The King (KG) is back

King Pharmaceuticals, Inc.  (Public, NYSE:KG) has risen 19% so far YTD, after having a devastating year in 2997, shedding -35%.

On August 19th,  King Pharma announced results Tuesday from its Phase III study of Remoxy, an investigational drug to treat chronic pain, which they said was shown to provide effective around-the-clock analgesia within a patented formulation designed to resist common methods of misuse and abuse.

The companies also presented results of a previously unpublished study which they said showed the formulation resists dissolution in alcohol, thus preventing the quick, powerful euphoric high that is sought by drug abusers.

KG 1 year Chart:

This is huge, Stockmasters.  A painkiller that isn’t addictive and resists the affects of alcohol could dominate the painkiller market.

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Last Friday, King Pharmaceuticals said it has offered to acquire Alpharma Inc (ALO) for $1.4 billion to expand its pain drug business and warned it would turn hostile if the company refused to accept the bid.

Alpharma, which makes the pain drug Kadian and pain patch Flector plus products to treat animals, said its board determined the offer "to be not in the best interests of Alpharma shareholders" though it would "consider seriously any bona fide proposal that reflected the fair value of the company."

In an open letter to Alpharma Chief Executive Dean Mitchell, King CEO Brian Markison said he hoped Alpharma's board would "reconsider" the proposal.

"We continue to prefer to work together with you and your Board to complete a negotiated transaction," Markison said. "If we are unable to negotiate a transaction, we are prepared to take this offer directly to your stockholders."

King's offer of $33 a share represents a 37 percent premium over the $24.04 closing price of Alpharma's shares on Thursday. The shares rose 44 percent to $34.61 in afternoon trading on the New York Stock Exchange. They had fallen 16 percent before the offer from a 52-week high in April.

I like the way that King is thinking strategically by making a move to corner the Painkiller market. If they can succeed, King will be a lucrative investment opportunity indeed.