Egalet Corp (EGLT): Analyst Bets on Reimbursement as Key Driver of Uptake for Chronic Pain Asset That Just Scored Tentative Approval


Egalet Corp (NASDAQ:EGLT) shares are rising 21% after the specialty pharma company gained a tentative nod from the FDA for an expanded label for chronic pain asset Arymo ER. The extended-release morphine product formulated with abuse-deterrent properties has investors all riled up with excitement today, and one analyst takes this especially in confident stride: specifically considering the FDA’s intent to investigate abuse deterrent features for opioids. By October of next year, final approval is anticipated following the expiration of the exclusivity period.

Cantor analyst Brandon Folkes considers it “a positive read through” following the granted tentative green light for intranasal abuse deterrent claims, noting that “the FDA views EGLT’s Guardian Technology as a meaningful abuse deterrent technology.”

In reaction, the analyst maintains an Overweight rating on EGLT stock with a price target of $7, which implies a close to 474% upside from current levels. (To watch Folkes’ track record, click here)

For context, the company’s Guardian Technology has been designed as both a physical as well as chemical barrier strategy to confronting abuse deterrence without needing an opioid antagonist. Egalet created its Arymo ER morphine sulfate tablets using Guardian Technology make it a challenge to manipulate for users wanting to misuse or abuse the product, which scored approval January 9th. The tentative approval news making its rounds through the Street today relates to cases where severe pain needs to be managed through daily, around-the-clock, long-term opioid treatment, when alternative choices for treatment are simply not adequate enough.

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Folke asserts: “Given FDA Commissioner Scott Gottlieb’s comments that the Agency is looking to evaluate current abuse deterrent technologies, we view today’s announcement as a positive read through for EGLT’s Guardian Technology, as we don’t believe the Agency would have given a tentative approval if the Agency had concerns about the benefits of the Guardian Technology in reducing the rates of abuse. Earlier this year the Agency granted approval of COLL’s (Not Covered) sNDA expanding what was included in its Xtampza label. This reinforces our view that the Agency is receptive to high quality abuse deterrent technologies. We continue to view reimbursement as the major driver of Arymo ER uptake going into 2018.”

TipRanks highlights cautious optimism on the Street when it comes to Egalet’s market opportunity, with 2 of 3 analysts bullish on the biotech stock in the last 12 months and 1 playing it safe on the sidelines. With a return potential of nearly 802%, the stock’s consensus target price stands at $11.00.

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