Mallinckrodt Stock Drops 8% On New Citron Research Report

Mallinckrodt PLC shares dropped 8% in heavy morning trade Monday after short-seller Citron Research released a new report criticizing the pharmaceutical company. Citron Research has previously targeted the drugmaker, comparing it to Valeant in a tweet in 2015. In the Monday report, the short-seller focused on Mallinckrodt's H.P. Acthar Gel, which can be used for a variety of diseases including multiple sclerosis, dermatological diseases and respiratory diseases. Massive price increases over the years have brought Acthar's price to nearly $40,000 a vial, and the product brings in more than $1 billion in revenue for Mallinckrodt. The report focused on recent remarks by Express Scripts management as part of a conference call with Citi Research in which the company's Senior Vice President, Supply Chain and Specialty Everett Neville said "I think everybody in our company would agree that the product is vastly overpriced for the value." The Citron Research report claims that Mallinckrodt's Acthar relies on Express Scripts, which as a pharmacy-benefit manager middleman works to negotiate drug prices with drugmakers on behalf of health insurers and employers. "Express Scripts has FINALLY changed its stance on Acthar and the effect will send shares of Mallinckrodt to ZERO," the report claimed. "The words of Express Scripts management will echo through the halls of Medicare and insurance companies as Acthar has finally met the truth: it is an old drug that is way too expensive and not as good as its competition." Citron Research has also previously targeted Express Scripts, comparing the company to Philidor Rx Services, the now-shuttered mail-order pharmacy which had its relationship with Valeant come under scrutiny after criticism by Citron Research and others, including two news organizations. Mallinckrodt did not immediately respond to MarketWatch's request for comment. Shares have dropped 24.3% over the last three months, compared with a 2.3% rise in the S&P 500 .