Why This FDA Approval for Valeant Is Not as Good as First Thought

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Valeant Pharmaceuticals International Inc. (NYSE: VRX) received a key U.S. Food and Drug Administration (FDA) approval early on Thursday, but it seems to be a mixed blessing. Initially shares were higher in premarket trading, but since the opening they have slumped over 4% on the day.

The FDA approval was in relation to Siliq (brodalumab) for the treatment of plaque psoriasis in adult patients who are candidates for systemic therapy or phototherapy and have failed to respond or have lost response to other systemic therapies.

Essentially, the FDA approved the Biologics License Application (BLA) for Siliq, and Valeant expects to commence sales and marketing of Siliq in the United States in the second half of 2017.

Previously, Valeant had entered into a collaboration agreement with AstraZeneca PLC (NYSE: AZN) back in August of 2015. This collaboration granted Valeant an exclusive license to develop and commercialize Siliq globally, except in Japan and certain other Asian countries where rights are held by Kyowa Hakko Kirin.

However, with this approval comes a Black Box Warning for the risks in patients with a history of suicidal thoughts or behavior. Suicidal ideation and behavior have been reported in the trial.

The most common adverse reactions were headache, arthralgia, fatigue, oropharyngeal pain, and diarrhea. Also serious infections have occurred therefore caution should be exercised when considering the use of Siliq in patients with a chronic infection or a history of recurrent infection.

Joseph C. Papa, board chair and chief executive of Valeant, commented:

We believe SILIQ fulfills a significant unmet medical need, and I am proud of our team’s success in developing and bringing to market this treatment for patients with moderate-to-severe plaque psoriasis. We are pleased that SILIQ will soon be available to help treat the suffering of adults who live with this debilitating, incurable condition, and further our mission to improve people’s lives with our healthcare products.

Shares of Valeant were trading down 3% at $16.34 on Thursday, with a consensus analyst price target of $22.50 and a 52-week trading range of $13.00 to $95.90.

AstraZeneca was last seen at $28.80, with a 52-week range of $25.55 to $35.04 and a consensus price target of $33.87.