Why Did Sucampo Pharma Shares Just Get Upgraded To Buy?

Sucampo Pharmaceuticals, Inc. SCMP announced the failure of its Phase IIa trial of cobiprostone in patients with refractory non-erosive reflux disease [NERD]. Mizuho’s Irina R. Koffler upgraded the rating for the company from Neutral to Buy, while maintaining the price target at $14, saying that the negative catalyst had occurred and the risk/reward is “more attractive from here.”

Negative Catalyst Out Of The Way

The Phase IIa study for cobiprostone in NERD did not meet its primary endpoint, which was to achieve a reduction in patients reporting heartburn symptoms. “We never had expectations for this oral spray and did not model revenue tied to this drug,” analyst Irina Koffler wrote.

“Management plans to terminate work in NERD but has one more ongoing study of cobiprostone for the treatment of oral mucositis,” Koffler mentioned. She added that the company plans to report data from a futility analysis of the ongoing Phase IIa oral mucositis trial in the back half of this year, and may choose to halt the trial at that time.

“We model no revenue for this pipeline program either,” the Mizuho report noted.

Other Opportunities

Koffler expressed optimism regarding Sucampo Pharma’s refractory GERD program, the Phase IIb data of which was expected in 2017. She added, “We also expect results from a futility analysis of the Phase III trial of CPP-1X/Sulindac in familial adenomatous polyposis (FAP) in 2H:16 and assign a 30% probability of success to this program.”