Valeant Pharmaceuticals (VRX) PT Raised to $22 at Deutsche Bank on Xifaxan Legal Development


Deutsche Bank raised its price target on Valeant Pharmaceuticals (NYSE: VRX) to $22.00 (from $20.00) while maintaining a Buy rating.

Analyst Gregg Gilbert commented, “Xifaxan is VRX’s largest product (~13% of revenue) and an important growth driver. In the Xifaxan patent case vs. TEVA, the stay in litigation was recently extended from 4/30/18 to 7/30/18 (and may be further extended). Recall that the companies agreed to stay the patent case last year after FDA revised its draft bioequivalence guidance for Xifaxan generics in order for TEVA to evaluate the implications of the revised guidance. According to the court docket, the companies agreed to extend the stay “because the facts and circumstances that warranted a stay as of May 15, 2017 have not materially changed.” We previously modeled Xifaxan exclusivity through 2024, which represented a middle case scenario with generic competition ahead of patent expiry (the patents extend to 2030). Given that TEVA does not yet appear to have clarity on the path forward for its generic filing, we are now factoring in an additional year of exclusivity, which takes our PT to $22 (from $20). In our view, this could represent a decent “settlement” scenario if TEVA is able to resolve the issues with its filing. We look forward to an update from TEVA when the company reports 1Q18 results on 5/3. We continue to like the risk/reward for the stock, and are maintaining our Buy rating.”


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