Mallinckrodt, NeuroproteXeon Team Up for Inhalation Therapy
Mallinckrodt plc MNK announced that it has entered into a licensing agreement with NeuroproteXeon. The agreement relates to the development and commercialization of NeuroproteXeon's investigational, pharmaceutical-grade xenon gas for inhalation therapy.
The therapy is being evaluated to improve survival and functional outcomes for patients resuscitated after a cardiac arrest. Per the terms, Mallinckrodt will pay $10 million upfront with cash on hand to reimburse NeuroproteXeon for certain product development costs. This will give Mallinckrodt exclusive rights to commercialize the therapy. Mallinckrodt will make an additional milestone payment of up to $25 million.
A tentative approval of xenon for inhalation will expand Mallinckrodt's portfolio of hospital drug-device combination products providing therapies for patients.
The phase III registration trial will begin in early 2018. It is designed to confirm a potential clinical benefit associated with the positive biomarker outcome as demonstrated on magnetic resonance imaging (MRI) scans of patients who were treated with hypothermia therapy plus xenon gas for inhalation that was seen in a phase IIb study.
The trial is being conducted under Special Protocol Agreement with the FDA. The trial will measure the clinical benefit of xenon for inhalation in terms of improved 30-day survival and improved functional outcomes. The Special Protocol Assessment that has been approved by the FDA entitles an interim analysis at 50% of trial completion of the primary endpoint follow up.
Assuming the primary and secondary endpoints are positive, the trial will be halted. However, if the primary or secondary endpoints are not met the trial will be stopped. Mallinckrodt expects the regulatory submission to be a drug and delivery device combination upon a full completion of the trial (tentative approval expected in 2018).
Mallinckrodt expects bottom-line dilution for the remainder of 2017 to be 10 to 15 cents, with slightly lower dilution in 2018.
Mallinckrodt’s stock price has declined 22.6% year to date, compared with the industry’s fall of 19.0%.
We note that Mallinckrodt is currently focused on reshaping its product portfolio through strategic acquisitions and non-core asset divestitures to transform the portfolio and become a high-performing specialty pharmaceutical company. The company recently acquired privately held InfaCare Pharmaceutical Corporation. This specialty pharmaceutical company focuses on the development and commercialization of proprietary pharmaceuticals for neo-natal and pediatric patients.
The company’s generic segment continues to face weakness as various product categories are witnessing stiff competition, which is hurting both volumes and prices. The company expects double-digit declines in revenues from this segment. In addition, continued expected weakness in this segment will adversely impact gross profit margins also. The company sold its Nuclear Imaging business due to persistent challenging conditions.
The company also sold its Intrathecal Therapy business to focus on key areas. While Acthar sales continue to be strong on the back of increased formulary positions and access for appropriate patients in both the commercial and public environments, sales of Therakos is expected to decline.
Zacks Rank & Stocks to Consider
Mallinckrodt carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in health care sector are Regeneron Pharmaceuticals, Inc. REGN, Biogen Inc. BIIB and Aduro BioTech, Inc. ADRO. While Regeneron sports a Zacks Rank #1 (Strong Buy), Biogen and Aduro carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Regeneron’s earnings per share estimates have increased from $13.84 to $14.99 for 2017 and from $15.79 to $16.65 for 2018 over the last 60 days. The company posted positive earnings surprises in two of the trailing four quarters, with an average of 10.11%. The share price of the company has increased 21.8% year to date.
Biogen’s earnings per share estimates have moved up $21.37 to $21.42 for 2017 and from $23.11 to $23.23 for 2017 over the last 60 days. The company delivered positive earnings surprises inthe trailing four quarters, with an average of 6.41%. The share price of the company has increased 10.3% year to date.
Aduro’s loss estimates per share have narrowed from $1.36 to $1.29 for 2017 over last 60 days. The company reported positive earnings surprises in two of the trailing four quarters, with an average of 2.53%.
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