In a new twist on the good news/bad news paradigm, the FDA has informed Perrigo to expect a complete response letter for its copy of Teva’s popular ProAir inhaler.
The news was delivered in a conference call Friday with the FDA, Perrigo said in a release. The Dublin-based drugmaker gave no insight into the reasons for the expected CRL, but has been down this road before. The FDA has already rejected Perrigo’s copy twice, in 2016 and again in 2017.
It is, of course, good news for troubled Teva, which has seen sales crater in recent years and is going through massive restructuring that will cost 14,000 employees their jobs. The ProAir inhaler generated $501 million for Teva last year. Although ProAir sales were down, it remains one of the drugmaker’s better-performing meds.
In a note to investors, Leerink Research analyst Ami Fadia said Lupin is working toward releasing a generic of ProAir by 2019 or so, but she speculated it could be delayed given the concerns the FDA seems to have with generics of the med.
The rejection is really bad news for Perrigo, which is going through its own restructuring and whose new CEO had already baked some upside from the expected approval into the company’s 2018 projections. Investors can now kiss most if not all of that goodbye.
“Based upon this information, the company does not expect to meet its goal of launching a generic version of ProAir in the fourth quarter of 2018,” Perrigo said in a statement. “As a result, the company no longer expects to achieve the approximately $0.09 per share benefit that was included in its 2018 reported and adjusted earnings per share guidance range.”
Perrigo in January named Uwe Röhrhoff, a former pharma glass company exec, as its CEO to succeed retiring John Hendrickson. Hendrickson took the reins after Perrigo rejected a $26 billion buyout by Mylan and when generics prices began to crash in the U.S.
The pressure mounted on him early last year when activist investor Starboard Value gained five board seats and insisted on big changes. The company announced it would slash 750 jobs, the CFO left and shortly afterward federal authorities executed a search warrant as part of a widespread generic drug pricing probe.
Perrigo's cost-cutting and repositioning measures have paid off. Last week, it reported first-quarter results that beat expectations by turning in earnings of $1.26 per share, compared to Wall Street estimates of $1.14 per share. Revenue was $1.22 billion, beating analyst estimates of $1.21 billion. At the time, Perrigo reconfirmed calendar year 2018 adjusted diluted EPS in the range of $5.05 to $5.45, which included the 9 cents a share it believed its new generic would contribute.
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Teva also had an unexpectedly good quarter for a company that is working to cut $3 billion in annual operating expenses. Whereas analysts today said the upside of the CRL will be small for Teva, it does provide some margin for error.