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Mallinckrodt to Sell Intrathecal Therapy Business for $203M

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Mallinckrodt plc , entered into an agreement with the Piramal Enterprises Limited's subsidiary, Piramal Critical Care in the U.K., to sell its Intrathecal Therapy business for approximately $203 million.

Mallinckrodt’s share price declined 24.0% in the past one year, compared with the Zacks classified Medical-Generics Drugs industry’s fall of 33%.

Coming back to the latest news, we note that Intrathecal Therapy business markets products for the treatment of spasticity via intrathecal (spinal column) drug delivery. The business comprises Gablofen, which is approved for use in management of severe spasticity of cerebral or spinal origin in adult and pediatric patients aged 4 years and above.

Mallinckrodt is currently evaluating a higher Gablofen concentration in late-stage development.

The company decided to sell these assets as they have limited commercial synergy with other parts of its growing Specialty Brands segment.

The sale will impact the bottom line by 20–25 cents in 2017. The anticipated dilution will decline further in 2018.

The sale will be completed in the first quarter of 2017.

We remind investors that Mallinckrodt is currently focused on reshaping its product portfolio through strategic acquisitions and non-core asset divestitures. The company is looking to transform its portfolio into a specialty pharmaceutical company and build upon its growth platforms in autoimmune and rare diseases and hospital therapies

Last week, Mallinckrodt closed the sale of its global Nuclear Imaging business to IBA Molecular (IBAM) for approximately $690 million. The company decided to divest its Nuclear Imaging as it aims to transform its portfolio to specialty pharmaceutical assets.

Mallinckrodt PLC Price and Consensus


Mallinckrodt PLC Price and Consensus | Mallinckrodt PLC Quote

Zacks Rank & Key Picks

Mallinckrodt currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the health care sector include Sucampo Pharmaceuticals SCMP, Anika Therapeutics ANIK and Sunesis Pharmaceuticals SNSS. While Sucampo carries a Zacks Rank #1 (Strong Buy), Anika and Sunesis sport a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sucampo’s earnings estimates were stable at $1.22 for 2016 but have increased from $1.58 to $1.74 for 2017 over the last 60 days. The company posted a positive earnings surprise in all of the four trailing quarters with an average beat of 35.5%.

Anika’s earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.1%. Its share price was up 37.2% in the past one year.

Sunesis’ loss estimates narrowed 5.06% and 8.80% for 2016 and 2017, respectively, over the past 60 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.

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