DUBLIN – Shares of Mallinckrodt slid 12 percent Tuesday after the Irish drugmaker reported disappointing quarterly revenue and said growth in sales of its HP Acthar Gel, the target of a $5.6 billion acquisition last year, may be lower than it expected.
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HP Acthar Gel is taken from the pituitary glands of pigs after the animals are slaughtered, and it's used to treat a variety of autoimmune and inflammatory conditions including infantile spasms, eye inflammation and rare skin diseases. In August, Mallinckrodt bought Questcor Pharmaceuticals, the company that markets Acthar, for $5.6 billion. It said the drug was a crucial asset, the foundation of its broad autoimmune and rare disease business.
The company reported $269 million in Acthar revenue in its fiscal third quarter, and the drug was by far its biggest-selling product. But Mallinckrodt said sales grew just 4 percent compared to last year and said it now expects sales to grow by a mid-single digit to low-double digit percentage over the long term. It had earlier said sales would grow in the high single digits to low double digits.
In a conference call, President and CEO Mark Trudeau said the company faces a lot of pressure from health insurance companies and other payers over the cost of Acthar, and a string of consolidation in the health insurance industry could make the situation more difficult. Some health insurers and government programs have refused to cover the drug or restricted their coverage based on its cost and concerns about the evidence it works better than steroids or other medications.
Mallinckrodt PLC stock lost $15.10 to $109.11 in afternoon trading.
The company reported net income of $58 million, or 49 cents per share, in its fiscal third quarter. Excluding costs related to amortization, restructuring, and other one-time items, the company said it earned $2.05 per share over the three months that ended on June 26. Its revenue grew to $965.1 million. Mallinckrodt said the weaker euro reduced its revenue by about $25 million.
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Analysts expected net income of $1.84 per share and $985.7 million in revenue, according to Zacks Investment Research.
The company said its revenue increased 48 percent including the additions of Acthar and Inomax, a treatment for a type of respiratory failure in newborns. In April, the company paid $2.3 billion for Ikaria, the maker of Inomax.
With Tuesday's decline, Mallinckrodt's shares are still up 55 percent in the last 12 months.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on MNK at http://www.zacks.com/ap/MNK
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