Endo Bonds Jump After N.Y. Opioid Settlement Heads Off Threats
(Bloomberg) -- Endo International Plc’s debt rallied on Friday after the company settled claims by New York over its opioid marketing, averting a possible $1 billion verdict and the risk it could have been stripped of its legal defenses in an ongoing trial in the state.
The pact, announced late Thursday, settles for $50 million allegations that the opioid maker’s sales and marketing efforts helped fuel a public crisis over the highly addictive painkillers. Lawyers for New York Attorney General Letitia James and two Long Island counties had accused Endo of adopting illegal tactics to turn its Opana painkiller into a blockbuster.
Endo’s bonds were among the biggest gainers in the high-yield market on Friday. Its 6% notes due 2028 climbed as much as 5.25 cents on the dollar to 69.5 cents, and its 9.5% bonds due 2027 rallied 2.875 cents to 100.125.
The company’s stock also surged, rising as much as 58.6% to $3.33, its biggest gain on record.
Endo’s decision to settle leaves four defendants in the New York trial, in which jurors may now have to weigh whether to award more than $1 billion in damages each against Teva Pharmaceutical Industries Ltd., one of its subsidiaries, ANDA Inc. and a unit of Allergan Ltd.
“Sounds like the Endo folks made a smart move in settling this case,” said Richard Ausness, a University of Kentucky law professor who follows the opioid litigation. “While $50 million is a lot of money to a smaller company like Endo, they were facing more than $1 billion in exposure.”
The pact also averts the threat Endo faced of losing its legal defenses over its failure to properly hand over files in pre-trial document exchanges. Endo ran into similar trouble over an opioid suit brought by more than 20 Tennessee counties and cities. A judge in that case entered a default against Endo over its mishandling of internal files. The company paid $35 million last month to resolve that suit.
Evidence in the New York case showed Endo executives tied bonuses to Opana sales and pushed its salesforce to downplay the medication’s addictiveness.
“Their litigation risk from the NY opioids litigation is resolved by this settlement,” said Alexandra Lahav, a law professor at the University of Connecticut. “The question is, how many more of these settlements will it need to make, and at what cost?”
The case is In Re Opioid Litigation, Index no. 40000/2017, Supreme Court of New York, Suffolk County.
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