After Mallinckrodt (MNK) experienced cracks in Acthar sales I all but left the company for dead. Last week it announced it expected up to $500 million in deferred tax benefits after President Trump's tax cuts take hold. It subsequently announced the $1.2 billion acquisition of Sucampo Pharmaceuticals (SCMP):
Mallinckrodt Plc agreed to buy Sucampo Pharmaceuticals Inc. for about $1.2 billion in cash to add a treatment for constipation and experimental medicines targeting rare diseases, helping diversify its business away from the controversial drug that makes up the largest part of its revenue.
MNK was up as much as 6% when the deal was announced on Tuesday. Since, the stock has given back those gains. Mallinckrodt needs to change the narrative from its stalling top line growth. This transaction may not be the catalyst management expected.
About Sucampo
Sucampo's primary focus lies in the treatment of gastrointestinal, ophthalmic, autoimmune, inflammatory, neurological and oncology disorders. Its primary product, Amitiza (lubiprostone), is marketed in the u.s. under collaboration with Takeda Pharmaceutical (TKPHF). Amitiza treats chronic idiopathic constipation (CIC) in adults, irritable bowel syndrome with constipation (IBS-C) in adult women and opioid-induced constipation (OIC) in adults suffering from chronic non-cancer related pain. Gastrointestinal disorders (“GI”) include irritable bowel syndrome (IBS) – a disorder of the intestine that affects 20 to 60 million people in the U.S. IBS is the most common disorder diagnosed by gastroenterologists and accounts for over 10% of visits to primary care physicians.
Sucampo's Q3 revenue of $61 million was up 6% Y/Y. EBITDA of $29 million was flat Y/Y. Its EBITDA margin was 47%, down from 49% in the year-earlier period due to higher marketing expenses. Sucampo granted Par Pharmaceuticals a non-exclusive license to market generic Amitiza in the U.S. beginning in 2021; Par will split gross profits with Sucampo. It granted Dr. Reddy's (RDY) a license to market generic Amitiza beginning in Q4 2022; Sucampo will also share in a portion of Dr. Reddy's net profits.
