Mylan surges after EpiPen settlement

Mylan shares surged in pre-market trade after the company said at the end of last week that it had agreed the terms of a $465m settlement with the US Department of Justice and other government agencies over how it charged Medicaid for its allergy shot pen EpiPen.

The company said the settlement terms provide for resolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for the US Centers for Medicare and Medicaid services purposes and subject to a higher rebate formula.

The terms of the settlement did not provide for any finding of wrongdoing on the part of Mylan or any of its employees.

Chief executive officer Heather Bresch said: "This agreement is another important step in Mylan's efforts to move forward and bring resolution to all EpiPen Auto-Injector related matters. The agreement is in addition to the significant steps Mylan has taken in relation to EpiPen Auto-Injector over the past several weeks, including the unprecedented, pending launch of a generic version of EpiPen Auto-Injector and expansion of our patient access programs for this product.

“Entering into this settlement is the right course of action at this time for the company, its stakeholders and the Medicaid program."

Also on Friday, Mylan updated its earnings guidance, saying it now expects full-year 2016 adjusted diluted earnings per share of between $4.70 and $4.90, down from previous guidance of $4.85 to $5.15.

It said this was mostly the result of the previously announced changes in EpiPen Auto-Injector access programmes and the upcoming launch of the generic to EpiPen Auto-Injector.

The company said it remains committed to its target of at least $6.00 in adjusted EPS in 2018.

Ina note written on Friday after the news, RBC Capital Markets said the lowered guidance was not a surprise, adding that it expected the shares to bounce back on Monday given the removal of the DoJ overhang. However, it said that 2017 profit and loss uncertainty will linger.

At 1255 BST, Mylan shares were up 13% to $40.78 in pre-market trade.