Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) To Be Acquired By Mallinckrodt


Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) To Be Acquired By Mallinckrodt

scmpPharmaceutical giant Mallinckrodt has indicated that it will acquire Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) Inc at a price of approximately $1.2 billion in its bid to get its hand on Amitiza, a constipation drug which generated sales of around $480 million last year, as well as a couple of experimental treatments for rare diseases. To acquire Sucampo Pharmaceuticals Mallinckrodt will buy the stock at a 6% premium based on the closing price of Friday last week. One of Mallinckrodt’s biggest drugs, Acthar, is experiencing declining sales. Shares of Sucampo Pharmaceuticals Inc rose by 5.88% to close the day at $18.00 following the news.

At the moment Acthar, which is used to treat multiple sclerosis and infantile spasms, contributes around 42% of Mallinckrodt’s revenues. In the third quarter however sales of the drug missed estimates of Wall Street by $17.9 million as they came in at $308.7 million. Wall Street now expects sales of the drug to decline even further during the fourth quarter.

Exorbitant Pricing

In the recent past Mallinckrodt has been in the spotlight over the drug’s exorbitant pricing. At the beginning of the year the drug was price at $34,000. Currently the drug has been approved for use by adults but the Food and Drug Administration is considering approved it for use by children.

Earlier in the month there were media reports indicating that Sucampo was looking for a buyer following takeover interest. Since then shares of the company have appreciated by around 14%.

According to Maxim Group’s analyst, Jason Kolbert, the value of the deal will be a disappointment to the investors in Sucampo who were in it for the long term and who were expecting the treatments in the pipeline to succeed. At the moment Sucampo is focused on developed treatments for a pair of rare genetic diseases. If successful the treatments are likely to fetch a high price since alternative treatments are hard to come by.

Natural Partner

SCMP“With the addition of its significant resources and expertise, we believe Mallinckrodt is a natural partner to accelerate the development of our rare disease assets in NPC and FAP, and to continue to provide AMITIZA for patients suffering from constipation-related disorders,”said the chairman and chief executive officer of Sucampo, Peter Greenleaf.

Funding of the deal will be financed by use of a revolving credit facility that Mallinckrodt already has as well as cash on hand and a new loan. In the transaction Mallinckrodt’s financial adviser was Deutsche bank while Sucampo’s financial adviser was Jefferies LLC.