Mallinckrodt shares slide after FDA reclassifies ADHD drug, prompting review of forecast

MarketsAssociated Press

Mallinckrodt will re-evaluate its fiscal 2015 forecast after the Food and Drug Administration said it is concerned that the company's generic ADHD drug is not equivalent to the brand-name drug it is based on. Mallinckrodt's U.S.-traded shares slid.

The FDA is reclassifying Mallinckrodt's drug, methylphenidate ER, and another generic made by Kudco Ireland Ltd. The agency will no longer recommend that pharmacies automatically substitute the generic drugs for their brand-name equivalents. Pharmacies don't have to follow that recommendation, but it could hurt sales of the generics.

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The FDA said the drugs, generic versions of Johnson & Johnson's Concerta, might deliver their active ingredient more slowly for some people. As a result, those patients might not feel the desired effect of the drugs, which are intended to treat attention deficit hyperactivity disorder. But it said it had not found any "serious safety concerns" with the two generic drugs.

The agency wants the companies to perform tests that prove their drugs have the same effects on patients' body as Concerta.

Mallinckrodt launched its drug, methylphenidate ER, in late 2012 as the first generic alterative to Concerta. It generated more than $148 million in sales last year for the Irish pharmaceutical company. The company has said that it expected sales of methylphenidate ER to decline, due in part to increased competition.

Mallinckrodt said it remains confident in the safety of its product.

"We are considering all of our options to persuade the agency to engage in a meaningful (dialogue) with us regarding the science, including potential legal action," CEO Mark Trudeau said in a statement.

Last month, the drugmaker said it expected adjusted earnings of $6.70 to $7.20 per share for its fiscal year ending in September 2015. That topped analysts' forecast.

Mallinckrodt Plc said Thursday it will update its forecast after it has assessed the impact of the FDA decision.

Mallinckrodt shares slid more than 6 percent, or $6.24, to $86.75 Thursday afternoon, while broader trading indexes dipped slightly. The stock had climbed 78 percent this year as of Wednesday's close.