Lannett Company (LCI) Stock: Climbing On New Agreement

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Lannett Company, Inc. (NYSE: LCI) is flying early on in the trading session this morning, and for good reason. The company announced that it has entred into a new agreement surrounding Levothyroxine Sodium. The agreement comes with a strong upfront payment, leading to an improved balance sheet. Today, we’ll talk about:

  • The agreement;
  • what we’re seeing from LCI stock as a result; and
  • what we’ll be watching for ahead.

LCI Announces Agreement

As mentioned above, Lannet Company is seeing strong gains in the market this morning after announcing a new agreement. In a press release issued early this morning, the company said that it has entered into an agreement with Amneal Pharmaceuticals. The agreement is centered around the company’s Levothyroxine Sodium Tablets.

According to the terms of the agreement, Amneal will be the sole customer of LCI for Levothyroxine Sodium starting on December 1, 2018 and running trhough March 23, 2019. Amneal will be purchasing the product from the company and reselling it to its customers. As part of the agreement, LCI will receive an upfrnt payment of $50 million. However, other terms of the transaction were not disclosed.

In the release, the company reminded investors that its distribution agreement with Jerome Stevens Pharmaceuticals, also includeing Levothyroxine Sodium Tablets, will expire on March 23, 2019 and will not be renewed. Nonetheless, the agreement signed with Amneal gives the company the ability to continue to see revenue under this agreement for the remainder of its term. Also, the company said that it will continued to distribute the two other products under the agreement with JSP through March 23, 2019.

In a statement, Tim Crew, CEO at LCI, had the following to offer:

This agreement benefits all parties, including and importantly patients and customers who can be assured of a definitive transition and supply plan for this important medication… For Lannett, this transaction guarantees $50 million of gross profit, which exceeded our previous projections for the 16 week period.

What We’re Seeing From The Stock 

One of the first lessons that we learn when we start to work in the market is that it’s important to keep a close eye on the news. After all, the news moves the market. In the case of Lannett Company, the news proved to be overwhelmingly positive. After all, the new agreement will lead to an immediate injection of $50 million in funding into the company. While further details of the agreement were not disclosed, it will also likely lead to revenue growth for the company. So, it comes as no surprise to see that excited investors are pushing the stock on a run for the top in the market this morning. At the moment (7:57), LCI is trading at $6.16 per share after a gain of $0.80 per share or 14.93% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on LCI. In particular, we’re interested in following the story surrounding the company’s newly minted agreement with Amneal Pharmaceuticals and the revenue that is generated through the agreement. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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