STAINES-UPON-THAMES, United
Kingdom, Dec. 6, 2018
/PRNewswire/ -- Mallinckrodt plc
(NYSE: MNK), a leading global specialty pharmaceutical company,
today announced plans to spin off a new company consisting of
Mallinckrodt's Specialty
Generics/Active Pharmaceutical Ingredients (Specialty Generics)
business and AMITIZA® (lubiprostone) to
Mallinckrodt shareholders, subject to
final Board approval. The separation is expected to create two
independent, appropriately capitalized, publicly traded companies –
one focused on innovative specialty pharmaceutical brands, the
other concentrated primarily in niche specialty generic products
and API manufacturing – each positioned to optimize future success
as they pursue independent growth strategies.
The planned separation is expected to be executed through a
pro-rata distribution of common stock to Mallinckrodt's shareholders that is generally
tax-free for U.S. federal income tax purposes. The spin-off is
projected to be completed in the second half of 2019 or sooner. It
is anticipated that the spun-off company will be listed on the New
York Stock Exchange (NYSE) and will assume the Mallinckrodt name and ticker symbol (MNK).
The 'remaining' independent Specialty Pharmaceutical Brands
company, whose goal is to improve outcomes for underserved patients
with severe and critical conditions, will continue to focus on its
portfolio of innovative marketed and development products.
Mark Trudeau, current
President and Chief Executive Officer, will lead the
business. The remaining company will be renamed at a later
date.
Angus Russell, Mallinckrodt's Chairman of the Board, said,
"Over the past five years, Mallinckrodt
has transformed its business through a series of strategic
transactions – acquiring a portfolio of marketed and development
stage pharmaceutical brands that can drive growth, and divesting
non-core assets that could be better maximized by others. In 2016
the Board began to explore a range of strategic alternatives for
the company's Specialty Generics business, and believes there is a
strong rationale and opportunity to create two new, appropriately
capitalized, independent companies that have the potential to
unlock and increase value over the long term. We expect this
separation will result in greater strategic focus, allowing each
business to more effectively enhance returns by commercializing new
and current product offerings; drive innovation by allocating
resources to the areas of highest opportunity; and pursue growth
and investment strategies more directly aligned with each company's
respective goals."
Mark Trudeau said,
"Today's announcement is another important step forward in our
journey to become an innovation-driven, pure-play, specialty
pharmaceutical brands growth company. We believe this separation
will further enhance our strategic focus and strengthen our balance
sheet. It should also provide us with additional liquidity to
support investments in our in-line brands and development portfolio
and strategically allocate capital."
Trudeau added, "The spin-off of the Specialty Generics business
creates an exciting new company which we believe will be well
positioned to grow. Operating independently will allow this new
company to more rapidly capitalize on its growth opportunities to
enhance value."
PROFILE OF THE NEW SPECIALTY GENERICS COMPANY
For the
twelve months ended September 28,
2018, the collective net sales from the new Specialty
Generics company exceeded $850
million on an as reported basis inclusive of the AMITIZA
product since February 14, 2018.
With approximately 1,600 employees, the newly spun company will
include a leading acetaminophen business, a portfolio of both API
and generic finished dose forms of controlled substances and other
drugs, a niche specialty generics development portfolio, and a
strong U.S. manufacturing footprint. The inclusion of the AMITIZA
product in the non-promoted assets to be spun off brings added
manufacturing facilities and employees in Japan, and diversifies revenues further.
Marketed in the U.S. and Japan by
alliance partners, Mallinckrodt
recognizes net sales from commercial partnership arrangements in
the form of AMITIZA product sales, royalties and milestones. The
new Specialty Generics company will be positioned financially to
grow its ANDA1 pipeline and expects to launch as many as
five new products in 2019. The company will be headquartered in the
St. Louis, Missouri area.
Matthew Harbaugh,
currently Mallinckrodt's Executive Vice
President and Chief Financial Officer (CFO) and President of the
Specialty Generics business, is expected to become President and
Chief Executive Officer of the new company upon completion of the
spin off.
Harbaugh will step down as Mallinckrodt's CFO, effective immediately, to focus
exclusively on preparing for separation, but will continue to serve
as President of the Specialty Generics business and report to
Trudeau. A search for Harbaugh's successor is underway. During this
process, George Kegler,
Mallinckrodt's Vice President of
Finance, will serve as interim CFO. Announcements of the Board of
Directors for the Specialty Generics business are expected at a
later date.
Harbaugh said, "Mallinckrodt
has a more than 150-year legacy of operations in St. Louis and a proud history of supplying the
highest quality products to customers. As an independent,
U.S.-based company, I am confident that we will be well positioned
to advance our R&D2 capabilities and continue to
maintain our category leadership in controlled substances."
"Matt has been involved in the Specialty Generics business for
over a decade," said Trudeau. "We're very pleased to have someone
with his leadership experience take the helm."
PROFILE OF THE SPECIALTY PHARMACEUTICAL BRANDS
COMPANY
With net sales in excess of $2.3 billion3 (inclusive of a
$1 billion hospital portfolio and a
robust innovative pipeline), the Specialty Pharmaceutical Brands
company is expected to gain additional liquidity and financial
flexibility from the transaction to enable continued strategic
transformation and growth.
As reported on Nov. 6,
Mallinckrodt's third quarter 2018
results showed strong customer demand for its branded hospital
products – including INOmax® (nitric oxide) gas,
for inhalation, OFIRMEV® (acetaminophen)
injection and the Therakos® immunotherapy
platform – and improved performance for H.P. Acthar®
Gel (repository corticotropin injection). Solid execution
combined with tight expense control helped support increased
R&D investments in the company's innovative pipeline.
Operational excellence and continued strong commercial execution
throughout 2018 have also been the catalysts for Mallinckrodt to raise its guidance for adjusted
diluted earnings per share in each of the last two quarters.
The company expects to achieve a number of key milestones for
its pharmaceutical brands in coming quarters. It anticipates
top-line results from both the completed rheumatoid arthritis
clinical trial and multiple sclerosis registry for H.P. Acthar Gel
as early as the first half of 2019. Additionally, in the second
half of 2019, the company is targeting completion of enrollment in
Phase 4 trials in uveitis and lupus for the drug, and anticipates
completing enrollment in the H.P. Acthar Gel Phase 2 trial in
amyotrophic lateral sclerosis as well. Top-line results from the
company's development program for CPP-1X/sulindac are
anticipated in the first quarter of 2019, and the pivotal trial
results for both StrataGraft® viable engineered
skin tissue and terlipressin are expected to be available in
the second half of the year.
Following the spin-off, ordinary shares of the renamed Specialty
Pharmaceutical Brands company will continue to trade on the NYSE.
The company will maintain its global headquarters in
Staines-upon-Thames, United
Kingdom, and its principal U.S. office in Bedminster, N.J. The company also plans to
maintain other facilities throughout the
United States and in Australia, Canada, Ireland, Japan, Luxembourg and Switzerland.
NEXT STEPS IN THE SEPARATION PROCESS
With the
pursuit of strategic alternatives for the Specialty Generics
business actively underway for more than two years, important
progress has already been made in key areas that the company
believes will simplify and support a relatively short separation
process. Completion of the separation transaction will be subject
to certain conditions, including final Board approval, an opinion
from tax counsel regarding the treatment of the spin-off as
generally tax-free for U.S. federal income tax purposes to
Mallinckrodt shareholders, and the U.S.
Securities and Exchange Commission (SEC) declaring the Form 10
registration statement effective. There can be no assurance
regarding the final allocation of assets between the two companies,
the ultimate timing of the proposed separation, or that the
spin-off will be completed.
CONFERENCE CALL AND WEBCAST
Mallinckrodt will hold a conference call on
Thursday, Dec. 6, 2018, beginning at
8:00 a.m. U.S. Eastern Time. This
call can be accessed in three ways:
- At the Mallinckrodt website:
http://www.mallinckrodt.com/investors.
- By telephone: For both listen-only participants and those who
wish to take part in the question-and-answer portion of the call,
the telephone dial-in number in the U.S. is (877) 359-9508. For
participants outside the U.S., the dial-in number is (224)
357-2393. Callers will need to provide the Conference ID of
5349569.
- Through an audio replay: A replay of the call will be available
beginning at 11:00 a.m. Eastern Time on
Thursday, Dec. 6, 2018, and ending at 11:59 p.m. Eastern Time on Thursday, Dec. 20,
2018. Dial-in numbers for U.S.-based participants are (855)
859-2056 or (800) 585-8367. Participants outside the U.S. should
use the replay dial-in number of (404) 537-3406. All callers will
be required to provide the Conference ID of 5349569.
ADVISORS
Goldman, Sachs & Co. is acting as
financial advisor on the spin-off and Wachtell, Lipton, Rosen &
Katz is acting as legal advisor.
ABOUT THE SPECIALTY GENERICS DISPOSAL GROUP
In light
of this announcement, and in accordance with the accounting
literature pertaining to discontinued operations, it is expected
that the Specialty Generics Disposal Group, which is currently
reflected in discontinued operations, will be brought back into
Mallinckrodt's continuing operations in
conjunction with its next quarterly earnings announcement and
within its 2018 Form 10-K to be filed in February 2019.
ABOUT AMITIZA
AMITIZA (lubiprostone), a leading global
product in the branded constipation market, is approved by the U.S.
Food and Drug Administration for treatment of chronic idiopathic
constipation in adults, irritable bowel syndrome with constipation
in women 18 years of age and older, and opioid-induced constipation
in adult patients with chronic, non-cancer pain, including patients
with chronic pain related to prior cancer or its treatment who do
not require frequent opioid dosage escalation. The AMITIZA product
is a chloride channel activator which increases fluid secretion and
motility of the intestine, facilitating passage of stool.
ABOUT MALLINCKRODT
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; analgesics and
gastrointestinal products. 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 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.
CAUTIONARY STATEMENTS RELATED TO FORWARD-LOOKING
STATEMENTS
Statements in this document that are not strictly
historical, including statements regarding future financial
condition and operating results, economic, business, competitive
and/or regulatory factors affecting Mallinckrodt's businesses and any other statements
regarding events or developments the company believes or
anticipates will or may occur in the future, may be
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995, and involve a number of
risks and uncertainties.
There are a number of important factors that could cause actual
events to differ materially from those suggested or indicated by
such forward-looking statements and you should not place undue
reliance on any such forward-looking statements. These factors
include risks and uncertainties related to, among other things: the
proposed spin-off of the Specialty Generics business inclusive of
Mallinckrodt's AMITIZA product,
including the costs associated with the contemplated separation and
spin-off, the expected benefits of the transaction, and the
expected timeframe to complete such a transaction; general economic
conditions and conditions affecting the industries in which
Mallinckrodt operates; the commercial
success of Mallinckrodt's products;
Mallinckrodt's ability to realize
anticipated growth, synergies and cost savings from acquisitions;
conditions that could necessitate an evaluation of Mallinckrodt's goodwill and/or intangible assets
for possible impairment; changes in laws and regulations;
Mallinckrodt's ability to successfully
integrate acquisitions of operations, technology, products and
businesses generally and to realize anticipated growth, synergies
and cost savings; Mallinckrodt's and
Mallinckrodt's licensers' ability to
successfully develop or commercialize new products; Mallinckrodt's and Mallinckrodt's licensers' ability to protect
intellectual property rights; Mallinckrodt's ability to receive procurement and
production quotas granted by the U.S. Drug Enforcement
Administration; customer concentration; Mallinckrodt's reliance on certain individual
products that are material to its financial performance; cost
containment efforts of customers, purchasing groups, third-party
payers and governmental organizations; the reimbursement practices
of a small number of public or private insurers; pricing pressure
on certain of Mallinckrodt's products
due to legal changes or changes in insurers' reimbursement
practices resulting from recent increased public scrutiny of
healthcare and pharmaceutical costs; limited clinical trial data
for H.P. Acthar Gel; complex reporting and payment obligations
under healthcare rebate programs; Mallinckrodt's ability to navigate price
fluctuations; future changes to U.S. and foreign tax laws;
Mallinckrodt's ability to achieve
expected benefits from restructuring activities; complex
manufacturing processes; competition; product liability losses and
other litigation liability; ongoing governmental investigations;
material health, safety and environmental liabilities; retention of
key personnel; conducting business internationally; the
effectiveness of information technology infrastructure; and
cybersecurity and data leakage risks.
These and other factors are identified and described in more
detail in the "Risk Factors" section of Mallinckrodt's Annual Report on Form 10-K for the
fiscal year ended December 29, 2017.
The forward-looking statements made herein speak only as of the
date hereof and Mallinckrodt does not
assume any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events
and developments or otherwise, except as required by law.
CONTACTS
Investor Relations
Daniel J. Speciale, CPA
Investor Relations and Strategy Officer
314-654-3638
daniel.speciale@mnk.com
Media
Daniel Yunger
Managing Director, Kekst CNC
212-521-4879
daniel.yunger@kekstcnc.com
Rhonda Sciarra
Senior Communications Manager
908-238-6765
rhonda.sciarra@mnk.com
Meredith Fischer
Chief Public Affairs Officer
908-997-9294
meredith.fischer@mnk.com
Government Affairs, Policy, Advocacy
Mark Tyndall
Vice President Government Affairs, Public Policy and Advocacy
202-459-4141
mark.tyndall@mnk.com
Mallinckrodt, the "M" brand mark and
the Mallinckrodt Pharmaceuticals logo are trademarks of a
Mallinckrodt company. Other brands are
trademarks of a Mallinckrodt company or
their respective owners. © 2018 Mallinckrodt.
1 Abbreviated New Drug Application
2 Research and Development
3 Reflects last twelve months ended September 28, 2018 on an as reported basis
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SOURCE Mallinckrodt plc