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Questcor up 25 Percent on Drug Acquisition

Biotech company Questcor (NASDAQ: QCOR) is up 25 percent after the company announced that it was purchasing the rights to autoimmune drug, Synacthen from Novartis (NYSE: NVS)

You would expect the circumstances to be reversed. Normally, a company like Novartis with a $196.4 billion market cap would purchase a drug from Questcor, a company with a $2 billion market cap. This time it’s different.

Questcor will pay at least $135 million to buy Synacthen, a drug used to treat autoimmune and inflammatory diseases. The company will pay $60 million upfront for Synacthen and Synacthen Depot, drugs that are approved in about 40 countries. It will also make at least $75 million in additional payments over the next several years, according to the Associated Press.

One country where it isn’t approved is the United States and that’s the focus of the acquisition. Not only does this drug open Questcor up to more international markets but it will focus on gaining FDA approval for the drug since it acquired all the rights for the U.S. market.

If the company is successful, it will pay Novartis royalties on sales along with a one-time payment for the approval.

Questcor makes drugs for difficult-to-treat conditions including nephritic syndrome and infantile spasms.

Disclosure: At the time of this writing, Tim Parker had no position in the above named stocks.

[stock-tools exchange="NASDAQ" symbol="QCOR" image_height="180" image_width="300"]

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