U.S. Markets closed

Questcor will pay at least $135M for Novartis drug

NEW YORK (AP) -- Questcor Pharmaceuticals Inc. said Tuesday it will pay at least $135 million to buy an autoimmune and inflammatory disease drug made by Novartis AG, sending its shares surging in morning trading.

Questcor said it will pay $60 million upfront for Synacthen and Synacthen Depot, which are approved in about 40 countries as a treatment for illnesses including rheumatoid diseases, ulcerative colitis, chronic skin conditions, acute exacerbations of multiple sclerosis, and nephrotic syndrome, a kidney condition. Questcor said it will make at least $75 million in additional payments over the next several years.

The drugs are not approved in the U.S., but Questcor plans to seek approval and the deal includes terms that are intended to ensure Questcor will seek approval and then market the drugs.

The Anaheim, Calif., company said the deal will expand and speed up product development work and allow it to do business in more than three dozen new international markets. Shares of Questcor jumped $8.30, or 22.6 percent, to $45.01 in morning trading.

Questcor will get the U.S. rights to the drugs immediately, and the international rights are subject to conditions the company has to meet over the next two years. The deal also calls for Questcor to make payments based on development milestones for the Synacthen products, and another milestone payment if Food and Drug Administration approves the drugs, and royalties on sales.

Questcor makes drugs for difficult-to-treat autoimmune and inflammatory disorders. It primary product is H.P. Acthar Gel, which is used to treat 19 conditions, including nephrotic syndrome, multiple sclerosis in adults, and infantile spasms. Share of Questcor plunged in September after health insurer Aetna Inc. stopped covering H.P. Acthar for most conditions and the U.S. government began investigating Questcor's promotional practices.