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Questcor Surges on Drug Acquisition

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Shares of Questcor Pharmaceuticals, Inc. recently received a major boost when the company announced the acquisition of development and commercialization rights to Synacthen and Synacthen Depot from Novartis (NVS - Free Report) in the US and several other countries (subject to certain closing conditions). Questcor’s stock price shot up almost 15% on the news.

Synacthen and Synacthen Depot are available in more than 40 countries outside the US for autoimmune and inflammatory conditions like nephrotic syndrome, rheumatoid diseases, ulcerative colitis, chronic skin conditions responsive to corticosteroids, acute exacerbations in patients suffering from multiple sclerosis and retrobulbar neuritis. However, Synacthen and Synacthen Depot are not approved in the US.

As per the terms of the deal, Questcor has made an upfront payment of $60 million and will pay at least $75 million in addition to milestone payments over the next few years to Novartis. Novartis will be eligible to receive royalties based on net sales of Synacthen and Synacthen Depot in the US. Questcor will acquire rights in over 36 countries (ex-US) in the next couple of years, subject to certain closing conditions.

The Synacthen and Synacthen Depot acquisition will boost Questcor’s portfolio which includes H.P. Acthar Gel. Acthar Gel is approved by the FDA for as many as 19 indications including nephrotic syndrome, rheumatoid arthritis, dermatomyositis and multiple sclerosis relapses. Questcor plans to develop Synacthen in the US for indications not addressed by Acthar Gel. The company will also develop Synacthen for indications in which it has potential superiority over Acthar Gel.

The purchase of Synacthen and Synacthen Depot rights along with the acquisition of BioVectera Inc. completed earlier this year, provides Questcor an opportunity for international expansion and diversification of revenues. Moreover, FDA approval of Synacthen would consolidate Questcor’s presence in the US.

Questcor and Novartis both carry a Zacks Rank #3 (Hold). Currently, companies like Santarus, Inc. and Salix Pharmaceuticals look more attractive with a Zacks Rank #1 (Strong Buy).

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