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Valeant's (VRX) NDA for Bowel Cleansing Drug Accepted by FDA

Valeant Pharmaceuticals International, Inc.'s VRX wholly owned subsidiary, Salix Pharmaceuticals, announced that the FDA has accepted its New Drug Application for Plenvu (NER1006).

A low volume (1L) polyethylene glycol-based bowel preparation, Plenvu, has been developed for whole bowel cleansing, with added focus on the ascending colon. This, in turn, is expected to enhance bowel cleansing and the overall experience relating to colonoscopy.

We note that Salix licensed the drug from Norgine in Aug 2016. The drug, upon approval, will offer the lowest solution for an FDA-approved bowel cleanser in the market. The drug will have an edge over high preparation volumes which sometimes can be a deterrent in patients completing their regimen.

In Apr 2015, Valeant acquired erstwhile Salix, a specialty pharmaceutical company with a portfolio of over 20 marketed products, including Xifaxan, Uceris, Apriso, Glumetza and Relistor to expand in gastrointestinal market.

Shares of Valeant Pharma have underperformed the Zacks classified Medical-Drugs industry in the last one year. The stock lost 14.8% against the industry’s 8.2% gain.

The approval of new drugs should boost Valeant’s top line. The company has been caught up in various controversies due to price hike of specialty drugs, erroneous financial reporting and termination of contracts with Philidor Rx Services. Valeant started a rebuilding process with its new CEO, Joseph C. Papa in 2016. Even though it is still early to comment on the rebuilding process but the company’s efforts to sell non-core assets and pay down huge levels of debt is commendable and should bode well in the upcoming quarters. The dermatology business saw some positive trends as the average selling price stabilized. The GI business continues to struggle with weak sales of Xifaxan but should see gain in market share with an increased sales force.

Zacks Rank and Stocks to Consider

Valeant Pharma carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the health care sector include VIVUS, Inc. VVUS , MEI Pharma, Inc. MEIP and Sanofi SNY .

While VIVUS and MEI Pharma sport a Zacks Rank #1 (Strong Buy), Sanofi carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VIVUS’ loss per share estimates narrowed from 50 cents to 39 cents for 2017 over the last 60 days. The company delivered positive earnings surprises in the trailing four quarters, with an average beat of 233.69%.

MEI Pharma’s estimates moved up from a loss per share of 1 cent to gain per share of the same for 2017, over the last 60 days. The company posted positive earnings surprises in three of the trailing four quarters, with an average beat of 66.56%. Sanofi’s earnings per share estimates increased from $3.00 to $3.18 for 2017 over last 60 days. The company posted positive earnings surprises in three of the trailing four quarters, with an average beat of 5.10%.

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