Endo files for Chapter 11 as it looks to finish off its opioid litigation
Irish drugmaker Endo International is entering into bankruptcy as it faces the weight of serious litigation related to its involvement in the opioid epidemic in the US.
The company has filed Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of New York, with the company expected to file recognition proceedings in Canada, the UK and Australia. The company’s bankruptcy filing showed the company had assets and liabilities in the range of $1 billion to $10 billion.
This comes as attorneys general from several US states have reached a $450 million nationwide settlement. According to the Massachusetts attorney general’s office, an agreement in principle has been reached with Endo where, pending the court’s approval, Endo will provide up to $450 million to participating states and local governments as well as ban the promotion of Endo’s opioids and require Endo to turn over millions of documents related to its role in the opioid crisis and for the docs to be published in a public online archive.
The agreement seeks to resolve allegations that Endo had boosted opioid sales using deceptive marketing that downplayed the risk of addiction while overstating the benefits.
Endo makes generic and branded opioids including Percocet and Endocet, as well as Opana ER, approved in 2006 but withdrawn in 2017. The states allege that Endo had falsely promoted the benefits of Opana ER’s abuse-deterrent formulation, which did little to deter abuse.
An FDA adcomm voted 18-8 in 2017 stating that the drug’s benefits no longer outweighed the risks, as post-marketing data showed a “significant shift in the route of abuse.”
The bankruptcy move was anticipated as far back as July, as the company felt the heat from various lawsuits surrounding the opioid crisis on top of the company being $8 billion in the hole.
“By definitively addressing the more than $8 billion of debt that has burdened our balance sheet and establishing a pathway to closure with respect to the thousands of opioid-related and other lawsuits that the Company has been defending at an unsustainable cost, we will be able to move forward as a new Endo and reach our full potential,” said Endo CEO Blaise Coleman in a statement.
While Endo might be bullish about the move, the company is still facing a declining stock price $ENDP as it is well-entrenched in the penny stock zone at $.33 per share. The news today sent its price down 11% adding to an over 91% drop since January.
The company has also shelled out significant amounts in settlements this year as it has paid $65 million to escape claims in Florida, $26 million to West Virginia, $7.5 million to Louisiana and $25 million to Alabama.
Endo is the latest of several opioid manufacturers, including Purdue Pharma and Mallinckrodt, that have filed Chapter 11 filings in recent years as well as faced steep financial penalties over the opioid crisis.