FDA Restricts Sale Of Bayer's Essure Birth Control Device

The FDA issued an order to restrict the sale and distribution of Bayer AG (DE:BAYGN)'s (OTC:BAYRY) implanted birth control device, Essure. The move comes two years after the agency put a warning label on the product.

Over a year, shares of Bayer have increased 4% compared with the industry’s gain of 6.4%.

The FDA is issuing a restriction on sales of the permanent contraception device Essure to ensure that women considering its use have all available information about its risks and benefits.

Per the FDA, the move will restrict the sale of Essure to doctors and health-care facilities that provide a specific patient brochure mentioning the risks of the device which include perforation of the uterus and fallopian tubes, migration of the device to other parts of the body, pain and allergic reactions.

A patient brochure, titled “Patient-Doctor Discussion Checklist – Acceptance of Risk and Informed Decision Acknowledgement,” must be reviewed with the prospective patient by the health care provider to ensure that patients understand the risks, benefits and have access to all other information about Essure implantation. The FDA stated that patients undergoing the process and the physician implanting the device must sign it.

The agency stated that Bayer is required to ensure health-care provider compliance, and said it will take action such as criminal and civil penalties if anyone fails to comply.

The FDA ordered Bayer to conduct a post-marketing study in February 2016 to provide a better idea of Essure's safety profile, and in November of that year directed the company to add a boxed warning — its strongest — on the product label warning of safety issues. Since then the drug suffered about a 70% decline in the sales in the United States. However, the FDA found out that some women still are not receiving information about the known risks of Essure before implantation.

Separately, there are reports stating that the U.S. Justice Department will allow the Bayer to acquire Monsanto (NYSE:MON) in a $66 billion deal.

The combined business is expected to boost Bayer’s Crop Science business and provide accretion to its core earnings from the first full year of the closing of the transaction, followed by double-digit percentage growth.

European Union antitrust regulators approved the deal in March 2018. China, Brazil and Australia have also approved the proposed merger.

Bayer refused to comment on the report but said in a statement that it still anticipates to close the Monsanto purchase in the second quarter of 2018. Shares of Monsanto surged by more than 6% on the news.

Zacks Rank and Stocks to Consider

Bayer carries a Zacks Rank #4 (Sell).

A few better-ranked stocks from the same space are Ligand Pharmaceuticals (NASDAQ:LGND) and Regeneron Pharmaceuticals (NASDAQ:REGN) . While Ligand sports a Zacks Rank #1 (Strong Buy), Regeneron carries a Zacks Rank#2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates have moved up $3.78 to $4.20 from $4.75 to $5.32 for 2018 and 2019, respectively, over the last 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters, with an average beat of 24.88%. The company’s shares have rallied 50.2% over a year.

Regeneron’s earnings per share estimates have moved up from $18.67 to $18.68 for 2018 in the last 30 days. The company pulled off a positive earnings surprise in three of the last four quarters, with an average beat of 9.15%.

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