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Mallinckrodt (MNK) to Buy Stratatech for Undisclosed Value
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Mallinckrodt plc announced that it will acquire privately held regenerative medicine company, Stratatech Corporation.
However, financial terms of the transaction were not disclosed. The transaction will close in the second half of the year.
Assets Acquired through the Deal
Stratatech’s lead pipeline candidate, StrataGraft, is currently in phase III development for the treatment of severe, deep, partial thickness burns. The FDA had granted orphan product status to StrataGraft in 2012. The candidate is being developed as a biologic to be filed under a Biologics License Application (BLA) that would confer regulatory protection until 2032. Upon a potential approval, StrataGraft could be the first biological "off-the-shelf" skin substitute product for the treatment of severe burns.
The acquisition will also add a technology platform for genetically enhanced skin tissues for natural wound healing and antimicrobial factors to Mallinckrodt’s portfolio. A phase I study is ongoing in the diabetic foot and venous leg ulcers indication, with other potential applications under consideration.
The latest deal was in line with Mallinckrodt’s efforts to broaden its portfolio through strategic acquisitions, even though Stratatech does not have any approved product yet. Nevertheless, Mallinckrodt’s pipeline will receive a boost with the addition of Stratatech’s late-stage candidate, StrataGraft (a potential approval in the U.S. is expected by 2020). Every year, approximately 10,000 patients in the U.S. are hospitalized for treatment of severe burns and the market for skin graft products used in this application is estimated to be approximately $300 million in the country.
Upon approval, the products will be commercialized by the company's existing hospital-focused organization.
We note that Mallinckrodt has been extremely active on the acquisition front in the recent past. Earlier this year, the company acquired hemostasis drugs – Recothrom Thrombin topical (recombinant), PreveLeak and Raplixa (fibrin sealant) – from The Medicines Co. in a transaction that strengthened its growing hospital portfolio. Prior to that, in 2015, Mallinckrodt acquired privately held critical care company, Ikaria, thereby adding Inomax, a vasodilator used in conjunction with ventilatory support and other appropriate agents, to its portfolio. Meanwhile, in Sep 2015, it acquired Therakos Inc. for approximately $1.3 billion in an attempt to broaden its footprint in hospitals.
Mallinckrodt currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Pacira Pharmaceuticals, Inc. (PCRX - Free Report) and Corcept Therapeutics Incorporated (CORT - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy).
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Mallinckrodt (MNK) to Buy Stratatech for Undisclosed Value
Mallinckrodt plc announced that it will acquire privately held regenerative medicine company, Stratatech Corporation.
However, financial terms of the transaction were not disclosed. The transaction will close in the second half of the year.
Assets Acquired through the Deal
Stratatech’s lead pipeline candidate, StrataGraft, is currently in phase III development for the treatment of severe, deep, partial thickness burns. The FDA had granted orphan product status to StrataGraft in 2012. The candidate is being developed as a biologic to be filed under a Biologics License Application (BLA) that would confer regulatory protection until 2032. Upon a potential approval, StrataGraft could be the first biological "off-the-shelf" skin substitute product for the treatment of severe burns.
The acquisition will also add a technology platform for genetically enhanced skin tissues for natural wound healing and antimicrobial factors to Mallinckrodt’s portfolio. A phase I study is ongoing in the diabetic foot and venous leg ulcers indication, with other potential applications under consideration.
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Our Take
The latest deal was in line with Mallinckrodt’s efforts to broaden its portfolio through strategic acquisitions, even though Stratatech does not have any approved product yet. Nevertheless, Mallinckrodt’s pipeline will receive a boost with the addition of Stratatech’s late-stage candidate, StrataGraft (a potential approval in the U.S. is expected by 2020). Every year, approximately 10,000 patients in the U.S. are hospitalized for treatment of severe burns and the market for skin graft products used in this application is estimated to be approximately $300 million in the country.
Upon approval, the products will be commercialized by the company's existing hospital-focused organization.
We note that Mallinckrodt has been extremely active on the acquisition front in the recent past. Earlier this year, the company acquired hemostasis drugs – Recothrom Thrombin topical (recombinant), PreveLeak and Raplixa (fibrin sealant) – from The Medicines Co. in a transaction that strengthened its growing hospital portfolio. Prior to that, in 2015, Mallinckrodt acquired privately held critical care company, Ikaria, thereby adding Inomax, a vasodilator used in conjunction with ventilatory support and other appropriate agents, to its portfolio. Meanwhile, in Sep 2015, it acquired Therakos Inc. for approximately $1.3 billion in an attempt to broaden its footprint in hospitals.
Mallinckrodt currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the health care sector include Pacira Pharmaceuticals, Inc. (PCRX - Free Report) and Corcept Therapeutics Incorporated (CORT - Free Report) . Both stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>