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Mallinckrodt, Zogenix to End Deal

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Mallinckrodt plc (MNK - Free Report) announced that its co-promotion agreement with Zogenix Inc. (ZGNX - Free Report) for SUMAVEL DosePro, approved for the treatment of adults suffering from acute migraine and cluster headaches, will be terminated. Mallinckrodt will stop promoting the drug from Jan 31.

The agreement between Mallinckrodt and Zogenix dates back to Jun 7, 2012. Per the terms of the agreement, Mallinckrodt’s sales force was selling the drug to its prescriber base.  Mallinckrodt received a percentage of net sales from prescriptions generated by it. The agreement was initially slated to end on Jun 30 this year.

The agreement was terminated ahead of Zogenix’s sales force expansion plan, which is due to take effect from February this year. Zogenix will be fully responsible for the commercialization of the drug and will start promoting the drug to neurologists, headache specialists and pain specialists from Feb 1, 2014.

The amendment in the co-promotion agreement has been made in such a way that neither of the companies will be liable to pay a penalty for the premature termination.

Meanwhile, Mallinckrodt intends to focus on promoting its products in the pain market. 2014 will be a transition year for the company, with lead branded pain product Exalgo losing exclusivity. The company also expects additional competition for its generic version of Concerta (methylphenidate ER).

Mallinckrodt carries a Zacks Rank #2 (Buy). Other players which look attractive at current levels include Impax Laboratories Inc. and Actavis plc (ACT - Free Report) . While Impax is a Zacks Rank #1 (Strong Buy) stock, Actavis is a Zacks Rank #2 (Buy) stocks.

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