Use access key #2 to skip to page content.
$4.76 -0.20 (-4.03%)
12/3/2008 4:00 PM

Sucampo Pharmaceuticals, Inc. (SCMP)

CAPS Rating:
**

An emerging pharmaceutical company focused on the discovery, development and commercialization of proprietary drugs based on prostones, a class of compounds derived from functional fatty acids that occur naturally in the human body.

View All Commentary (SCMP)

Recs

2

Avatar drugncover (60.72) Submitted: 10/04/07 10:28 PM : Underperform Start Price: $12.79 SCMP Score: 20.84

Talk about inside dealing... reading the prospectus of this company is like wading through a swamp. They hold certain rights to all their compounds in a separate company, that the CEO of this company and his wife own, and have cut deals on the molecule that screw SCMP out of upside. They have sold drugs between five different subsidiaries from Asia, to North and South America, to Germany for what looks like only tax advantage, without any regard for what is best for the company. On top of this, they retain preferred shares that essentially prevent any shareholder from having any rights in SCMP. Add on the fact that they gave themselves fat bonuses based on EXPIRED options they used to hold in the company prior to IPO, and that the bulk of the IPO shares were not new shares, but them selling shares they held in other subsidiaries they still control... the CEO and his wife (who used to be chairman of the board) are clearly just using this company as a personal bank.
On the market side, they got a huge boost to revenue because of the Zelnorm withdrawal, which helped this IPO go up after issue... but Zelnorm is back, and there are IBS drugs coming up the pipeline left and right. Their revenue will likely decline next quarter (if the monthly script data showing Zelnorm coming back into the market hold true) and their pipeline is only mediocre.
Who knows in the end, but I can't help but feel any company so clearly structured to enrich the couple who runs it can't help but take away shareholder value in the end... hence my underperform.

Report this Post Replies: 1 | Reply | Permalink

Avatar razormd (91.36) Submitted: 10/07/07 1:51 PM

Recs: 0 | Rec This

First and foremost, zelnorm is definitely NOT "back"...it is only available to patients with idiopathic constipation who have NO OTHER ALTERNATIVE...well, amitiza IS an alternative...even where available, zelnorm is now "tainted" by virtue of the FDA and physicians will be reluctant to use it if safer alternatives are available...in fact, I suspect it may ultimately completely displace zelnorm worldwide...and zelnorm alone was worth over a billion dollars in sales to Novartis...so I believe SCMP's revenues are going to skyrocket for the next several quarters...
...in terms of the stock structure, it doesn't appear to be any different than any number of other listed companies that have different classes of stock -- e.g. NYT (New York Times)
...in terms of the options -- I don't know if you're correct...but I really don't care...they can make themselves as rich as they want as long as they me rich as well...
...in the IPO 3.75 million shares were offered at $11.50...of that 625,000 were sold by R-Tech Ueno Ltd which, indeed, was founded by Ryuji Ueno...however, it is not clear to what extent he controls the company at this point...I believe he does control S&R Technology holdings which owns about 1.3 million shares of SCMP...again, however, as long as he helps make me rich as well, I don't care...in fact, I find encouraging the fact that he has such a large vested interest in the company...
..."screw SCMP out of upside"????...I don't get that...the agreement with Takeda doesn't expire for about another fifteen years...not only will they derive substantial royalties but might get up to an additional 60 million as milestones are met...also, Takeda is going to be picking up a lot of the costs of cobiprostone's further development and approvals for other indications...while true that any new patents will get assigned to Sucampo AG, SCMP still gets the revenues from their sales...and it's reasonable that Ueno wants to keep control of his patents as they appear as though might be the proverbial mother lode...but who cares as long as the SCMP is making big bucks from royalties?
...royalty revenues rose to 9.56 million in the last quarter -- up from 2.3 million the previous quarter...earnings are due in a few weeks and I wouldn't be surprised if royalties rose to 20-30 million or more... ...amitiza is proving to be a very popular drug for treating idiopathic constipation -- particularly in elderly patients...and it's also gaining popularity with patients whose popularity is constipation secondary to opioid analgesics...and if cobiprostone proves successful for the other indications they are working on -- NSAID ulcers, portal HTN, COPD, non-ETOH fatty liver disease -- who knows where royalties might go...plus SCMP has SPI-017 that is in phase I for peripheral vascular disease plus several other prostones in development...overall, I think the company looks pretty good.

Report this Post Reply

Featured Broker Partners

Sponsored Links