Valeant Pharmaceuticals Intl Inc (VRX): Tampa Resolution to Pave the Way for FDA Approvals

H.C.


After receiving a Complete Response Letter (CRL) from the FDA earlier this month, concerning CGMP (Current Good Manufacturing Practice) deficiencies at its Tampa facility, management at Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is breathing a sigh of relief. Last week, the FDA confirmed that it will issue a Voluntary Action Indicated (VAI) for the troubled facility, indicating that the company can move forward on regulatory filings for products produced there.

Analyst Ram Selvaraju of H.C. Wainwright is cautiously optimistic that the company is in the process of a turnaround with a pathway towards regulation of its ophthalmology products. The analyst opines, “Given the current status of the Tampa facility, we believe that Valeant should now be in position to overturn the FDA’s CRL and receive approval for Vyzulta, while other drugs—e.g., another Valeant ophthalmology agent, the ocular redness treatment Luminesse —slated to be produced at the Tampa facility should no longer face the prospect of regulatory approval delays. However, we remain uncertain as to how long it may take for Vyzulta to obtain regulatory approval, and note that our current assumptions do not include revenue from Vyzulta in 2017.”

Furthermore, the analyst underscores that “Valeant has negotiated the most difficult portion of the turnaround process and has now obtained sufficient breathing room to put its core businesses in order and back on solid growth trajectories.” However, “While the attainment of the $5B debt pay-down target has given Valeant some much-needed breathing room, we believe that in the long run, larger divestitures would be likely in order to permit the company to meet the significantly more substantial debt maturities in 2020 and beyond.”

As such, Selvaraju reiterates a Neutral rating on VRX with a $17.00 representing a near 20% rise over current trading levels. (To watch Selvaraju’s track record, click here)

Out of 3 analysts polled by Tipranks (in the past 3 months), one is bullish, while two analysts are sidelined on Valeant stock. With a return potential of 4%, the stocks consensus price target stands at $105.67.

 

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