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Why Lannett Shares Are Jumping Today

By Keith Speights – Jul 16, 2020 at 12:14PM

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Investors responded enthusiastically to the company's new generic distribution deal.

What happened

Shares of Lannett Company (LCI -2.79%) were jumping 12.1% higher as of 11:35 a.m. EDT on Thursday. The nice gain came after the drugmaker announced a deal to distribute Cediprof's levothyroxine sodium tablets.

So what

Lannett stated that it plans to start distributing Cediprof's generic drug in the U.S. market on Aug. 3, 2020. It's an interim agreement, though, which ends on July 31, 2022. At that point, a 10-year supply and distribution agreement between the two companies takes effect.

Pills forming shape of a dollar sign

Image source: Getty Images.

How big is this distribution deal for Lannett? U.S. sales of the hypothyroidism drug, sold under the brand names Levoxyl and Synthroid, totaled around $2.3 billion during the 12-month period ending in May 2020, based on market data compiled by IQVIA. Sales of the generic version will be lower, but levothyroxine sodium should still boost Lannett's revenue by a significant amount.

The agreement with Cediprof provided much-needed good news for Lannett. Earlier this week, the company announced staff cuts of around 8.5% of its total workforce. The pharmaceutical stock was down more than 40% year to date prior to today's gain.

Now what

Lannett hopes to increase its revenue through new product launches. Today's announcement will help the company achieve this goal. Lannett also expects to file for approval of a generic version of respiratory drug Advair Diskus later this year.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lannett Company, Inc. Stock Quote
Lannett Company, Inc.
$0.45 (-2.79%) $0.01
GSK Stock Quote
$29.43 (0.24%) $0.07
IQVIA Holdings Stock Quote
IQVIA Holdings
$181.14 (-0.26%) $0.47

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