Shares of Mallinckrodt (MNK - Free Report) were down 13.5% after it reported mixed results for the third quarter of 2019.
Mallinckrodt’s stock has slumped 78.9% in the year so far compared with the industry’s decline of 1.6%.
The company reported adjusted earnings of $2.07 per share in the quarter, declining from the year-ago quarter’s $2.25 but easily beating the Zacks Consensus Estimate of $1.98.
Net sales in the quarter came in at $743.7 million, decreasing 7.1% year over year and falling short of the Zacks Consensus Estimate of $772.4 million.
Quarter in Detail
The company now operates two reportable segments aligned with the previously-announced separation — the Specialty Brands and the Specialty Generics.
Specialty Brands sales came in at $580.4 million, down 9.3% year over year.
Acthar, Mallinckrodt’s largest product, generated sales of $229.8 million, down 20.8% year over year primarily due to persistent reimbursement challenges impacting new and returning patients, and continued payer scrutiny on overall specialty pharmaceutical spending.
Inomax, the company’s second-largest product, generated sales of $136.8 million, up 2.7% year over year, driven by continued demand and significant utilization in multi-year, unlimited use contracts.
Ofirmev sales decreased 1.1% year over year to $86.1 million, due to lower demand and typical quarter-to-quarter order variability.
Sales of the Therakos immunology platform were $60.9 million, up 1.5% on growth in the United States.
Amitza net sales were $52.6 million, up 9.1% owing to consistent strong utilization in Japan, partially offset by an increasingly competitive landscape in the United States.
Specialty Generics sales amounted to $163.3 million, up 2.1% on share recapture across the business.
Adjusted selling, general and administrative expenses were $182 million, down from $205.2 million in the year-ago quarter. Research and development expenses increased to $103.1 million from $86.1 million, primarily owing to the $20-million up-front payment for collaboration with Silence Therapeutics concerning the RNAi technology platform for complement-mediated diseases.
Earnings per share are now projected to be $8.50-$8.70, up from the previous guidance of $8.40-$8.70. The hospital business continues to perform well and the company expects the portfolio to see high-single-digit growth for the full year.
In September, Mallinckrodt reported positive top-line results for its phase III study demonstrating the benefit of StrataGraft regenerative skin tissue in patients with deep partial-thickness burns. The company plans to submit a BLA for StrataGraft tissue to the FDA in the first half of 2020.
Meanwhile, the CONFIRM study, which evaluated the efficacy and safety of pipeline candidate terlipressin in adults with HRS type I, met its primary endpoint. The company is planning to submit an NDA for the same to the FDA in early 2020.
Mallinckrodt beat on earnings in the third quarter but missed sales estimates as Acthar continues to face reimbursement pressures because payers challenge longer duration prescriptions for certain indications.