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Mallinckrodt's Stannsoporfin Gets Complete Response Letter

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Mallinckrodt Plc announced that the FDA has issued a Complete Response Letter to its new drug application (NDA) for stannsoporfin.

Stannsoporfin is a heme oxygenase inhibitor under investigation for the treatment of newborns greater than 35 weeks of gestational age with indicators of hemolysis, who are at risk of developing severe jaundice or hyperbilirubinemia.

Shares of the company fell 2.2% following the news. Year to date, shares of the company have increased 55.9% compared with the industry’s growth of 6.6%.

The letter provides guidance on areas of further evaluation for resubmitting the NDA. The letter from the FDA was not unexpected following the outcome at the Advisory Committee meeting held in May. The FDA’s Gastrointestinal Drugs Advisory Committee and Pediatric Advisory Committee recommended in a vote of 21 to 3 that the risk-benefit profile of stannsoporfin does not support the approval for the treatment of newborns aging 35 weeks or more of gestational age with indicators of hemolysis, who are at risk of developing hyperbilirubinemia.

The company is evaluating the agency's guidance and will request a meeting with the FDA in the coming months to discuss the path forward. Until that discussion, Mallinckrodt does not expect to make a decision related to future efforts or investment in the developmental product.

We remind investors that stannsoporfin was added to Mallinckrodt’s portfolio after the company acquired InfaCare Pharmaceutical Corporation in September 2017.

Meanwhile, Mallinckrodt is also making progress with two of its late-phase programs — terlipressin and StrataGraft. Patient recruitment is two-thirds complete in the ongoing phase III trial on pipeline candidate, terlipressin for the treatment of Hepatorenal Syndrome type 1.

Enrolment is ongoing with nearly half the planned patients enrolled in the deep partial thickness study on StrataGraft. The candidate is in development trials for treatment of deep partial and full thickness burns.

Zacks Rank & Other Stocks to Consider

Mallinckrodt has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the biotech sector are Gilead Sciences Inc. (GILD - Free Report) , Celgene Corp. and Vertex Pharmaceuticals (VRTX - Free Report) . While Gilead carries a Zacks Rank #1 (Strong Buy), Celgene and Vertex carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates have increased from $6.15 to $6.57 for 2018 and from $6.33 to $6.48 for 2019 over the past 30 days. The company delivered a positive earnings surprise in three of the trailing four quarters with an average beat of 6.43%. The stock has rallied 3.0% so far this year.

Celgene’s earnings per share estimates have increased from $8.54 to $8.76 for 2018 and from $10.19 to $10.60 for 2019 over the past 30 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 2.38%.

Vertex’s earnings per share estimates moved up from $3.15 to $3.74 for 2018 and from $4.37 to $4.59 for 2019 in the last 30 days. The company delivered a positive earnings surprise in all of the trailing four quarters with an average beat of 27.5%. Share price of the company has increased 18.6% in a year.

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