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MiddleBrook Pharmaceuticals, Inc. (NDAQ: MBRK) shareholders have been on a rollercoaster ride in recent days. The pharmaceutical company announced yesterday that it received a $100 million equity investment from Equity Group Investments. The investment was made via a purchase of 30 million shares at $3.30 and a five-year warrant to purchase a total of 12.1 million at $3.90 per share. MiddleBrook is also required to repurchase its Keflex assets sold to Deerfield Management last year.

Investors saw the move as a sign that MiddleBrook's previously announced exploration of strategic alternatives was concluded. After all, who would buy a company that now has all of this added dilution. As a result, the stock dropped to levels that it was trading at prior to any announcement of strategic alternatives. However, investors failed to realize the added value of the $100 million investment. Today, that value was realized as shares surged 40 percent higher to close to $2.15 per share.

The agreement also calls for Edward Rudnic to step down as President and CEO and be replaced by John Thievon. Thievon has more than 17 years experience in pharmaceutical sales and helped build the Mucinex brand into a $350 million annually franchise before leaving in February of 2008 following its acquisition by Reckitt Benckiser. David Becker, the new CFO, also has extensive experience in public accounting and mergers and acquisitions.

The repurchase of Keflex and additional $100 million in equity signaled to some investors that this new team is set to rebuild MiddleBrook by regaining its key revenue stream and using the proceeds to develop new drugs using the PULSYS system. The background of this new management along with the typical lifecycle of such companies suggests that the company will then try to sell itself later down the road when it has built up substantially more value.

Shares of MiddleBrook Pharmaceuticals rose $0.63, or 41.45%, to $2.15 on the news.

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