Shares of Bausch Health Companies Inc. BHC were down 8.69% on Jun 6 after the FDA granted tentative approval to Norwich Pharmaceuticals Inc.’s abbreviated new drug application (ANDA) for Xifaxan (rifaximin) 550 mg in a letter dated Jun 2, 2023.
However, the FDA confirmed in its letter that it cannot grant final approval until Oct 2, 2029, which is the date specified by the presiding judge in his final judgment in Salix Pharmaceuticals, LTD et al. v. Norwich Pharmaceuticals, Inc.
Bausch’s gastroenterology business is conducted through Salix Pharmaceuticals.
Last month, Bausch obtained a favorable ruling from the U.S. District Court of Delaware for Xifaxan. In the matter of Salix Pharmaceuticals, LTD et al. v. Norwich Pharmaceuticals, Inc., the U.S. District Court of Delaware denied Norwich Pharmaceuticals' motion to modify the court's final judgment that prevents the FDA from approving Norwich's ANDA for Xifaxan 550 mg before Oct 2, 2029.
Norwich has now sued the FDA in the United States District Court for the District of Columbia, requesting that the Court direct the FDA to immediately grant final approval to the ANDA.
Xifaxan 550 mg tablets are indicated for reducing the risk of overt hepatic encephalopathy (HE) recurrence in adults and for treating irritable bowel syndrome with diarrhea (IBS-D) in adults. It is one of the top drugs in BHC’s portfolio.
Bausch Health intends to intervene in Norwich's lawsuit against the FDA.
Xifaxan accounted for approximately 81% of the Salix reporting unit’s revenues in 2022. Salix generated revenues of $2.09 billion in 2022. Hence, an earlier-than-expected generic entry will adversely impact revenues.
Bausch’s stock has gained 15% in the year so far compared with the industry’s growth of 3.4%.
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Bausch’s first-quarter results were disappointing due to decreases in sales across neurology, generics and dermatology. Nevertheless, the Salix business maintains momentum. Xifaxan’s revenues grew 7% in the first quarter.
Zacks Rank and Stocks to Consider
Bausch currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the healthcare sector are Novo Nordisk NVO, Ligand Pharmaceuticals LGND and Novartis NVS. NVO and Ligand sport a Zacks Rank #1 (Strong Buy), and NVS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Over the past 30 days, estimates for NVO’s 2023 earnings per share have risen by 11 cents to $5.07. Novo Nordisk topped earnings estimates in three of the last four quarters and missed in the remaining one, the four-quarter earnings surprise being 0.35%, on average.
Over the past 30 days, earnings estimates for LGND have increased by 46 cents per share to $5.25. LGND topped earnings estimates in two of the last four quarters and missed in the remaining two, the average surprise being 21.50%.
Over the past 60 days, NVS’ earnings estimates have increased to $6.72 from $6.57 for 2023. Novartis surpassed estimates in all the trailing four quarters, the average surprise being 5.15%.
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