FDA Clears Covidien's Exalgo Tablet

Mallinckrodt, the pharmaceuticals business of Covidien plc (COV - Analyst Report), recently received the clearance of the U.S. Food and Drug Association (FDA) for the 32 mg strength of its Exalgo (hydromorphone HCI) Extended-Release Tablets (CII). The tablet will be available in the market within the next few weeks.

The FDA approval of the Exalgo 32 mg tablet marks a keystone for Mallinckrodt. The tablet is meant for a specific set of opioid-tolerant patients who suffer from tolerable to oppressive chronic pain and stand in need of uninterrupted and continuous opioid analgesia for a long time.

This newest offering is the intermediate dosage which provided convincing results by counterpoising the patients during trials. Per management, the approval of the tablet will enhance Mallinckrodt’s pain management portfolio and mount Covidien’s pharmacologic profile.

According to the company, the Exalgo tablets have a sizeable market opportunity in the U.S. as statistics suggests that roughly 116 million Americans suffer from chronic pain. Despite the known fact that opioid therapy is not the preferred choice of treatment for all these individuals, it is of utmost clinical importance to find the right dosage and treatment for these patients.

The extended-release pain medication Exalgo was launched in 2010. It uses the Oros drug delivery system with an inbuilt feature to control the dispensation of the opioid analgesic. The Oros drug delivery system will reduce fluctuations in blood plasma levels while the new dosage will enhance the options available to a physician at a stage before the right treatment plan for opioid-tolerant patients is found.

Earlier, in March 2010, the FDA approved Mallinckrodt’s 8, 12 and 16 mg Exalgo tablets. The company had submitted supplemental New Drug Application (sNDA) for the 32 mg tablet in January 2012. The application encompassed the conspectus of clinical trials as well as post-marketing data validating the tolerance and effectiveness of the Exalgo 32 mg tablet.

Mallinckrodt’s strategy to enhance its operations and boost its financial performance on the back of a solid product pipeline is expected to yield positive results. Earlier this month, the company revealed that it has inked an agreement with Xanodyne Pharmaceuticals, an integrated specialty pharmaceutical company with expertise in pain management.

Mallinckrodt is the largest provider of opioid pain management drugs in the U.S. Exalgo and Pennsaid are its front-line branded products, which are successfully contributing to the company’s sales. Covidien is looking to spin-off Mallinckrodt into a stand-alone company by mid-2013.

Mallinckrodt upholds the initiatives to monitor the abuse, misuse and overdose of opioid analgesics undertaken by the White House Office of National Drug Control Policy. Recently, Covidien also extended its support for the Sentinel Event Alert issued by The Joint Commission regarding Safe Use of Opioids in Hospitals.

This particular issue provided a number of suggestions that can be taken to avoid the risks associated with opioid use among hospital in-patients. The company supported this initiative to encourage safe and effective use of pain management drugs.

Covidien is a leading developer, manufacturer and distributor of medical devices and services on a global scale. Its business segments overlap with the business of its competitors such as Becton, Dickinson and Company (BDX - Analyst Report), Johnson and Johnson (JNJ - Analyst Report) and CR Bard Inc. (BCR - Analyst Report) among others.

While acquisitions remain the most important part of Covidien’s growth strategy, the approval underlines its aggressive strategy of portfolio extension. It remains committed to rolling out new products and technologies consistently. Management expects that focus on product innovation and aggressive portfolio management will enhance growth opportunities in the long run.

However, sustained pricing/procedure volume pressure, fluctuating foreign exchange rates, and a sluggish U.S. and European economy represent major headwinds.

We currently have a long-term ‘Neutral’ recommendation on Covidien. The stock carries a Zacks #4 Rank, which translates into a short-term Sell rating.