Eagle Pharmaceuticals (EGRX) collapsed Tuesday after it scrapped plans to knock off AstraZeneca's (AZN) breast cancer treatment, and as preliminary third-quarter results came in mixed.
XOn the stock market today, Eagle stock plummeted 16.5% to close at 47.50. AstraZeneca stock rose 1.2% to 38.45.
The generic drugmaker had been looking to establish that its drug, fulvestrant, was biologically equivalent to AstraZeneca's Faslodex. But early Tuesday, Eagle said its copycat failed in a study of 600 healthy women across the U.S.
"At this time, and given the results of the fulvestrant trial, we plan to focus on other promising programs in our pipeline," Chief Executive Scott Tarriff said in a written statement.
Eagle Stock: Other Pipeline Setbacks
The problem for Eagle Pharma, Mizuho analyst Irina Koffler said in a note, is that it doesn't have many other viable drugs in its pipeline.
Eagle is currently looking testing its Ryanodex to treat exertional heat stroke, psycho-stimulant drug-induced toxicity and nerve-agent induced brain damage. Ryanodex is only approved to treat high body temperature, a condition called malignant hyperthermia.
"We do not credit Eagle for its exertional heat stroke and nerve agent programs in Ryanodex, and view the intramuscular formulation as a life-cycle extension of the current product, which loses orphan drug exclusivity in 2021," she said.
Previously, Koffler had modeled $3 million in sales of fulvestrant for Eagle. RBC Capital Markets analyst Randall Stanicky had seen fulvestrant as offering 15% of the value of Eagle stock.
"This is another pipeline setback that follows disappointing Ryanodex exertional heat stroke (study) enrollment numbers in August," he said in a report to clients.
Preliminary Quarterly Results Mixed
Eagle also unveiled preliminary adjusted earnings of $1.18 per share and $51 million in sales for the third quarter. Mixed results showed earnings topped by 21 cents, but revenue lagged by $4.2 million, Mizuho's Koffler said.
Further, the drugmaker announced a new share repurchase program of up to $150 million of common stock.
"We do not believe the share repurchase program will offset news of the fulvestrant study failure," she said. "Eagle may still pursue asset purchases to fill out its pipeline gap, which is another risk to the stock, in our view."
She has a neutral rating and 62 price target on Eagle stock.
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The post This Drug Stock Collapsed After Its Generic Failed To Pass Muster appeared first on Investor's Business Daily.
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