To The Moon

$Endo International PLC(ENDP)$ recently announced that its subsidiary Endo Ventures Limited has entered into an agreement with clinical-stage specialty pharmaceutical company Taiwan Liposome Company, Ltd. ("TLC"). 

Both the companies will commercialize TLC599. The candidate is an extended and controlled release liposomal formulated dexamethasone for chronic knee osteoarthritis (OA) pain. It is currently in phase III development for the treatment of osteoarthritis knee pain.

Per the terms of the agreement, TLC will primarily be responsible for the development of the product. On the other hand, Endo will primarily be responsible for obtaining regulatory approval and commercializing the product in the United States.

Endo will have exclusive rights to manufacture, market, sell and distribute the product in the United States upon receipt of regulatory approval.

In exchange, TLC will receive an upfront payment of $30 million. It is also eligible to receive up to an additional $110 million based on the achievement of certain development, regulatory, and manufacturing milestones related to the initial indication for the treatment of OA knee pain.

Additionally, TLC will be eligible to receive payments based on the achievement of certain commercial milestones and royalties based on the product's net sales in the United States.

Endo will account for the upfront payment of $30 million in the second quarter as acquired in-process research and development.  Endo had not taken this into account when it provided guidance for the second quarter on May 5, 2022, as the transaction was signed after the date of the second-quarter earnings release.

Revenues for the second quarter are projected to be $500-$525 million. Adjusted loss per share is estimated at 17 cents to 15 cents.

The guidance for the second quarter was disappointing due to challenging market dynamics for Vasostrict, which faces generic completion.

Endo has lost 91.9% this year before the surge, compared with the industry's 28.7% decline.

Lost before the surge & Industry decline

Last month, shares tanked significantly after a Wall Street report stated that the company has started negotiations with its lenders and senior bondholders about a possible restructuring of more than $8 billion of debt.

Please note that Endo is already in deep trouble with several litigation suits over opioid sales, which has been an overhang on its shares for quite some time now.

Endo reported first-quarter earnings of 66 cents per share, beating the Consensus Estimate of 44 cents but declining from 73 cents in the year-ago quarter. A significant increase in litigation expenses and selling, general and administrative expenses hurt the bottom line.

As of Mar 2022, the company had $1.4 billion of cash and equivalents and long-term debt of $8.0 billion.