Sucampo Pays $200 Million Upfront for Rare Disease Biotech Vtesse

Published: Apr 03, 2017

Troubled Sucampo Pays $200 Million Upfront for Rare Disease Biotech Vtesse April 3, 2017
By Mark Terry, Breaking News Staff

Rockville, Md.-based Sucampo Pharmaceuticals has acquired privately-held Gaithersburg, Md.-based Vtesse. Jefferies LLC served as financial advisor to Sucampo and Leerink Partners served as financial advisor to Vtesse; Cooley LLP served as legal advisor to Sucampo, and Wilmer Cutler Pickering Hale and Dorr LLP served as legal advisor to Vtesse.

Sucampo will pay an upfront fee of $200 million. It funded the buyout by issuing 2,782,678 shares of Sucampo Class A common stock and $170 million in cash. In addition, Sucampo has agreed to pay Vtesse shareholders contingent consideration based on mid-single digit to double-digit royalties on global net sales of the product based on increasing net sales levels, as well as a share of net proceeds that might be created from the monetization of the pediatric review voucher.

The pediatric review voucher is expected to be granted by the U.S. Food and Drug Administration (FDA) when the product is approved in the U.S.

In addition to the company, Sucampo picks up VTS-270, currently in a pivotal study to treat Niemann-Pick Disease Type C1 (NPC-1). NPC-1 is a rare genetic disease in which sphingomyelin accumulates in lysosomes in cells. Symptoms are generally related to organs where sphingomyelin accumulates, so there is usually enlarged liver and spleen, reduced appetite, abdominal distension, and pain. Enlarged spleen may cause low platelet levels.

The incidence of NPC-1 is from 1 in 100,000 to 1 in 150,000 live births, with about 2,000 to 3,000 cases worldwide. The disease typically results in early death. There are no approved treatments.

VTS-270 is a mixture of 2-hydroxypropyl-beta-cyclodextrins. It is administered via intrathecal infusion (into the spinal theca) to respond to neurological manifestations. Early studies of the drug indicate it may slow or stop some of the NPC-1 indicators. It has been granted breakthrough therapy designation in the U.S. and orphan designation in both the U.S. and Europe.

“We are extremely pleased to announce the acquisition of Vtesse,” said Peter Greenleaf, chairman and chief executive officer of Sucampo, in a statement. “Sucampo brings significant capabilities to Vtesse and its program, and we believe that this acquisition not only has the potential to make an important difference in the lives of patients, their families, and the dedicated physicians who care for them, but also to create value for shareholders. We welcome the employees of Vtesse to our team and look forward to accelerating the global development of VTS-270 in the hopes of bringing this novel treatment to patients afflicted by Niemann-Pick Disease Type C1 in the U.S. and around the globe.”

Sucampo says it expects Vtesse employees to join the company. The two companies also plan to create a foundation to support research related to NPC disease. Vtesse’s equity holders have agreed to set aside some of the transaction proceeds to contribute to the foundation. Sucampo plans to match the Vetesse shareholder contribution.

“At the time of Vtesse’s launch in January 2015, Vtesse’s original investors recognized the imperative of driving VTS-270 rapidly through clinical development to secure the data for regulatory approvals and to deliver the drug candidate to the NPC-1 community,” said David Mott, general partner, NEA, and Vtesse board chairman, in a statement. “Sucampo is a global partner that is fully behind the original mission of Vtesse and its investment group. We’re very proud to join their shareholders in establishing a foundation that will support further research of and awareness-building for NPC disease.”

Sucampo Pharmaceuticals is currently trading for $10.48.

Results from the Phase IIb/III pivotal trial are expected in mid-2018.

In the summer of 2016, Sucampo closed development of its lead compound, cobiprostone, after a midstage trial showed no clinical benefit in oral mucositis. The company has a market cap of about $500 million. It has a product, Amitiza (lubiprostone), for constipation. The company projects sales of $500 million by 2020.

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