|Endo's vaginal mesh implants--Courtesy of Endo|
Facing billions in lawsuits related to its vaginal mesh implants for pelvic organ prolapse, Endo International ($ENDP) announced that it will close its Astora Women's Health device unit. Investors were unhappy that its efforts to find a suitor for the troubled division failed, and pushed the stock down 21% on the announcement.
The company said that it did receive formal bids for Astora, but "by shutting down the business as opposed to selling it, we are able to reduce the potential for product liability related to future mesh implants, which would have not been achievable in the event of a sale of the Astora business," said CFO Suketu Upadhyay during the company's earnings call.
Endo paid $150 million in legal settlements related to its vaginal mesh in Q4. And more payments are on the way. The company recorded a $834 million pretax charge to increase the estimated product liability accrual. It had already set aside $1.4 billion to cover the legal costs at the end of the previous quarter, according to the Philadelphia Business Journal.
In response to mounting concerns about side effects, the FDA last month said it will require vaginal mesh implants to file a PMA application, and warned of several cases of severe pelvic pain, pain during intercourse, infection, bleeding, organ perforation and urinary problems from mesh eroding into surrounding tissues. Currently marketed implants must submit a PMA as well. They were initially cleared via the far less stringent 510(k) pathway.
The adverse events are not limited to Endo's vaginal mesh; Boston Scientific ($BSX) is also laboring under the strain of net litigation charges that topped $1 billion 2015, with vaginal mesh implants responsible for a good portion of that number.
Endo last year sold the men's health portion of its American Medical Systems device unit to Boston Scientific for $1.6 billion, and renamed the remaining portion Astora Women's Health. It acquired AMS for $2.9 billion in 2011.
The closure of Astora leaves the specialty pharma company with minimal exposure to devices. Endo operates South African company Litha Medical, which sells a variety of devices (and drugs) in its local market, according to the company website.
Astora also makes mesh implants to treat stress urinary incontinence, which are not the subject of the increased FDA regulation. And the company's CE-marked mesh implant for fecal incontinence recently won the backing of an FDA advisory panel, making U.S. approval likely.
The fate of the implant in light of the closure of Astora is not yet clear.
- read more in the Philadelphia Business Journal