Mallinckrodt continues march towards pure-play pharma status with pair of divestitures

January 31, 2017 – 8:15 AM | By Andrea Gonzalez | No comments yet

By Omar Ford, Staff Writer

Mallinckrodt plc has closed on a $690 million deal to sell its nuclear imaging business to St. Louis-based Iba Molecular Corp. The deal was first disclosed back in August of last year. The Staines-upon-Thames, U.K.-based company’s imaging business produces the radioisotope molybdenum-99, from which technetium-99m is derived and is used in about 80 percent of all nuclear medicine procedures worldwide.

“Our view of an announced sale of the Nuclear Imaging business for $690 million is positive even if the divestiture takes away [about] $415 million in sales,” said David Buck, an analyst with Northland Capital Markets.

However the business has recently dealt with significant headwinds. In 3Q16 the business had recorded sales of $104 million, down 4.4 percent on a nominal basis and down 4.7 percent on a constant-currency basis from $108.8 million in 3Q15.

This isn’t the first deal in which Mallinckrodt has sought to reduce its imaging offerings.

About two years ago, the company sold its contrast media division to Villepinte, France-based, Guerbet LLC, for $270 million. In the deal, Mallinckrodt divested products in X-ray and MRI.

The Iba deal closure comes at the same time Mallinckrodt has inked a deal to divest its Intrathecal Therapy business to anesthesia-specialist Piramal Critical Care Inc., of Bethlehem, Pa. The $203 million deal is expected to be completed in 1Q17. Mallinckrodt’s Intrathecal Therapy business markets products for the treatment of spasticity via intrathecal (spinal column) drug delivery. Its main product is Gablofen (baclofen injection), which was approved by the FDA for use in management of severe spasticity of cerebral or spinal origin in adult and pediatric patients age four years and above.

SHIFTING STRATEGY

Mallinckrodt has been reshaping its portfolio through acquisitions over the past few years – becoming more of a pure play pharma company. In August, it picked up Stratatech Corp., a privately held regenerative medicine company focused on the development of skin substitute products.

In 2015, Mallinckrodt bolstered its hospital-based drug portfolio with the acquisition of Hampton, N.J.-based Ikaria in a transaction valued at about $2.3 billion. (See Medical Device Daily, Aug. 11, 2015.) Ikaria is focused on therapies and delivery systems for critically ill infants in hospital neonatal intensive care unit settings, and brought to the table Inomax, a continuous flow version of inhaled nitric oxide. Cleared by the FDA in 1999, the vasodilator is indicated to treat term and near-term neonates with hypoxic respiratory failure associated with pulmonary hypertension.

The company also picked up West Chester, Pa.-based Therakos Inc. for about $1.3 billion.

In its most recent earnings call, Mallinckrodt’s president and CEO Mark Trudeau spoke about the deals and said the company is focused on acquiring highly durable assets, typically those that are under-resourced, and those that have relatively low patient penetration where the opportunity for long-term growth is driven predominantly by volume.

“We like specifically the hospital marketplace,” Trudeau said. “We like the autoimmune and rare disease space because we believe these areas of the pharmaceutical industry typically are going to offer those types of assets.”

OUT OF TROUBLED WATERS

Earlier this month, the company paid out $100 million to settle a Federal Trade Commission complaint that it and its Questcor subsidiary had engaged in anti-competitive behavior by acquiring Basel, Switzerland-based Novartis AG’s Synacthen Depot, the rival drug to H. P. Acthar Gel. The FTC complaint said Mallinckrodt and Questocor had kept Synacthen Depot off the market to protect Acthar Gel profits. The settlement also includes a provision where Mallinckrodt must license the rights to Synacthen Depot to a competitor. The drugs offer treatment for infantile spasms.

Michael Waterhouse, an analyst for Morningstar, said Mallinckrodt’s drug could face competitive headwinds over the long term.

“Regardless, we already incorporate increased competition and pricing pressure for Acthar Gel in our model due to potential emergence of therapeutic alternatives over the long term, and this development doesn’t materially alter our outlook,” Waterhouse said.

 

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