Mallinckrodt shares fall 32% on foot of poor quarterly revenue

Shares of Irish-domiciled pharma group Mallinckrodt plunged more than 30 per cent to an all-time low on Tuesday after it reported disappointing quarterly revenue and warned of slower sales of Acthar, its biggest source of revenue.

Acthar, which is used to treat infantile spasms and multiple sclerosis, has been under scrutiny for its costly price tag and was at the centre of a federal probe that Mallinckrodt settled in January. At the time, Acthar cost more than $34,000.

Specialty drugs such as Acthar are usually expensive, mainly because they are developed to treat complex diseases. Acthar – which contributes 42 per cent to Mallinckrodt’s overall revenue – generated sales of $308.7 million in the third quarter to September 30th, missing analysts’ average expectation of $326.6 million, according to brokerage Stifel.

Reimbursement pressure

The company said Acthar sales were likely to fall further in the fourth quarter from the third. Acthar sales were dented by unfilled prescriptions, mainly due to reimbursement pressure from insurers.

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“It could be because of the amount of hurdles that are put in place by the various payers [insurers], can be because of the amount of time it might take for these patients to get access to the products,” Hugh O’Neill, president of Mallinckrodt’s autoimmune and rare disease drugs business, said on a call with analysts.

Mallinckrodt’s net sales fell 10.5 per cent to $739.9 million in the third quarter, lagging analysts’ estimates of $811.9 million.

Shares of the company, which have fallen 55 per cent this year, were down 32.2 per cent at $21.13 in morning trading on Tuesday. – Reuters