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Emergent BioSolutions Inc. announced Wednesday that the U.S. Food and Drug Administration approved its opioid overdose-reversing nasal spray, Narcan, for over-the-counter sales.
The news initially sent the drugmaker’s stock
EBS,
soaring as much as 20%, but it has given up most of its gains to be up 6% in midday trading. The FDA’s approval was expected, as an FDA advisory committee had voted unanimously last month in favor of allowing over-the-counter sales of Narcan.
Emergent expects Narcan to be available for sale at retailers, in stores and online, by “late summer.” The company must first implement manufacturing changes to support nonprescription packaging and supply chain changes.
Meanwhile, the prescription product, which was launched in 2016, will remain available at pharmacies.
“Today’s landmark FDA OTC approval for Narcan Nasal Spray marks a historic milestone as we have delivered on our commitment to make this important emergency treatment widely accessible, given the alarming rates of opioid overdoses occurring across the country,” said Chief Executive Officer Robert Kramer.
Emergent’s stock has run up 21.1% amid a five-day winning streak, but that streak kicked off only after it closed at a 15-year low of $7.79 on March 22. It was trading about 36% below where it closed on Feb. 16, when the FDA advisory committee recommended approval.
JPMorgan analyst Jessica Fye had recently recommended investors sell the stock — she cut her rating to underweight from neutral on March 17 — as profitability remains under pressure following a string of disappointing financial updates, and as there is still no resolution on the debt overhang.
Emergent has said since its quarterly filing in November 2022 that “there is substantial doubt about the company’s ability to continue as a going concern within one year after the date that the financial statements are issued.”
According to Emergent’s 2022 annual report, the company had total borrowings of $1.41 billion as of Dec. 31, and working capital of negative $19.2 million. Meanwhile, 2022 sales had dropped 57.7% from a year ago to $966.2 million and the company swung to a net loss of $223.8 million from net income of $230.9 million.
JPMorgan’s Fye said that while Narcan remained a bright spot for the company, given resilience amid generic competition, the company’s 2023 outlook shows continued sales erosion.
“While we expect the outlook to improve in 2024+, we also see the stock as a show-me that is likely to underperform our coverage universe this year,” Fye wrote in a recent note to clients.
Emergent’s stock has shed 20.2% year-to-date and 78.6% over the past 12 months, while the S&P 500 index
SPX,
has gained 4.5% this year and declined 13.4% the past year.
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