What happened
Shares of Mallinckrodt (MNK) closed up 12% on Monday while Endo International (ENDP) jumped almost 13%, without either company releasing any news.
It could just be a coincidence, but it seems likely that investors have more confidence that the opioid lawsuits that both companies face will be settled sooner rather than later.
So what
A decision in an opioid lawsuit between Johnson & Johnson (JNJ -0.91%) and the State of Oklahoma is expected in the coming weeks, so opioid companies have an incentive to settle their cases rather than let the Johnson & Johnson ruling set the bar for what others might have to pay.
Earlier this month, Bloomberg reported that drug distributors McKesson (MCK -0.80%), Cardinal Health (CAH -1.75%), and AmerisourceBergen (COR -1.30%) were in talks with a group of state attorneys general to settle their lawsuits. The companies reportedly wanted to pay $10 billion and the states wanted $45 billion, which seems like a fairly large gap to find a compromise.
Image source: Getty Images.
Now what
While a settlement would be great news for Mallinckrodt and Endo International -- assuming it didn't send either company into bankruptcy -- without any additional information, it's hard to see why now is a good time to invest in the companies. Mallinckrodt hasn't been able to spin off its specialty generics business, and Endo International continues to struggle, with second-quarter revenue down 2% year over year.
