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Empire Analyst: Sell Sucampo Pharma, It Has 50% Downside

by
January 12, 2016 10:45 am
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  • Amid volatility, Sucampo Pharmaceuticals, Inc. (NASDAQ: SCMP) shares have declined 21 percent over the past six months.
  • Empire’s Dr. Cathy Reese initiating coverage of the company with a Sell rating and a price target of $7.
  • The company has only one FDA approved drug, which could witness increased competition going ahead, Reese stated.

Sucampo Pharma markets Amitiza [lubiprostone], which is a twice-daily oral drug for chronic idiopathic constipation [CIC], irritable bowel syndrome with constipation [IBS-C] and opioid-induced constipation [OIC]. The drug received FDA approval and become available in January 2006.

“The company’s pipeline that includes Amitiza’s life cycle management programs are in early development or addressing what we perceive as minimal markets,” analyst Cathy Reese wrote.

Amitiza currently has two competitors:

  1. Linzess – marketed by Allergan plc Ordinary Shares (NYSE: AGN) and Ironwood Pharmaceuticals, Inc. (NASDAQ: IRWD)
  2. Movantik – marketed by AstraZeneca plc (ADR) (NYSE: AZN) and DAIICHI SANKYO COM SPON ADR EA REPR 1 ORD (OTCMKTS: DSNKY)

Amitiza could witness an increase in competition, from:

  1. Relistor – expected to be approved in April 2016 – by Valeant Pharmaceuticals Intl Inc (NYSE: VRX) and Progenics Pharmaceuticals, Inc. (NASDAQ: PGNX)
  2. Plecanatide – expected to be approved in early 2017 – by Synergy Pharmaceuticals Inc (NASDAQ: SGYP)
  3. Naldemedine – filing expected in early 2016 – by Shionogi & Co., Ltd. (OTCMKTS: SGIOY)

“Additionally, a branded generic Amitiza from Par’s Anchen should enter the market in 2021, if not sooner. A recent effect of increased competition for Amitiza is its loss of Tier-2 CVS/Caremark formulary status to Movantik starting January 2016. About 60% of Amitiza’s Caremark volume is Medicare Part D that SCMP has contracted through 2016, but we believe the loss of this Tier-2 status could trigger Amitiza pricing weakness in the future,” Reese added.

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