Valeant (NYSE:VRX) investors got cold feet today, sending shares tumbling nearly 11%. The reason? The drug maker announced the receipt of a CRL from the FDA regarding Duobrii lotion for the treatment of plaque psoriasis. The company noted that the CRL did not specify any deficiencies related to clinical efficacy or safety, or raise any issues related to manufacturing, but did have questions regarding pharmacokinetic data. Valeant is working to resolve this matter expeditiously and has requested a meeting with the FDA. The company will have more color on the CRL after its meeting.
Meanwhile, Cantor’s healthcare analyst Louise Chen issued a note today defending the stock and saying that the CRL does not change his positive investment thesis, and Duobrii approval is still expected.
Chen wrote, “There are three reasons we still like VRX despite the CRL: 1) The PK data has been available on the individual products for years; 2) On 4/9/18, VRX announced that JAAD published, for the first time, positive results from two Phase 3, multicenter, randomized, double-blind clinical trials (Studies 1 and 2); And, 3) Sales were not material to VRX’s 2018 numbers because it would have been a late launch this year. FactSet consensus has $4MM of sales for Duobrii in 2018. For context, FacSet consensus is at $8.3B of total sales for VRX in 2018.”
As such, Chen reiterates an Overweight rating on Valeant shares, with a price target of $32, which represents a potential upside of 36% from where the stock is currently trading. (To watch Chen’s track record, click here)
TipRanks reveals VRX as a stock that has not drawn a vote of confidence among Wall Street opinion. Out of 13 analysts polled in the last 3 months, 5 are bullish on Valeant stock, 4 remain sidelined, while 4 are bearish on the stock. Worthy of note, the 12-month average price target stands at $21.55, which represents a 9% downside from current levels.