M&A

On a deal spree, Mallinckrodt bags Sucampo and two late-stage rare disease drugs for $1.2B

The biotech year is ending with a light bang on the M&A front.

Suffering from a rep based more on exploiting markets than developing new drugs, Mallinckrodt $MNK is beefing up its pipeline of rare disease drugs with the $1.2 billion buyout of Sucampo $SCMP. The deal delivers one marketed drug — Amitiza (lubiprostone) for constipation — as well as two experimental ones, both in late-stage development.

The deal represents only a 6% premium over Sucampo’s pre-Christmas height. But Sucampo’s stock has been headed straight north for the past 5 weeks, on little hard news.

Mallinckrodt, which quit PhRMA earlier this year just before the group imposed a set of standards on R&D spending, is paying $18 a share and covering debt obligations at Sucampo. The deal follows two other acquisitions in recent months, reserving $425 million for InfaCare and $117 million for Ocera.

Notably, Mallinckrodt gains a late-stage drug for Niemann-Pick type C disease which Sucampo bagged in its $200 million acquisition of Vtesse early this year.

The drug — VTS-270 — is a unique mixture of 2-hydroxypropyl-ß- cyclodextrins (HPßCD), which registered positive data from a tiny study with 14 patients. Delivered in the spinal column every two weeks for 18 months, the symptoms of 7 of 14 patients improved, with some regaining an ability to speak as researchers tracked scores on gait, cognition and speech.

In the event that Mallinckrodt can gain an approval for this drug, the company would qualify for a priority review voucher probably worth around $125 million to $130 million.

Their other pipeline drug is CPP-1X/sulindac, in Phase III development for Familial Adenomatous Polyposis (FAP) under a collaborative agreement between Cancer Prevention Pharmaceuticals and Sucampo.

Mallinckrodt agreed to pay a $100 million fine to resolve a probe of the long, rather sordid history behind Acthar, an infantile spasm drug which cost $28,000 a vial when Mallinckrodt picked it up in the $5.6 billion acquisition of Questcor. Questcor had been jacking up the price on Acthar when it paid Novartis $135 million to gain US rights to a therapy that posed a direct threat to its drug franchise. And Mallinckrodt was forced to pay the fine for illegally maintaining a drug monopoly — not the kind of sanction PhRMA likes to see for members.


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