A Slowdown at Endo

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When your company is regulated by a government agency, you have to work on the government's timeline -- even if millions of dollars are at stake. On Friday, Endo Pharmaceuticals (Nasdaq: ENDP) received word from the FDA that it was extending the review period for its supplemental New Drug Application (sNDA) of migraine treatment Frova.

Frova's PDUFA date, May 19, was the goal for when the FDA would give the marketing thumbs up or down for the drug. In this case, the PDUFA date was extended by three months to Aug. 19, even though Endo did nothing to cause the delay, like submitting last-minute data to the agency.

Endo already markets Frova in the U.S. as a treatment for migraines, but because there are so many other competing agents on the market, sales have been light since the drug's 2001 approval. Last year, the drug brought in $41 million in sales, which represents a 7% increase over 2005. Getting this expanded label that covers not only treating migraines but also preventing menstrual migraines would make marketing the drug against its competitors much easier.

Investors shouldn't read too much into the FDA's delayed review of the Frova sNDA. There could be any number of factors external to the compound's marketing application that may be causing the slowdown in review time. The FDA has extended review periods for many companies in the past year; in the past, the extended reviews have generally not given any hint of the direction the agency is leaning on a drug's odds of getting approved.

The good news is that Endo wasn't expecting the expanded Frova label to materially affect its 2007 revenue estimates before the review delay. Therefore, this slowdown will have no material impact on its sales guidance for the year. In the long run, though, Endo needs to boost sales of Frova and its other new compounds to offset the potential for generic competition facing its pain patch Lidoderm, which accounts for the vast majority of revenue.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.