When it comes to significant movements in the stock price of a pharmaceutical company, then there are very few triggers that are better than that of positive development with regards to a product in the pipeline. That is what has happened with AMRX stock this morning after Amneal Pharmaceuticals Inc (NYSE:AMRX) made a major announcement with regards to its product EluRyng.
Big Boost
The EluRyng is the first generic medicine version of NuvaRing, which is originally manufactured by Merck (NYSE:MRK). Amneal announced that the United States Food and Drug Administration has granted the product an Abbreviated New Drug Application (ANDA) approval, which, for a generic product, is a significant development.
The news sparked a lot of optimism in the market, and it was perfectly natural considering the implications of the product. AMRX stock shot up by as much as 47% to $5.12 in the morning session on the back of the news and has emerged as one of the stocks to watch for the rest of the day.
It is a particularly important development when one considers the annual sales of Merck’s NuvaRing. For the fiscal year ended on October 31, NuvaRing generated as much as $976 million in sales, and hence, it is a major milestone for Amneal Pharmaceuticals and AMRX stock.
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Acquisition of AvKARE
However, that is not all. Amneal made another major announcement about its business back on Tuesday. The company announced that it has reached an agreement to acquire AvKARE and R&S Northeast, a related associate. As per the announcement, Amneal Pharmaceuticals is going to pick up a 65.1% majority stake.
The entities have a combined value of $340 million. An unrestricted Amneal subsidiary is going to provide the financing for the purchase by way of a senior secured term loan facility totaling around $180 million. Additionally, it is going to provide $75 million in cash and a seller note worth $44 million.
Despite today’s rally, AMRX stock is still down 65% for the year.
Featured image: DepositPhotos © solarseven
