Back to top

Analyst Blog

Allergan’s (AGN - Analyst Report) shares slipped 1.29% on news that Actavis plc (ACT - Analyst Report) has filed an Abbreviated New Drug Application (ANDA) for its generic version of Allergan’s eye drug, Restasis.

The paragraph IV filing is challenging U.S. patent number 8,629,111 which is slated to expire in Aug 2024. A method of use patent (patent number 8,633,162) for Restasis was issued recently by the United States Patent and Trademark Office – this patent, which has been submitted for listing in the Orange Book, is also slated to expire in Aug 2024.

Actavis had submitted the ANDA before the FDA had issued bioequivalence draft guidelines in Jun 2013 related to the approval of generic versions of Restasis. According to the draft guidelines, companies wanting to make a generic version of Restasis have two options – an in vitro study or an in vivo study. These draft guidelines, if finalized, could make it easier for generic versions of Restasis to enter the market.

Since Actavis had submitted its ANDA before the issuance of the FDA guidelines, the FDA informed Actavis that it would not accept the ANDA filing. Actavis is currently in discussions with the agency regarding the status of its ANDA filing. Actavis also amended its ANDA in order to include a para IV certification regarding the recently issued patent ‘162.

Restasis posted sales of $662.4 million in the first nine months of 2013.

Our Take

Although Allergan’s shares slipped slightly on the news regarding Actavis’ ANDA, we do not expect generic competition to enter the market any time soon. The issuance of new patents should provide protection. Moreover, Allergan has submitted a Citizen Petition to the FDA regarding the agency’s draft guidance for Restasis. Also, there is lack of clarity on the filing status of Actavis’ ANDA.

While Actavis is a Zacks Rank #1 (Strong Buy) stock, Allergan is a Zacks Rank #2 (Buy) stock. Other stocks in the medical sector that look attractive include Impax Laboratories Inc. (IPXL - Snapshot Report) and H. Lundbeck A/S (HLUYY). Both are Zacks Rank #1 stocks.
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SYNAPTICS I… SYNA 78.11 +8.14%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
SKYWORKS SO… SWKS 52.07 +2.58%
CLAYTON WIL… CWEI 109.08 +2.51%