Sector News

Mallinckrodt to sell intrathecal therapy business to Piramal

January 30, 2017
Life sciences

Mallinckrodt plc (MNK), a leading specialty pharmaceutical company, announced today it has entered into an agreement under which it will sell its Intrathecal Therapy business to Piramal Enterprises Limited’s subsidiary in the U.K., Piramal Critical Care, for approximately $203 million, including fixed and contingent consideration.

Piramal Critical Care is an integral business unit of Piramal Enterprises Limited and a global leader in the field of anesthesia.

Mallinckrodt’s Intrathecal Therapy business markets products for the treatment of spasticity via intrathecal (spinal column) drug delivery. The key asset is Gablofen® (baclofen injection), a product approved by the U.S. Food and Drug Administration (FDA) for use in management of severe spasticity of cerebral or spinal origin in adult and pediatric patients age 4 years and above. Gablofen is the only FDA-approved baclofen in prefilled syringes and factory-sealed vials. Mallinckrodt also has a higher Gablofen concentration in late-stage development which, if approved, would help address physicians’ demand for more refill options. Both currently marketed intrathecal products and those in development are included in the transaction.

“Mallinckrodt is transforming its portfolio to become a top-performing specialty pharmaceutical company, systematically divesting non-core businesses to build upon our growth platforms in autoimmune and rare diseases and hospital therapies,” said Mark Trudeau, President and Chief Executive Officer of Mallinckrodt. “While net sales for our Intrathecal Therapy business have increased approximately 50% since 2012 and it has become significantly more profitable, the products have limited commercial synergy with other parts of our growing Specialty Brands segment. The sale of this business to Piramal is the best solution to meet patient needs and will free resources for us to invest in additional growth.”

Fiscal 2016 net sales of Intrathecal Therapy products were $44.6 million and reported as part of Mallinckrodt’s Specialty Brands segment within the “Other” line. The sale of the business does not qualify for GAAP1 treatment as a discontinued operation, and therefore historical sales and earnings results will not be recast to reflect the divestiture. Assuming the transaction closes in the first quarter of 2017, the sale is expected to dilute 2017 earnings per share from continuing operations by between $0.20 and $0.25, with anticipated dilution declining in 2018 and beyond. Mallinckrodt believes the majority of the negative earnings impact will be offset by expense management, strength of the continuing businesses and further reduction in share count through ongoing share repurchases.

“This divesture is in line with our ongoing focus on driving return on invested capital decisions we make on behalf of shareholders,” said Matt Harbaugh, Executive Vice President and Chief Financial Officer of Mallinckrodt. “The transaction is a perfect example of how we pursue activities that have positive economic outcomes.”

The approximately $203 million transaction will consist of $171 million of fixed consideration of which 10%, or $17 million, will be paid at closing, and an additional $154 million will be paid on the first anniversary of the close date. The remaining total consideration of up to $32 million is contingent, based on the gross profit of the Gablofen products in 2018 and 2019. The transaction is subject to customary closing conditions, and Mallinckrodt expects to complete the transaction in the first quarter of 2017.

Mallinckrodt plc (MNK), a leading specialty pharmaceutical company, announced today it has entered into an agreement under which it will sell its Intrathecal Therapy business to Piramal Enterprises Limited’s subsidiary in the U.K., Piramal Critical Care, for approximately $203 million, including fixed and contingent consideration.

Piramal Critical Care is an integral business unit of Piramal Enterprises Limited and a global leader in the field of anesthesia.

Mallinckrodt’s Intrathecal Therapy business markets products for the treatment of spasticity via intrathecal (spinal column) drug delivery. The key asset is Gablofen® (baclofen injection), a product approved by the U.S. Food and Drug Administration (FDA) for use in management of severe spasticity of cerebral or spinal origin in adult and pediatric patients age 4 years and above. Gablofen is the only FDA-approved baclofen in prefilled syringes and factory-sealed vials. Mallinckrodt also has a higher Gablofen concentration in late-stage development which, if approved, would help address physicians’ demand for more refill options. Both currently marketed intrathecal products and those in development are included in the transaction.

“Mallinckrodt is transforming its portfolio to become a top-performing specialty pharmaceutical company, systematically divesting non-core businesses to build upon our growth platforms in autoimmune and rare diseases and hospital therapies,” said Mark Trudeau, President and Chief Executive Officer of Mallinckrodt. “While net sales for our Intrathecal Therapy business have increased approximately 50% since 2012 and it has become significantly more profitable, the products have limited commercial synergy with other parts of our growing Specialty Brands segment. The sale of this business to Piramal is the best solution to meet patient needs and will free resources for us to invest in additional growth.”

Fiscal 2016 net sales of Intrathecal Therapy products were $44.6 million and reported as part of Mallinckrodt’s Specialty Brands segment within the “Other” line. The sale of the business does not qualify for GAAP1 treatment as a discontinued operation, and therefore historical sales and earnings results will not be recast to reflect the divestiture. Assuming the transaction closes in the first quarter of 2017, the sale is expected to dilute 2017 earnings per share from continuing operations by between $0.20 and $0.25, with anticipated dilution declining in 2018 and beyond. Mallinckrodt believes the majority of the negative earnings impact will be offset by expense management, strength of the continuing businesses and further reduction in share count through ongoing share repurchases.

“This divesture is in line with our ongoing focus on driving return on invested capital decisions we make on behalf of shareholders,” said Matt Harbaugh, Executive Vice President and Chief Financial Officer of Mallinckrodt. “The transaction is a perfect example of how we pursue activities that have positive economic outcomes.”

The approximately $203 million transaction will consist of $171 million of fixed consideration of which 10%, or $17 million, will be paid at closing, and an additional $154 million will be paid on the first anniversary of the close date. The remaining total consideration of up to $32 million is contingent, based on the gross profit of the Gablofen products in 2018 and 2019. The transaction is subject to customary closing conditions, and Mallinckrodt expects to complete the transaction in the first quarter of 2017.

Source: Mallinckrodt

comments closed

Related News

January 29, 2023

Colorcon, Inc. signs Put agreement with intent to acquire controlled atmosphere packaging specialist Airnov Healthcare Packaging

Life sciences

Airnov provides critical healthcare industries with high-quality, controlled atmosphere packaging, to protect their products from moisture and oxygen. The business has manufacturing facilities in the USA, France, China and India and employs around 700 people.

January 29, 2023

Takeda pledges up to $1.13B for rights to Hutchmed’s cancer drug fruquintinib outside of China

Life sciences

Takeda of Japan has partnered with Hong Kong-based Hutchmed, gaining the commercial rights to colorectal cancer drug fruquintinib outside of China for $400 million up front, plus $730 million in potential milestone payments. Takeda also will help develop fruquintinib, which can be applied to subtypes of refractory metastatic colorectal cancer, regardless of biomarker status, the companies said.

January 29, 2023

Vir taps Bayer dealmaker Marianne De Backer as its next CEO

Life sciences

On April 3, Scangos, who’s been chief executive officer at Vir since the start of 2017, will hand over the reins to Marianne De Backer, Ph.D. De Backer comes over from Bayer, where she currently heads up pharmaceutical strategy, business development and licensing. Alongside her CEO appointment, De Backer is set to join Vir’s board of directors, the company said Wednesday.

How can we help you?

We're easy to reach