Shares of Ocera Therapeutics (NASDAQ:OCRX) are a top performer amongst those on the NASDAQ exchange, bolstered by the news that Mallinckrodt plc (NYSE:MNK) has agreed to buy the company for $42 million in cash, or $1.52 per share.
Mallinckrodt also has agreed to pay up to $75 million more, or $2.58 per share, based upon future drug development and sales milestones being met, bringing the total acquisition price to about $117 million.
That's a big jump from the all-time low of 52 cents per share OCRX was trading at earlier this year, but well off the highs of the stock during its early public years in 2011 - 2014, when shares were as high as $68.40.
Mallinckrodt is buying itself a pipeline of treatments for orphan and serious liver diseases. The most advanced asset is OCR-002, an ammonia scavenger (rapidly eliminates ammonia from the bloodstream in a novel way) in clinical studies for treating hepatic encephalopathy, a neuropsychiatric syndrome associated with hyperammonemia, a complication of acute or chronic liver disease.
Ocera's stock was pummeled earlier this year when a mid-stage trial missed its primary endpoint.
Mallinckrodt scientists believe the trial data was more compelling when taking a deep dive into it and that trial design, not the therapy, was the reason for failure. By working with the FDA on protocol and optimizing dosing, the companies believe the results can be different to address a U.S. market they estimate to be between $5 billion and $7 billion. Up to two million Americans are at risk for hepatic encephalopathy currently.
Ocera is developing OCA-002 under orphan drug designations from the U.S. Food and Drug Administration and European Medicines Agency, in addition to an FDA Fast Track designation, programs meant to expedite and incentivize drug development for areas of unmet medical need via priority reviews, tax breaks and extra patent protection.
Shares of OCRX shot ahead from Wednesday's close at $1.00 to as high as $1.78 in Thursday morning trading. The stock is still holding strong at $1.68 for a gain of 68.5% on the day as of 2:30 p.m. Eastern.
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