Questcor Pharmaceuticals Inc. is beefing up its pipeline.
The Anaheim-based drug maker said last week that it would spend at least $135 million to buy U.S. development and commercialization rights to drug candidates Synacthen and Synacthen Depot from Novartis AG in Switzerland.
The deal includes $60 million upfront to Novartis, with provisions of more than $75 million in milestone and other payments for Synacthen.
Synacthen and Synacthen Depot are sold in 40 countries to treat maladies such as kidney disorder nephrotic syndrome, rheumatoid diseases, and chronic skin diseases that are receptive to corticosteroids.
Questcor’s sole drug, H.P. Acthar Gel, treats nephrotic syndrome, as well as multiple sclerosis flare-ups, rheumatoid diseases and infantile spasms, a rare form of epilepsy.
Buying Synacthen “strengthens our business … through the acquisition of an additional melanocortin peptide with unique characteristics different from and complementary to Acthar,” Chief Executive Don Bailey said last week.
Synacthen “provides us with an initial international presence in over three dozen markets,” Bailey said, adding that the deal creates an opportunity to revitalize the drug internationally and “helps clarify potential for Acthar outside of the United States.”
Synacthen and Synacthen Depot are regarded by analysts as potential competitors to Acthar, particularly in the U.S. market.
Questcor brushed aside a question about potential competition.
“We acquired Synacthen with the goal of making this drug available to patients in the U.S., and we intend to dedicate significant R&D resources to that effort,” Bailey said.
The drug maker believes it’s the “right company to develop Synacthen, as we have a significant R&D effort already,” he said.
Wall Street weighed in on Questcor’s side, sending its shares up as much as 22% on June 11, when the deal was announced. They held the gain to finish last week with a market value of about $2.6 billion.
“With this smart acquisition, [Questcor] shores up any immediate concerns over a potential competitor entering the market,” said Jim Molloy, an analyst with Philadelphia-based investment bank Janney Montgomery Scott, in a research note issued after the announcement.
Molloy wrote that “that potential threat” from Synacthen has been “absorbed and eliminated” by Questcor’s action.
Investor website EvaluatePharma Vantage referred to Synacthen as “effectively a synthetic version” of Acthar, which is extracted from pigs’ pituitary glands.
Acthar and Synacthen have some similarities because they are part of the melanocortin peptide drug family.
“But they are different in some key therapeutic ways,” Bailey said. “Synacthen is a different product containing a different molecule with different pharmacology than Acthar.”
“The addition of Synacthen helps diversify our development pipeline since we believe Synacthen may provide certain benefits in specific indications that we are evaluating,” he said.
Bailey later said that it was “premature to define” a U.S. marketing strategy for Synacthen because the drug’s development program would take several years to complete if successful.
Questcor’s decision to get Synacthen had nothing to do with its troubles last fall, when its shares took a hit after Hartford, Conn.-based insurer Aetna Inc. stopped paying for Acthar for many conditions, according to Bailey.
“There is no connection here,” he said.
