Mallinckrodt Takes Out Sucampo in Surprising $1.2B Deal

Mallinckrodt, based in Staines-Upon-Thames, UK, is acquiring Rockville, Maryland-based Sucampo Pharmaceuticals for $1.2 billion.

Under the terms of the deal, Sun Acquisition Co., a subsidiary of Mallinckrodt, will buy outstanding Sucampo shares for $18 per share. This represents about a 6 percent premium over Sucampo’s share price just prior to Christmas.

Mallinckrodt picks up Sucampo’s Amitiza for chronic constipation and irritable bowel syndrome as well as two pipeline compounds. One pipeline drug is VTS-270, a mixture of 2-hydroxypropyl-beta-cyclodextrins for Niemann-Pick Type C, a fatal, rare, neurodegenerative illness. It is currently in Phase III trials. The second pipeline drug is CPP-1X/sulindac, also in Phase III trials, for familial adenomatous polyposis (FABP).

Sucampo picked up VTS-270 earlier this year when it bought Vtesse for $200 million. If approved, Mallinckrodt would qualify for a Priority Review Voucher that would likely be worth about $125 to $130 million. Priority Review Vouchers can be traded in to the U.S. Food and Drug Administration (FDA) to get earlier review of a future product, or sold to another company for its use.

CPP-1X/sulindac is being developed with Cancer Prevention Pharmaceuticals through a collaboration agreement.

Bloomberg writes, "Mallinckrodt has faced major setbacks in recent months, and is seeking to lessen its reliance on two products that together account for more than half of total sales: Acthar, a drug for autoimmune and rare diseases that has drawn controversy over its high price, and INOmax, an infant-respiratory treatment that lost a court ruling in September and could face generic versions. Mallinckrodt’s own generic-drugs business has suffered from pricing pressure, and, along with makers of opioids, the drugmaker is being probed by the government as part of an industrywide crackdown."

Acthar cost $28,000 per vial at the time Mallinckrodt bought it in the acquisition of Questcor for $5.6 billion. John Carroll, with Endpoints News, writes, "Questcor had been jacking up the price on Acthar when it paid Novartis $135 million to gain U.S. 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."

The fine was $100 million. Two years after acquiring Achthar, Mallinckrodt was charging$34,000 per vial. In a 15-year period, Acthar’s price grew 85,000 percent. In April, Mallinckrodt pulled out of the industry lobbying organization PhRMA.

This move occurred around the time PhRMA was launching a multimillion-dollar advertising campaign to improve public opinion of pharmaceutical companies. PhRMA reviewed and revised its membership rules, and Mallinckrodt pulled out, stating, "Mallinckrodt routinely evaluates its engagement in trade associations and policy organizations and has concluded that the significant financial and time commitment required as a full PhRMA member outweighs its direct policy value to us at this time, given our present size and staff footprint. We continue to subscribe to the PhRMA Code of Conduct, support many of the group’s positions and initiatives and look forward to continuing our positive working relationship with PhRMA and its members."

Mark Trudeau, Mallinckrodt’s chief executive officer and president, in a statement, said, "Mallinckrodt’s acquisition of Sucampo is the latest milestone towards our vision of becoming an innovation-driven specialty pharmaceutical growth company focused on improving outcomes for patients with severe and critical conditions. The acquisition brings near-term net sales and earnings accretion through Amitiza and bolsters our pipeline in rare diseases with VTS-270 and CPP-1X/sulindac."