Shares of opioid makers Depomed Inc. (DEPO) and Insys Therapeutics Inc. (INSY) were down Friday following the U.S. Food and Drug Administration's request for Endo Pharmaceuticals Inc. to pull its opioid pain medication from the market.
Depomed's stock was down 5.24%, or 55 cents, on Friday, June 9, to $ 9.94, while Insys shares closed at $ 11.48, down 52 cents or 4.33%. Meanwhile, shares of Johnson & Johnson (JNJ - Get Report) , whose Janssen division is a leading painkiller producer, were in the green, up 98 cents or 0.75% to 131.53 after dropping initially when the market opened Friday.
"I think negative sentiment is what's coming through today on the sector, but I think fundamentally that this [the FDA's request] is a neutral or positive for Depomed," said Scott Henry, head of pharmaceuticals research at ROTH Capital Partners LLC. "I don't think physicians are going to stop prescribing opioids because one got pulled from the market."
According to Henry, the FDA's decision could pave the way for new medications, such as Belbuca and other lighter opioids.
The FDA said June 8 it was requesting the removal of Endo's reformulated Opana ER, expressing concern that the "benefits of the drug may no longer outweigh its risks." This marks the first time that the FDA is seeking the removal of an opioid pain medication from the market due to the public health consequences of abuse.
Endo said in a statement it was reviewing the FDA's request and evaluating potential options on the appropriate path forward.
Meanwhile, Insys may have more to worry about than mere day-to-day trading queries. In light of a Department of Justice enforcement action into marketing and sales practices for Subsys, according to Oppenheimer & Co. analyst Derek Archila. The DOJ entered a settlement limiting Insys' marketing practices after alleging that a physician accepted speaking fees to promote Subsys, a fentanyl-based product for treating cancer pain. The DOJ said the speaking engagements were little more than a scheme to induce doctors to write Subsys prescriptions.
"For people who OD on Subsys, that's going to be an issue and definitely something that the FDA will have to look at -- not only for Subsys, but for other products as well," Archila said. "It doesn't seem that Subsys has a very good track record."
In response to the opioid epidemic, FDA Commissioner Scott Gottlieb recently created an internal committee to develop additional tools and strategies for the FDA to employ against future crises. The committee is composed of the agency's "senior career leaders" and was asked specifically by Gottlieb to explore additional steps encompassing drug regulations.
"[This] is a cross-agency effort that we're looking very closely at and it's a priority for the commissioner and for the agency," said FDA spokeswoman Sarah Peddicord.
A potential beneficiary of the FDA's move regarding Opana ER could be Impax Laboratories Inc. (IPXL) , according to Canaccord Genuity Group Inc. analyst Dewey Steadman in an interview.
Hayward, Calif.-based Impax has a generic version of the original formulation of Opana ER and physicians seeking an oxymorphone product could gravitate towards Impax's offering, Steadman said.
Shares of Impax were trading at $16.27 on June 9, down 2.3%.
Opana ER received approval in 2006, though the company introduced a newer version in 2012 designed to make abuse via oral use or snorting more difficult.
The agency's move on June 8 comes after an FDA advisory committee in March voted 18-8 that the benefits of reformulated Opana ER no longer outweigh its risks.
Products with similar abuse-deterrent formulations to Opana ER, such as OxyContin from privately held Purdue Pharma, could come under FDA scrutiny in the future, Steadman said. He noted, though, that OxyContin hasn't had the same reported safety issues as Opana ER.
Sought for comment, a Purdue Pharma spokesperson noted in an email that OxyContin and Opana ER "are different medicines, with different active ingredients and are formulated differently." The spokesperson pointed out that the FDA in April 2013 recognized OxyContin as meeting the appropriate high-standards for abuse-deterrent labeling claims, and the agency in May 2013 rejected Endo's request for Opana ER.
The tone of the FDA's press release on the requested removal of reformulated Opana ER, coupled with Gottlieb's remarks, signal that opioid medication is top of mind for the agency, Steadman said.
The FDA's move on Thursday "could be the first of several, whether pulling products from the market or restricting prescriptions," he said.
At a Senate Health Committee hearing in April, Gottlieb called the opioid crisis a "public health emergency on par with Ebola and Zika." Gottlieb, who was confirmed by the Senate as FDA chief on May 9, wrote in a May 23 blog post that his highest initial priority is to "take immediate steps to reduce the scope of the epidemic of opioid addiction."