Archive | February, 2013

Sucampo Pharmaceuticals (SCMP) a good risk/reward play

8 Feb

Sucampo Pharmaceuticals, Inc. (SCMP)

 The following research is based on a potential momentum play based on the Companies PDUFA date for Amitiza of April 26, 2013.  Sucampo Pharmaceuticals, Inc. is a global pharmaceutical company focused on the discovery, development and commercialization of proprietary drugs based on prostones. Prostones are a class of compounds that occur naturally in the human body as a result of enzymatic catalysis by 15-PGDH of eicosanoids and docosanoids.

 About Amitiza:  from the Companies website: (http://investor.sucampo.com/phoenix.zhtml?c=201197&p=irol-presentations)

  • Amitiza has been used for over 6 years with 6 million prescriptions by patients with chronic idiopathic constipation and irritable bowel syndrome with constipation
  • Priority review in the US (although FDA extended review by 3 months) with target filing in the UK and Switzerland in Q1 2013 as sNDA for treatment of Opioid-Induced Constipation
  • Pregnancy warnings have been removed from labeling
  • Good safety data and product efficacy

 Product pipeline

scmp pipeline

Key catalysts

scmp value drivers 

Financial info

From Sep 29, 2012 SEC filing:

  • Cash $ 78.6M
  • Total assets $ 121.1M
  • L-T debt $ 61.2M
  • Looks to be in solid cash position; should be able to last through potential approval without further dilution, i.e. stock offering(s)

From quote summary Yahoo! Finance 2/8/13

  • Market cap $ 219.6M
  • Shares o/s 41.59M, float 13.34M
  • P/E n/a
  • Average analyst target $ 8.00

Stock data

scmp chart 

 

While the chart above is not the most impressive chart, the stock has been trending sideways with a slight bias to the upside.  As you can see from the trendline drawn there should be a nice floor for the stock around 5.06-5.08.  What I would like to see is a break at 5.50 on greater than average volume.  Once that happens we could see a run back to the 6.00 area before the PDUFA date.  I think this will start to see increased volume in the next couple of weeks once people roll out of other plays and see the potential in this one.  I think there is a greater than 60% probability that this will be approved based on prior use of the drug, the safety and efficacy.  Coupled with possible European filings there are enough catalysts to create nice potential for a 20-25% gain.  There is a nice risk reward on this with IMO.  Set your stop a little below 5 and look to sell around 6.

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Disclosure:  currently long SCMP

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