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Mallinckrodt (MNK) Completes Enrollment in Skin Tissue Study

Zacks Equity Research

Mallinckrodt plc MNK announced that Stratatech (acquired in 2016) has completed enrollment in the phase III study on its investigational regenerative skin tissue, StrataGraft. The study is designed to evaluate the safety and efficacy of StrataGraft regenerative skin tissue for promoting autologous skin regeneration in patients with thermal burns that contain intact dermal elements (also known as deep partial-thickness burns).

The ongoing pivotal study enrolled 71 patients across 12 sites in the United States.

Top-line data from the study is expected by the end of this year. The primary endpoints of the study include autograft sparing and durable wound closure. Mallinckrodt plans to file a Biologics License Application (BLA) in 2020, if outcomes from the program are found to be supportive.

Notably, StrataGraft enjoys an orphan drug status and was among the first products designated as Regenerative Medicine Advanced Therapy (RMAT) by the FDA under the provisions of the 21st Century Cures Act.

Currently, Autograft is the standard of care for treating skin defects in patients with thermal burns. If approved, StrataGraft will be an alternative to autograft for the given patient population.

Shares of Mallinckrodt have soared 56.9% so far this year against the industry’s decline 17.4%.

We remind investors that Mallinckrodt added StrataGraft to its portfolio through the acquisition of Stratatech Corporation, a privately held regenerative medicine company. The company is coordinating with the United States Biomedical Advanced Research and Development Authority (BARDA) to back the StrataGraft development.

Last October, Stratatech was awarded an approximately $26 million in additional Project BioShield funding by the BARDA, which is part of the U.S. Department of Health and Human Services' Office of the Assistant Secretary for Preparedness and Response. The funding is believed to prop up pediatric studies of StrataGraft skin tissue in thermal burns.

StrataGraft is a viable, engineered, bilayer human skin substitute, currently under development for severe burns and other complex skin defects.

Meanwhile, StrataGraft is also under phase II development for treating full thickness burns. Apart from StrataGraft, Mallinckrodt has an interesting candidate in its portfolio — terlipressin. Patients are being enrolled in the ongoing phase III study on terlipressin for the treatment of Hepatorenal Syndrome type 1. This program will be completed in the second half of 2019. Assuming positive results, both BLA submission and approval of the candidate are awaited in 2020.

Zacks Rank & Other Stocks to Consider

Mallinckrodt currently sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering from the healthcare sector include Merus N.V. MRUS, PDL BioPharma, Inc. PDLI and Trevena, Inc. TRVN, all flaunting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Merus’ loss per share estimates have been narrowed 28% for 2019 and 30.7% for 2020 over the past 60 days.

PDL BioPharma’s earnings estimates have been revised 100% upward for 2019 and 30% for 2020 over the past 60 days. The stock has rallied 26.7% year to date.

Trevena’s loss per share estimates have been narrowed 31.5% for 2019 and 64.5% for 2020 over the past 60 days.

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