty pharmaceutical company Paladin Labs Inc. The transaction, cleared by the board of directors of both companies, is expected to close in the first half of 2014. The deal, which will strengthen Endo Health's portfolio substantially, is expected to boost Endo Health's 2014 adjusted earnings per share.

Endo Health carries a Zacks Rank #3 (Hold). Actelion Ltd. (ALIOF) is an example of a better-ranked stock with a Zacks Rank #1 (Strong Buy).