Sucampo, Takeda Working To Create Value With New Indication For Amitiza

Sucampo Pharmaceuticals (NASDAQ: SCMP) and marketing partner Takeda, announced the filing of a supplemental NDA (sNDA) for Amitiza for the treatment of opioid induced constipation (OIC) in patients with chronic, non-cancer pain.  Amitiza is already approved for chronic constipation (CIC) and constipation-predominant irritable bowel syndrome (IBS-C) in women over 18. This new OIC indication has significant potential, as there are millions of patients in the U.S. taking opioid narcotics for chronic pain, and therefore a high number of those suffering from OIC. Recently, the company announced that after losing its lawsuit against Takeda for allegedly underperforming on the marketing of Amitiza, it would now work together with its partner to promote the brand.

Sales of Amitiza have shown strong growth over the past couple of quarters, as visibility in the IBS segment is increasing with companies like Ironwood Labs (NASDAQ: IRWD) developing new treatments. Sales of treatments for IBS, CIC, and OIC are expected to rise on the whole, as more products are introduced and marketed in this underpenetrated treatment segment.

Amitiza is tracking at about $250 million annually, and with a royalty rate from Takeda in the high teens, SCMP trades at just over 3x revenues (less than 3x factoring in net cash). Amitiza prescriptions are growing, suggesting that the product is now getting Takeda’s full attention and that the effort is paying off. Additionally, Amitiza was just approved in Japan and when international partner Abbott (NYSE:ABT) begins to market the product in that territory, Amitiza royalties to SCMP will continue to grow. Typically, royalty streams with growth are valued at 5x revenues, so SCMP should be trading with a valuation of more than $300 million, or over $7 per share ($8 including net cash). News of the two Amitiza partners working together on the OIC indication is favorable; SCMP shares are likely to begin trading up from current levels.