Allergan Recalls Taytulla Oral Contraceptives, Stock Down

Allergan plc AGN announced a nationwide recall of some sample packs of Taytulla softgel oral contraceptive capsules (1mg/20mcg). Allergan said that four non-hormonal placebo pills were erroneously placed where the contraceptive capsules should have been. This instigated the recall following a physician report on the same.

Allergan warned that the four inactive pills raise the risk of unintended pregnancy and the patients who have concerns should consult a doctor.

Shares of Allergan were down almost 2% on Tuesday following the recall. In fact, so far this year, Allergan’s share price has declined 7.7%, compared with the industry’s decline of 5.8%.

Despite a strong first-quarter performance and positive regulatory updates, shares of this pharma company continue to decline this year.

We believe that this is because Allergan is facing loss of exclusivity for several of its key products and this will continue through 2018.This is what concerns analysts. While the first generic versions of Alzheimer’s treatment Namenda XR and Estrace cream were launched in the first quarter, that of blockbuster dry-eye drug, Restasis, Allergan’s second best-selling drug, is expected to be launched in the second quarter.

A generic version of Delzicol is also expected to be launched in early second-quarter 2018.Allergan estimates that the products facing loss of exclusivity wereworth$3 billion in 2017. Sales of these products are expected to decline significantly in 2018 with the introduction of generics.

On the first-quarter conference call, management addressed this disconnect between its business performance and stock value. Allergan’s CEO Brent Saunders said that the company is conducting a strategic review of its business, which can unlock shareholder value.

Allergan currently carries a Zacks Rank #3 (Hold).

Better-ranked drug/biotech stocks include Eli Lilly & Company LLY, BioMarin Pharmaceutical, Inc. BMRN and Ligand Pharmaceuticals LGND, all with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Lilly’s earnings estimates increased 5.7% for 2018 and 2.8% for 2019 over the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, with an average beat of 8.20%.

BioMarin’s earnings estimates rose 47.7% for 2018 and 19.1% for 2019 in the past 60 days. Shares of BioMarin have rallied 1.5% this year so far.

Ligand’s earnings per share estimates increased 11.8% for 2018 and 8% for 2019 in the last 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, with an average beat of 31.79%. The company’s shares have rallied 36.6% year to date.

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