Cosmo Scraps Partnership Plans After Santarus Windfall, CEO Says

Cosmo Pharmaceuticals SpA (COPN), the Italian developer of a dye to detect pre-cancerous lesions, has shelved its search for a partner and will market the product itself in the U.S. using the money it gained from the $2.6 billion sale of Santarus Inc.

Cosmo plans to remain independent, Mauro Ajani, the company’s founder and chief executive officer, said in a Jan. 31 interview, 15 months after saying he was considering the company's "way out." Instead, Cosmo plans to hire as many as 150 people to sell its Methylene Blue MMX in the U.S. if the dye is approved next year, and seek a secondary Nasdaq listing.

The company, which had a partnership with Santarus for the experimental antibiotic rifamycin that included a stake in the San Diego-based company, made $200 million when Raleigh, North Carolina-based Salix Pharmaceuticals Ltd (SLXP) bought Santarus in January. Salix had to return rifamycin to Cosmo because it has a similar antibiotic.

“With $200 million you can change your idea,” Ajani said at the company’s headquarters in Lainate, outside Milan. “With rifamycin back, and with the money, we started to think, can we do in-house the marketing and the commercialization of this product? The answer at the end of the day is yes, we can.”

Cosmo shares, which are traded in Switzerland, have almost doubled in the past 12 months, making them one of the top 10 performers in the Swiss Performance Index of 208 companies. The stock rose 1.4 percent to 93.75 Swiss francs on Jan. 31, giving the company a market value of 1.41 billion francs ($1.55 billion).

Cancer Dye

Cosmo expects results by the end of this year from a late-stage trial of Methylene Blue MMX, which identifies pre-cancerous lesions in the colon. The dye, administered in a tablet taken before a colonoscopy, is designed to improve on the white light currently used in the procedure, which doesn’t detect some lesions, and a sprayed dye that is rarely used because of the mess it involves.

Methylene Blue MMX may reach sales of $300 million, according to Peter Welford, an analyst at Jefferies LLC in London.

Cosmo, which gets royalties on medicines sold by Shire Plc and Santarus, expects total revenue to almost triple to 158 million euros ($213 million) next year from an estimated 56 million euros last year, it said in a Jan. 31 presentation to investors.

Ajani, who founded Cosmo in 1997, took it public 10 years later and is its majority shareholder, said last week he plans to step aside as CEO to focus on strategic decision-making, while handing helm to Alessandro Della Cha.

To contact the reporter on this story: Simeon Bennett in Geneva at sbennett9@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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