Biotech Analysis Central Pharma News: Agile CRL, Roche's Purchase, Mallinckrodt's Major Buy

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Includes: AGRX, MNK, RHHBY
by: Terry Chrisomalis
Summary

Agile Therapeutics receives Complete response letter for Twirla.

Roche Acquires Ignyta Inc. to add new cancer drugs to its pipeline.

Mallinckrodt buys Sucampo to add rare diseases to its pipeline.

Welcome to Biotech Analysis Central Daily News, a daily news report and analysis about what has happened lately in the biotech industry.

Agile Therapeutics Receives CRL For Twirla

News: Recently, Agile Therapeutics (AGRX) received a complete response letter (CRL) for its contraceptive patch Twirla (formerly known as AG200-15). The FDA issued the CRL based on the resubmission of the New Drug Application (NDA) for Twirla. A complete response letter means that the FDA has rejected the application. There were a few items noted why the FDA rejected the NDA for Twirla. For starters, the CRL identified a problem relating to the quality adhesion test methods provided. Secondly, the CRL noted a problem with an inspection at a third-party manufacturer known as Corium International Incorporated. The final item that was reported to be an issue in the CRL was the in vivo adhesion properties of Twirla and its relationship with respect to the phase 3 SECURE trial results.

Analysis: I believe that many investors have a shot to get into the company now, and benefit at least one year from now. That's because a majority of the issues identified in the CRL had already been sent to to the FDA to satisfy questions raised in the CRL. The one issue about the quality adhesion tests was submitted by Agile as an amendment. In addition, the response about Corium addressing each of the issues raised on the FDA's inspection of the facility were also already addressed. That means that all Agile has to do now is add both of these amendments as a response to the CRL issues. Finally, it just needs to take care of the third issue relating to the phase 3 SECURE trial results and how it relates to the in vivo adhesion properties. If that can be addressed, along with the two amendments already sent to the FDA, then I believe Agile should be able to receive FDA approval within a year. That gives investors a good opportunity to get in before the stock spikes upwards again heading towards approval. That's why Agile Therapeutics is a good buy, especially after the tumble due to its CRL.

Roche Acquires Ignyta Inc. In $1.7 Billion Deal

News: Recently, Roche (OTCQX:RHHBY) made a deal to purchase Ignyta Inc. (RXDX) for $27 per share or $1.7 billion. The reason for Roche acquiring the company is because of its pipeline in targeting cancers with specific genetic mutations. The deal is expected to be completed by the first half of 2018.

Analysis: This deal was a good one for both Roche and Ignyta Incorporated. That's because Roche gets a big pipeline of cancer drugs that go after genetic mutations. Why is that a good thing? That's because focused specialized treatment for cancer means better treatment rates, and limited competitors. It also gives Roche a chance to expand upon its cancer pipeline, which is already massive to begin with. Some popular cancer drugs from Roche are Avastin and Tarceva. Most importantly, this is only the beginning for Roche. That's because it stated that it will be making more of these small acquisitions to boost its pipeline. That means there are probably more acquisitions on the way. The deal is good for Ignyta, because it got bought out at a 74% premium of its closing price on December 21, 2017. It is highly likely that Roche will make more acquisitions on other cancer drug makers in the coming year. Roche remains a good buy.

Mallinckrodt Buys Sucampo For $1.2 Billion

News: Recently, Mallinckrodt (MNK) paid $1.2 billion to buy Sucampo (SCMP). This deals has allowed Mallinckrodt to obtain one already FDA approved drug, and two others in late-stage studies. The funding of the acquisition is made possible thanks to a revolving credit facility, a new secured term loan facility and cash on hand. The deal is expected to close sometime around the first quarter of 2018.

Analysis: This buyout is good for Mallinckrodt because it obtains an already FDA approved drug, Amitiza, which treats patients with constipation. On top of that it also adds two late-stage drugs to the pipeline. These two indications are rare disease candidates known as Niemann-Pick Type C and Familial Adenomatous Polyposis. The good part about these additions is that they may provide more potential revenue for the company, should these products reach the market. Both products combined are expected to earn up to $450 million in revenue for the company. That is on top of the $250 million expected to be earned from Amitiza sales in 2018. While Mallinckrodt won't earn the money spent on the acquisition right away, it should make it back over time. The downside with this deal was that Sucampo only obtained a 6% premium over its closing price before the Christmas Holiday. Mallinckrodt is heading in the right direction when it comes to these acquisitions, but it will likely need to do more to help itself from all the other problems that it has faced. Like the Acthar gel lawsuit in October, and a settlement with the justice department as well. The company's stock has been falling the past few years. Despite the recent buy of Sucampo, it is best to steer clear of this name for the time being until it gets a handle on its pipeline.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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