The FDA uploaded the Halol Warning Letter (WL) on its website, detailing various observations (i.e. cGMP deviations) cited during the Sep’14 inspection, Sun’s response and the FDA’s view on Sun’s remediation efforts (for a range of observations). We have limited information about the details of the Halol issues.
However, based on a plain reading of the WL, we believe that theFDA has not cited data integrity issues; no new issues (other than those in 483) have been raised by the FDA;and no corporate-wide issues have been cited (i.e., limited to Halol site).
Therefore, we continue to believe that an Import Alert is unlikely at Halol.
The FDA has mentioned that it has reviewed Sun’s Oct’ 14 response (remediation plan) in detail, plus it has acknowledged subsequent additional correspondence (until May’15). However, it has cited several examples to indicateinadequateresponse/execution of the remediation plan.
We are equalweight on Sun in view of slower earnings ramp up,FDA uncertainty over Halol and fair valuations.
