Has Akorn Put The Worst Behind It?

(RTTNews) - Shares of Akorn Inc. (AKRX) have lost nearly 78% of their value year-to-date while the iShares NASDAQ Biotechnology Index (IBB) is up 7% for the same period.

Akorn develops, manufactures and markets generic and branded prescription pharmaceuticals as well as animal and consumer health products.

2018 has been a disappointing year for Akorn from share-price point of view, thanks to the German drug giant Fresenius Kabi terminating the merger agreement with Akorn.

Last April, Fresenius had inked an agreement to acquire Akorn for US$34 per share, equivalent to a total acquisition price US$4.3 billion, plus approximately US$450 million of net debt. The acquisition was supposed to close in early 2018. But in February of this year, Akorn came under scrutiny for possible violations of FDA data integrity rules.

On February 26, 2018, Fresenius started conducting an independent investigation, using external experts, into alleged breaches of FDA data integrity requirements relating to product development at Akorn. In April of this year, the German pharmaceutical firm terminated its agreement to acquire Akorn.

With Fresenius walking away from the merger deal, jilted Akron filed a complaint in Delaware Chancery Court on April 23, 2018 asking that Fresenius be required to fulfill its obligations under the definitive merger agreement.

However, on October 1, 2018, the Delaware Chancery Court upheld Fresenius Kabi AG's decision to terminate the merger agreement. Akorn has decided to appeal the Court's ruling, and it remains to be seen if the verdict will stand or be reversed.

The Company has been experiencing year-over-year declines in revenue, EPS and operating income since the first quarter of 2017.

No doubt, Akorn has been hit by a double whammy of deteriorating financials and the derailed Fresenius/Akorn merger. But some analysts are hopeful that things may change for the better at Akorn, and have issued optimistic stock recommendations.

Recent ANDA Approval...

On October 10, the Company's Abbreviated New Drug Application for Bimatoprost Ophthalmic Solution, 0.03% was approved by the FDA. Bimatoprost ophthalmic solution, 0.03% is indicated to treat hypotrichosis of the eyelashes by increasing their growth including length, thickness and darkness.

According to IQVIA, a contract research organization, sales of Bimatoprost ophthalmic solution, 0.03% were approximately $63.5 million for the twelve months ended August 2018.

Akorn is still well below its 52-week high of $33.63. But it has gained 33% so far this month. Can the rally continue or are there any headwinds ahead for the stock? It's worth keeping an eye on AKRX.