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Oct 02, 2024 |
Mallinckrodt plc (NA: MNK)NA |
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Data Overview
| Value Score | NA |
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| P/E (F1) | NA |
| P/E (F1) Rel to Industry | NA |
| PEG Ratio | NA |
| P/S (F1) | NA |
| P/S (TTM) | NA |
| P/CFO | NA |
| P/CFO Rel to Industry | NA |
| EV/EBITDA Annual | NA |
| Growth Score | NA |
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| Proj. EPS Growth (F1/F0) | NA |
| Hist. EPS Growth (Q0/Q-1) | NA |
| Qtr CFO Growth | NA |
| 2 Yr CFO Growth | NA |
| Return on Equity (ROE) | NA |
| (NI - CFO) / Total Assets | NA |
| Asset Turnover | NA |
| Momentum Score | NA |
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| 1 week Volume change | NA |
| 1 week Price Cng Rel to Industry | NA |
| (F1) EPS Est 1 week change | NA |
| (F1) EPS Est 4 week change | NA |
| (F1) EPS Est 12 week change | NA |
| (Q1) EPS Est 1 week change | NA |
Summary
Mallinckrodt is focused on reshaping its product portfolio through strategic acquisitions and non-core asset divestitures to transform the portfolio. The company sold its Nuclear Imaging business and Intrathecal Therapy business. While Acthar sales continue to be strong on the back of increased formulary positions and access for appropriate patients in both the commercial and public environments, sales of Therakos is expected to decline. The company's generic segment continues to face weakness as various product categories are witnessing stiff competition, which is hurting both their volumes and prices. The company expects double-digit declines in revenues from this segment. Shares of the company have underperformed the industry so far in 2017. A U.S. District Court recently invalidated 11 patents covering its second-largest product Inomax.
Elements of the Zacks Rank
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0% Q2 (Next Qtr)Revisions: NA Up: NA Down: NA |
0% F1 (Current Year)Revisions: NA Up: NA Down: NA |
0% F2 (Next Year)Revisions: NA Up: NA Down: NA |
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Upside Zacks Consensus Estimate vs. Most Accurate Estimate
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The data on the front page and all the charts in the report represent market data as of , while the report's text is as of 10/31/2017
Overview
Dublin, Ireland-based Mallinckrodt is a specialty biopharmaceutical with a worldwide presence. The company develops, manufactures, markets and distributes branded and generic specialty pharmaceutical and biopharmaceutical products and therapies as well as nuclear medicine products.
Mallinckrodt operates under two segments: Specialty Brands - produces and markets branded pharmaceutical products including Acthar and Ofirmev; and biopharmaceuticals. Specialty Generics - produces specialty generic pharmaceuticals and active pharmaceutical ingredients (API) consisting of biologics, medicinal opioids, synthetic-controlled substances, acetaminophen and other active ingredients.
Its key acquisitions include the Mar 2014 Cadence Pharmaceuticals ($1.3 billion) acquisition, the Aug 2014 Questcor Pharmaceuticals ($6 billion) acquisition, the Apr 2015 Ikaria acquisition ($2.3 billion), the Sep 2015 Therakos acquisition ($1.325 billion) and the Feb 2016 acquisition of three commercial stage topical hemostasis drugs from The Medicines Company. Meanwhile, the company sold its contrast media and delivery systems (CMDS) business in Nov 2015.
On Jan 27, Mallinckrodt sold its Nuclear Imaging business to IBA Molecular for $690 million and on Mar 20, it sold its Intrathecal Therapy business to Piramal Enterprises limited for about $203 Million.
Revenues in fiscal 2016 came in at $3.4 billion, up 15.7% from fiscal 2015. The last quarter of 2016 was the planned transition quarter as the company aligned to a calendar-based financial year.
Reasons To Buy:
Inomax and Acthar hold significant potential and the company continues to work on boosting its presence in the hospital segment.
Untapped Potential in Acthar Gel: Acthar Gel, which became a part of the company’s portfolio following the Questcor acquisition, is currently approved for 19 indications but marketed for only 9 with a 3% patient penetration rate. Hence, Mallinckrodt is working on boosting Acthar sales in the approved indications including rheumatology and pulmonology as well as underserved patient populations. The company intends to invest in research and development activities for developing Acthar for indications like lupus, proteinuria in nephrotic syndrome, amyotrophic lateral sclerosis and diabetic nephropathy. Performance of the drug has been impressive so far, propelled by solid demand for rheumatology, pulmonology, ophthalmology, and nephrology and expanded access in more recently promoted indications such as lupus and sarcoidosis, as well as mature indications such as infantile spasms and nephrotic syndrome. On the reimbursement front, the company is working to increase the commercial coverage of Acthar with major payors, which will boost sales. The company has already bought more than 60% of covered commercial lives under contract earlier than expected. The product is projected to grow in the mid-single to low double-digit range in the long run while the second half of 2017 should see further growth driven by price increases.
Inomax – a Growth Driver in the Long Run: In a bid to expand into the hospital growth platform, Mallinckrodt acquired privately held critical care company Ikaria, which added Inomax (a vasodilator used in conjunction with ventilatory support and other appropriate agents) to its portfolio. The acquisition should broaden Mallinckrodt’s footprint in hospitals and expand its presence to include critical care respiratory therapies in neonatal intensive care units. Currently, Inomax is Mallinckrodt’s second-largest product. The company estimates that it is a roughly $400 million business on a global basis. Sales of the drug are projected to grow in the mid single digits over the long run.
Acquisitions to Boost Hospital Presence: Mallinckrodt is expanding its portfolio through strategic acquisitions. The Ikaria acquisition added a promising late-stage candidate to Mallinckrodt’s pipeline – terlipressin injection, being evaluated for the treatment of Hepato-Renal Syndrome Type 1 (HRS 1), an indication with no currently approved therapy in the U.S. The phase III trial is underway and enrollment in the trial is progressing as planned. The company has completed 25% of targeted enrolment.
The company acquired Therakos Inc. in Sep 2015 for approximately $1.3 billion in order to broaden its footprint in hospitals. With the Therakos acquisition, Mallinckrodt has gained access to Therakos’ therapeutic platforms including the latest generation of Therakos CELLEX Photopheresis System which is the only approved, fully integrated systems for administering autologous immune cell therapy through extracorporeal photopheresis (ECP) in the world. The acquisition has widened Mallinckrodt’s presence from multimodal surgical pain management and critical-care respiratory therapies in neonatal intensive care units to include innovative immunotherapy therapies. Increased demand continues to boost its performance. Meanwhile, the acquisition of hemostasis drugs – Recothrom Thrombin topical (recombinant), PreveLeak and Raplixa (fibrin sealant) – from The Medicines Co. has strengthened its growing hospital portfolio. Mallinckrodt will promote Recothrom alongside its Ofirmev injection. The acquisition will broaden Mallinckrodt's impact in the surgical suite for patients and physicians. There is huge demand for products that can help control bleeding in surgical practices, with the market estimated to be $750 million in the U.S. and at least $1 billion worldwide. The company has begun the launch cycle for PreveLeak, expanding its hemostasis portfolio in the U.S. The acquisition of Stratatech added a late-stage candidate, StrataGraft (a potential approval in the U.S. is expected by 2020), to the company’s pipeline. Every year, approximately 10,000 patients in the U.S. are hospitalized for the 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.
The acquisition of InfaCare had added Stannsoporfin to the company’s portfolio. The candidate is in late stage development for severe jaundice in infants. The NDA has been filed with the FDA through rolling submission. Assuming a potential approval, the drug will be launched in late 2018.
Ofirmev Holds Potential: The Cadence acquisition added Ofirmev to the company’s specialty pharmaceuticals portfolio, thus expanding its pain management franchise. With Ofirmev in its portfolio, Mallinckrodt can target the adjacent acute-care hospital market. Penetration rates on available surgical procedures are relatively low and hospitals systems continue to develop recovery standards after surgery protocols, which should benefit products like Ofirmev and enable patients to recover quicker after surgery. Growth of the drug is expected to be driven by expanded patient reach.
Reasons To Sell:
The Specialty Generic segment continues to face weakness as various product categories are witnessing stiff competition.
Share Price Performance: Mallinckrodt’s stock declined 37.6% so far in 2017 versus a decline of 27.9% for the industry. The stock took a significant hit after a U.S. District Court invalidated 11 patents covering its second-largest product Inomax. We remind investors that in February 2015, Mallinckrodt along with its subsidiaries filed suit in the U.S. District Court for the District of Delaware against Praxair, Inc. PX following receipt of a January 2015 notice from the latter. The notice was regarding Praxair’s submission of an ANDA containing a Paragraph IV patent certification with the FDA for a generic version of Inomax. Subsequently, in July 2016, Mallinckrodt filed a second suit against Praxair following receipt of a Paragraph IV notice concerning three additional patents recently added to the FDA Orange Book regarding its ANDA for a generic version of Inomax. Thereafter, a third suit was filed in September 2016. Mallinckrodt plans to appeal against the decision and stated that Inomax has patent protection till 2018.
Weakness in the Specialty Generic Segment: The segment continues to face weakness as various product categories are witnessing stiff competition, which is hurting both their volumes and prices. The company expects double-digit declines in revenues from this segment. In addition, continued expected weakness in this segment will adversely impact gross profit margins also.
Setback In Generic Concerta: The company earlier received a setback when the FDA informed the company that its methylphenidate hydrochloride ER tablets, USP (CII), might not be therapeutically equivalent to Johnson & Johnson’s ADHD drug Concerta. Consequently, the FDA reclassified Mallinckrodt’s abbreviated new drug application (ANDA) 202608 for methylphenidate ER tablets with dosage strengths of 27 mg, 36 mg and 54 mg from AB (freely substitutable at the pharmacy level) to BX (presumed to be therapeutically non-equivalent). The FDA further stated that the reclassification was based on the application of its new draft guidance for determining the bioequivalence of methylphenidate hydrochloride products as published on Nov 6, 2014. Mallinckrodt had received FDA approval to manufacture a generic version of Concerta in three dosage strengths – 27 mg, 36 mg and 54 mg tablets in Dec 2012. In Oct 2016, Mallinckrodt was notified that the FDA was initiating Withdrawal Proceedings on these products. In Oct 2016, the FDA initiated proceedings, proposing to withdraw approval of the company’s ANDA for methylphenidate ER. Later in the month, the United States Court of Appeals for the Fourth Circuit issued an order removing the pending litigation with the FDA from the Court’s oral argument calendar and placing that litigation in abeyance pending the outcome of the withdrawal proceedings. Concurrently, Mallinckrodt submitted to the FDA requests for a hearing in the withdrawal proceeding and for a 90-day extension of the deadline for submitting documentation supporting the necessity of a hearing. The FDA granted the company’s initial request to extend the deadline to March 20, 2017. In Feb 2017, the FDA suspended the deadline so that the Center for Drug Evaluation and Research can complete its production of documents. The company expects to see additional AB-rated entrants in the market as well in the coming months, further intensifying competition. Sales are expected to decline further.
Divestiture of Assets: The company continues to streamline and consolidate its portfolio. Mallinckrodt sold its Intrathecal Therapy business for approximately $203 million to Piramal Enterprises Limited's subsidiary, Piramal Critical Care in the U.K. The company also sold its global Nuclear Imaging business to IBA Molecular for approximately $690 million due to lingering challenging conditions. Sales of Recothrom is projected to decline over time.
Last Earnings Report
Quarter Ending
| Report Date | NA |
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| Sales Surprise | NA |
| EPS Surprise | NA |
| Quarterly EPS | NA |
| Annual EPS (TTM) | NA |
Mallinckrodt Tops Earnings, Generics Segment Weak
Mallinckrodt reported second-quarter 2017 results wherein earnings beat expectations but sales missed the same.
The company reported adjusted earnings of $1.85 per share in the reported quarter, beating the Zacks Consensus Estimate of $1.73. Earnings were however down from the year-ago figure of $2.03 due to continued pricing pressure within the Specialty Generics.
Net sales in the quarter came in at $824.5 million, down 4.9% year over year and missed the Zacks Consensus Estimate of $827.3 million.
Quarter in Detail
The company reports results under two segments – Specialty Brands and Specialty Generics.
Sales at the Specialty Brands segment were $594.5 million, up 0.9% from the year-ago quarter. Acthar, Mallinckrodt’s largest product, garnered sales of $319.4 million, up 7.1%. Inomax, its second-largest product, generated sales of $125.5 million, up 3.6%. Ofirmev sales grew 7.1% year over year to $75.7 million.
Sales of the Therakos immunology platform were $51.2 million, down 2.5%. Although the kit supply issue was resolved in the first quarter, the company underestimated the complexity of the conversion from the XTS to Cellex devices, resulting in lower-than-anticipated net sales. Moreover, these transitional issues are expected to persist in the upcoming quarters.
As expected, weakness in the Specialty Generics segment continues. The segment recorded sales of $216 million, down 18% but better than management’s expectation due to the active pharmaceutical ingredients products and controlled substances and other products categories.
Adjusted selling, general and administrative expenses in the reported quarter increased 3.2% to $232.1 million. Meanwhile, research and development expenses declined 7.5% to $69.2 million.
During the second quarter, the company repurchased 2.4 million ordinary shares for $100.7 million under its share repurchase programs, bringing the total repurchased in the first half to 8 million.
2017 Guidance
The company reiterated its earnings guidance of $7.40 to $8.00 for 2017. The Zacks Consensus Estimate for 2017 is $7.53.
Recent News
To Begin Sarcoidosis Study on Acthar Gel- Oct 9
Mallinckrodt announced that it will initiate a new phase IV study on H.P. Acthar Gel.
This multi-center, randomized, double blind, placebo-controlled study will further assess the efficacy of Acthar as a therapy option in patients with symptomatic sarcoidosis. The study will evaluate Acthar as a later-line treatment option for sarcoidosis patients with persistent disease.
The drug is already approved in the United States for this indication. The company is conducting the study to determine which class of patients will benefit the most from an alternative treatment like Acthar.
Acthar became part of the company’s portfolio following the Questcor acquisition and is currently approved for 19 indications. Mallinckrodt is working on boosting Acthar sales in the approved indications including rheumatology and pulmonology as well as underserved patient populations. The company intends to invest in research and development activities for developing Acthar for indications like lupus, proteinuria in nephrotic syndrome, amyotrophic lateral sclerosis and diabetic nephropathy.
Performance of the drug has been impressive so far, propelled by solid demand for rheumatology, pulmonology, ophthalmology and nephrology, and expanded access in more recently promoted indications such as lupus and sarcoidosis, as well as mature indications such as infantile spasms and nephrotic syndrome.
Mallinckrodt, NeuroproteXeon Team Up for Inhalation Therapy- Oct 2
Mallinckrodt announced that it has entered into a licensing agreement with NeuroproteXeon. The agreement relates to the development and commercialization of NeuroproteXeon's investigational, pharmaceutical-grade xenon gas for inhalation therapy.
The therapy is being evaluated to improve survival and functional outcomes for patients resuscitated after a cardiac arrest. Per the terms, Mallinckrodt will pay $10 million upfront with cash on hand to reimburse NeuroproteXeon for certain product development costs. This will give Mallinckrodt exclusive rights to commercialize the therapy. Mallinckrodt will make an additional milestone payment of up to $25 million.
A tentative approval of xenon for inhalation will expand Mallinckrodt's portfolio of hospital drug-device combination products providing therapies for patients.
The phase III registration trial will begin in early 2018. It is designed to confirm a potential clinical benefit associated with the positive biomarker outcome as demonstrated on magnetic resonance imaging (MRI) scans of patients who were treated with hypothermia therapy plus xenon gas for inhalation that was seen in a phase IIb study.
The trial is being conducted under Special Protocol Agreement with the FDA. The trial will measure the clinical benefit of xenon for inhalation in terms of improved 30-day survival and improved functional outcomes. The Special Protocol Assessment that has been approved by the FDA entitles an interim analysis at 50% of trial completion of the primary endpoint follow up.
Assuming the primary and secondary endpoints are positive, the trial will be halted. However, if the primary or secondary endpoints are not met the trial will be stopped. Mallinckrodt expects the regulatory submission to be a drug and delivery device combination upon a full completion of the trial (tentative approval expected in 2018).
Mallinckrodt expects bottom-line dilution for the remainder of 2017 to be 10 to 15 cents, with slightly lower dilution in 2018.
Acquires InfaCare Pharmaceutical- Sep 25
Mallinckrodt announced that it has acquired privately-held InfaCare Pharmaceutical Corporation.
This specialty pharmaceutical company focuses on the development and commercialization of proprietary pharmaceuticals for neonatal and pediatric patients.
InfaCare's product candidate, stannsoporfin, is expected to become the first and only pharmacologic option for the treatment of neonates for severe hyperbilirubinemia, or severe jaundice if and when approved.
The company made an upfront payment of $80 million. Mallinckrodt is also required to pay up to $345 million as milestone payments. The acquisition to be dilutive to the bottom line by 15 cents to 20 cents for 2017 and modestly higher in 2018.
Per estimates, the total number of term births is estimated at 3.7 million per year and, of those, approximately 750,000 infants are treated for jaundice. Among these, a large number are unresponsive to phototherapy. Hence, there is an unmet need for treatment of these infants. The combined potential patient treatments required annually in the United States for severe jaundice is approximately 70,000 to 125,000.
The acquisition will diversify its pediatric pipeline and strengthen the brands business.
Industry Analysis(1)Zacks Industry Rank: NA
Industry Comparison NA | NA |
Industry Peers |
| MNK NA | |
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| Market Cap | NA |
| # of Analysts | NA |
| Dividend Yield | NA |
| Value Score | NA |
| Cash/Price | NA |
| EV/EBITDA | NA |
| PEG Ratio | NA |
| Price/Book (P/B) | NA |
| Price/Cash Flow (P/CF) | NA |
| P/E (F1) | NA |
| Price/Sales (P/S) | NA |
| Earnings Yield | NA |
| Debt/Equity | NA |
| Cash Flow ($/share) | NA |
| Growth Score | NA |
| Hist. EPS Growth (3-5 yrs) | NA |
| Proj. EPS Growth (F1/F0) | NA |
| Curr. Cash Flow Growth | NA |
| Hist. Cash Flow Growth (3-5 yrs) | NA |
| Current Ratio | NA |
| Debt/Capital | NA |
| Net Margin | NA |
| Return on Equity | NA |
| Sales/Assets | NA |
| Proj. Sales Growth (F1/F0) | NA |
| Momentum Score | NA |
| Daily Price Chg | NA |
| 1 Week Price Chg | NA |
| 4 Week Price Chg | NA |
| 12 Week Price Chg | NA |
| 52 Week Price Chg | NA |
| 20 Day Average Volume | NA |
| (F1) EPS Est Wkly Chg | NA |
| (F1) EPS Est Mthly Chg | NA |
| (F1) EPS Est Qtrly Chg | NA |
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| Industry | S&P 500 |
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| 0.00 M | 38.02 B |
| 19 | |
| % | 1.5% |
| - | - |
| NA | 0.04 |
| NA | 16.05 |
| NA | 2.36 |
| NA | 3.81 |
| NA | 15.18 |
| NA | 19.97 |
| NA | 3.03 |
| NA% | 4.99% |
| NA | 0.60 |
| NA | 8.47 |
| - | - |
| NA% | 9.80% |
| NA% | 7.71% |
| NA% | 3.78% |
| NA% | 6.81% |
| NA | 1.18 |
| NA% | 38.98% |
| NA% | 12.14% |
| NA% | 16.56% |
| NA | 0.53 |
| % | 4.43% |
| - | - |
| NA% | -0.93% |
| NA% | -0.42% |
| NA% | 3.25% |
| NA% | 2.36% |
| NA% | 34.98% |
| 0 | 2,168,000 |
| NA% | 0.00% |
| NA% | 0.00% |
| NA% | 0.25% |
| NA% | 0.00% |
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