May 19, 2017
Recent media reports have cited allegations by self-acknowledged short sellers whose thesis on Mallinckrodt, the company believes, is not based on fact and is intentionally misleading. This statement serves to present facts and correct inaccuracies in those media reports.
Mallinckrodt does not publicly disclose profitability of the individual products in its diversified portfolio. Inflated assertions regarding H.P. Acthar® Gel’s contribution to the company’s overall profitability are incorrect. The drug contributes significantly to the company’s profitability, but at a substantially lower level of operating profitability than the 100% erroneously asserted by short seller claims. The suggestion that there is and will be no operating income contribution from other company products is patently untrue.
Allegations that Mallinckrodt carries $8 billion in debt are incorrect. As disclosed in Mallinckrodt’s most recent quarterly report from March 31, 2017, the company’s debt was approximately $6 billion and Mallinckrodt’s debt, net of cash, was $5.8 billion.
In fiscal 2016, Mallinckrodt had $617 million in GAAP operating income and non-GAAP adjusted operating income (OI) of more than $1.4 billion. While Mallinckrodt has not commented on or issued guidance related to OI for 2017, current consensus OI estimates for the company are well in excess of $1 billion on a non-GAAP basis. Speculation that Mallinckrodt’s annualized OI for 2017 will be $300 million based on results from the most recent quarter is erroneous.
H.P. Acthar Gel’s efficacy in its approved indications is strongly supported by evidence. The U.S. Food and Drug Administration (FDA) reviewed the label in 2010, and determined there in fact was sufficient scientific and clinical evidence to support the 19 indications now in the current label. The drug makes a significant difference in the lives of thousands of very sick patients with high unmet medical needs. Mallinckrodt prices its products responsibly, and in a way that reflects the value they offer patients, providers and the U.S. healthcare system as a whole.
Since acquiring H.P. Acthar Gel in 2014, Mallinckrodt has invested more than a quarter of a billion dollars into the drug, including building a larger body of evidence for the drug through clinical trials and health economic outcomes research data; payer engagement; manufacturing modernization; and other medical affairs and research activities.
MNK-1411 (formerly Synacthen® Depot) is simply not a “generic competitor to Acthar” – the two products are very different drugs. MNK-1411 is not approved by the FDA for any indications, and has never been commercialized in the United States. H.P. Acthar Gel is a biologically derived, 39-peptide chain that includes more than simply ACTH, while MNK-1411 is a synthetic 24-peptide chain. Importantly, the company believes the regulatory path for any corticotropin-type new drug application would require FDA approval and could take many years if successful.
In the commercial reimbursement space, the majority of payers have an established pathway for the use of H.P. Acthar Gel in those patients for whom it is appropriately prescribed – those with conditions covered by the FDA-approved label and for whom the product’s extensive existing data and clinical experience support H.P. Acthar Gel’s use as a proven therapy. The prior-authorization and reimbursement processes used by commercial payers rely on these criteria, and are not bypassed through co-pay programs.
Mallinckrodt has arms-length contracts for services with subsidiaries of Express Scripts for product distribution to a network of several independent, individually contracted specialty pharmacies, and separately for order processing. A separate subsidiary of Express Scripts, United BioSource Corporation, also manages a patient assistance program which provides free product to low-income, uninsured or underinsured patients who qualify. Utilization of all these services is a standard industry practice for most specialty pharmaceutical drugs, of which H.P. Acthar Gel is one.
For further information regarding H.P. Acthar Gel, please see: http://www.mallinckrodt.com/about/news-and-media/2263463
About H.P. Acthar® Gel (repository corticotropin injection)
H.P. Acthar Gel is an injectable drug approved by the FDA for the treatment of 19 indications. Of these, today the majority of Acthar use is in these indications:
Important Safety Information
Please see full Prescribing Information here for additional Important Safety Information.
Mallinckrodt is a global business that develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; and analgesics and hemostasis products. The company's core strengths include the acquisition and management of highly regulated raw materials and specialized chemistry, formulation and manufacturing capabilities. The company's Specialty Brands segment includes branded medicines and its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing. To learn more about Mallinckrodt, visit www.mallinckrodt.com.
Mallinckrodt uses its website as a channel of distribution of important company information, such as press releases, investor presentations and other financial information. It also uses its website to expedite public access to time-critical information regarding the company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission (SEC) disclosing the same information. Therefore, investors should look to the Investor Relations page of the website for important and time-critical information. Visitors to the website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations page of the website.
Coleman N. Lannum, CFA
Senior Vice President, Investor Strategy and IRO
Daniel J. Speciale, CPA
Director, Investor Relations
Senior Communications Manager
Chief Public Affairs Officer