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Mallinckrodt Diversifies Hospital Growth Portfolio, Acquiring Three Commercial-Stage, Global Specialty Hemostasis Brands From The Medicines Company

-- Mallinckrodt will invest in market development of RECOTHROM®, PreveLeak™ and RAPLIXA™ - innovative, highly durable hemostasis products that increase surgeons' choice -
-- Addition of global hemostasis assets will augment Mallinckrodt's growing hospital portfolio, including INOmax® and THERAKOS®; specifically expands on current OFIRMEV® surgical pain management offering --
-- Approved for use in the U.S. and certain European countries with long-range market exclusivity through intellectual property protection - RECOTHROM, 2026; PreveLeak, 2028; RAPLIXA, 2031 --
-- Upfront payment of approximately $175 million inclusive of existing inventory; transaction also includes potential future added milestone payments and is expected to be financed from cash on hand --
--Transaction expected to be accretive in fiscal 2017, driving organic growth for these products in the low double-digits --

CHESTERFIELD, United Kingdom, Dec. 18, 2015 /PRNewswire/ -- Mallinckrodt plc (NYSE: MNK), a leading global specialty biopharmaceutical company, today announced that it has entered into a purchase agreement with The Medicines Company (NASDAQ: MDCO) under which subsidiaries of Mallinckrodt plc will acquire a global portfolio of three commercial-stage topical hemostasis drugs – RECOTHROM® Thrombin topical (Recombinant), PreveLeak™ Surgical Sealant, and RAPLIXA™ (Fibrin Sealant) – for an initial payment of approximately $175 million, inclusive of existing inventory. The transaction also includes potential added future considerations in the form of payments for achieving certain milestones, and is expected to be financed from cash on hand.

"Addition of this innovative portfolio of branded hemostats to our hospital platform is another demonstration of Mallinckrodt's 'acquire to invest' business strategy. Products that help control bleeding are essential to the vast majority of surgical practices. Yet this category – a market that has been estimated at $750 million in the U.S. and at least $1 billion globally – is an area in hospital products that has seen relatively little innovation and investment in recent years," said Mark Trudeau, Chief Executive Officer and President of Mallinckrodt.

Trudeau continued, "Acquiring and promoting leading hemostasis brand RECOTHROM alongside OFIRMEV® (acetaminophen) injection broadens Mallinckrodt's impact in the surgical suite for patients and physicians, and creates a strong framework to broadly commercialize innovative, highly durable new agents PreveLeak and RAPLIXA, which carry intellectual property protection to 2028 and 2031, respectively. As we continue to further diversify our portfolio, we're excited about the volume growth opportunity these products will add to our hospital offering for years to come."

On a reported U.S. GAAP1 basis, Mallinckrodt expects the transaction to be dilutive to its fiscal 2016 earnings per share (EPS); however, on an adjusted basis, the company expects the transaction to be neutral to EPS in fiscal 2016. On both a U.S. GAAP and adjusted basis, the company expects the transaction to be accretive to EPS beginning in fiscal 2017. Assuming a closing in the second quarter of fiscal 2016, the company expects the new products will add between $40 million and $45 million in incremental revenue in fiscal 2016, and provide low double-digit organic growth starting in fiscal 2017.

Through this acquisition, the company is expected to capitalize on synergies with Mallinckrodt's current U.S. commercial team focused on pain management in hospital surgical practice with OFIRMEV, the company's intravenous acetaminophen product indicated for the management of mild to moderate pain, and management of moderate to severe pain with adjunctive opioid analgesics. With expanded product offerings including OFIRMEV, RECOTHROM, PreveLeak and RAPLIXA, and with focused promotion, the company's commercial organization – supported by Mallinckrodt's strong sales, market access, national accounts and medical affairs teams – is expected to broaden access for patients who would benefit from these analgesic and hemostasis drugs.

Hemostasis Products

Each of the three drugs being acquired is approved by the U.S. Food and Drug Administration (FDA) and also in a number of other countries.

Introduced in 2009, RECOTHROM is widely used in the U.S., and is the first and only recombinant topical thrombin approved for use in adult and pediatric patients. It is FDA-approved as a topical thrombin indicated to aid hemostasis whenever oozing blood and minor bleeding from capillaries and small venules is accessible and control of bleeding by standard surgical techniques (such as suture, ligature, or cautery) is ineffective or impractical in adults and pediatric populations greater than or equal to one month of age. RECOTHROM is also marketed internationally through distributors.

Upon closing, Mallinckrodt will invest in the commercial launch and ongoing market development of both PreveLeak and RAPLIXA in fiscal year 2016. Both have shorter preparation times and are easier to use and store than similar products in their categories. PreveLeak is more flexible than hemostasis glue products, is a surgical sealant and is indicated for use in vascular reconstructions to achieve adjunctive hemostasis by mechanically sealing areas of leakage. PreveLeak is currently marketed in Europe through distributors. 

RAPLIXA is the first and only powder fibrin sealant in ready-to-use room temperature form, with the RAPLIXASpray device allowing for even application over a diffuse bleeding site and greater versatility. RAPLIXA is comprised of human-plasma derived fibrinogen and thrombin and FDA-approved as an adjunct to hemostasis for mild to moderate bleeding in adults undergoing surgery when control of bleeding by standard surgical techniques (such as suture, ligature and cautery) is ineffective or impractical. RAPLIXA is used in conjunction with an absorbable gelatin sponge (USP) and is applied directly or by using the RAPLIXASpray device.

Closing

Mallinckrodt will report net sales from the new products in its Specialty Brands segment. Subject to customary terms and conditions, including the expiration or termination of the waiting period under the Hart Scott Rodino Antitrust Improvements Act, the transaction is expected to close in the first calendar quarter of 2016, Mallinckrodt's fiscal second quarter.

ABOUT OFIRMEV

OFIRMEV (acetaminophen) injection is indicated for the management of mild to moderate pain, management of moderate to severe pain with adjunctive opioid analgesics, and reduction of fever.

Important Risk Information

RISK OF MEDICATION ERRORS AND HEPATOTOXICITY

Take care when prescribing, preparing, and administering OFIRMEV injection to avoid dosing errors which could result in accidental overdose and death.

OFIRMEV contains acetaminophen. Acetaminophen has been associated with cases of acute liver failure, at times resulting in liver transplant and death. Most of the cases of liver injury are associated with the use of acetaminophen at doses that exceed the recommended maximum daily limits, and often involve more than one acetaminophen-containing product.

OFIRMEV is contraindicated in patients with severe hepatic impairment, severe active liver disease or with known hypersensitivity to acetaminophen or to any of the excipients in the formulation. Acetaminophen should be used with caution in patients with the following conditions: hepatic impairment or active hepatic disease, alcoholism, chronic malnutrition, severe hypovolemia, or severe renal impairment. Rarely, acetaminophen may cause serious skin reactions such as acute generalized exanthematous pustulosis (AGEP), Stevens-Johnson Syndrome (SJS), and toxic epidermal necrolysis (TEN), which can be fatal. Discontinue OFIRMEV immediately if symptoms associated with allergy or hypersensitivity occur, or at the first appearance of skin rash. Do not use in patients with acetaminophen allergy.

The most common adverse reactions in patients treated with OFIRMEV were nausea, vomiting, headache, and insomnia in adult patients and nausea, vomiting, constipation, pruritus, agitation, and atelectasis in pediatric patients. The antipyretic effects of OFIRMEV may mask fever in patients treated with postsurgical pain. OFIRMEV is approved for use in patients >2 years of age. Do not exceed the recommended maximum daily dose of OFIRMEV. OFIRMEV should be administered only as a 15-minute infusion.

For additional Important Risk Information, including complete boxed warning, see Full Prescribing Information.

ABOUT RECOTHROM

RECOTHROM, Thrombin topical (Recombinant), is a topical thrombin indicated to aid hemostasis whenever oozing blood and minor bleeding from capillaries and small venules is accessible and control of bleeding by standard surgical techniques (such as suture, ligature, or cautery) is ineffective or impractical in adults and pediatric populations greater than or equal to one month of age.

Important Risk Information

Contraindications: Do not inject directly into the circulatory system. Do not use for the treatment of massive or brisk arterial bleeding. Do not administer to patients with a history of hypersensitivity to RECOTHROM, any components of RECOTHROM or hamster proteins.

Warnings and precautions: RECOTHROM may cause thrombosis if it enters the circulatory system. Apply topically. DO NOT INJECT. Hypersensitivity reactions, including anaphylaxis, may occur.

The most common adverse reaction (incidence 6%) was thromboembolic events. Antibody formation to RECOTHROM occurred in < 1% of patients. None of the antibodies detected neutralized native human thrombin.

Full prescribing information is available here.

ABOUT PREVELEAK

PreveLeak Surgical Sealant is indicated for use in vascular reconstructions to achieve adjunctive hemostasis by mechanically sealing areas of leakage.

Important Risk Information

Contraindications: PreveLeak is not for use in patients with known allergies to materials of bovine or shellfish origin. PreveLeak is not for intravascular use. PreveLeak is not for cerebrovascular repair or cerebrospinal leak repair.

Warnings: Do not use PreveLeak as a substitute for sutures or staples. Avoid exposure of PreveLeak to nerves. Do not use PreveLeak in the presence of obvious infection and use it with caution in contaminated areas of the body. Do not allow either the uncured or polymerized form of PreveLeak to contact circulating blood. PreveLeak contains a material of animal origin that may be capable of transmitting infectious agents. Repeated use of PreveLeak in subsequent surgeries has not been studied.  Hypersensitivity reactions were not seen using PreveLeak, but hypersensitivity of bovine serum albumin has been reported.

Full instructions for use are available here.

ABOUT RAPLIXA

Raplixa is a fibrin sealant indicated as an adjunct to hemostasis for mild to moderate bleeding in adults undergoing surgery when control of bleeding by standard surgical techniques (such as suture, ligature, and cautery) is ineffective or impractical. Raplixa is used in conjunction with an absorbable gelatin sponge (USP) and is applied directly or using the RaplixaSpray device.

Important Risk Information

Contraindications: Do not use intravascularly. Do not use for the treatment of severe or brisk arterial bleeding. Do not use in patients known to have anaphylactic or severe systemic reactions to human blood products.

Warnings and precautions: Thromboembolic events may result from intravascular application of Raplixa. Air or gas embolism can occur using air- or gas-pressurized sprayers to administer fibrin sealants. Operate the device according to the manufacturer's instructions.  Raplixa may carry a risk of transmitting infectious agents, such as viruses, and theoretically, the Creutzfeldt-Jakob disease (CJD) agents, despite manufacturing steps designed to reduce the risk of viral transmission. Allergic type hypersensitivity reactions may occur. If allergic type hypersensitivity symptoms occur, discontinue administration immediately.

The most commonly reported adverse reactions (> 5 % subjects) were procedural pain, nausea, constipation, pyrexia, and hypotension.

Full prescribing information is available here.

ABOUT MALLINCKRODT

Mallinckrodt is a global specialty biopharmaceutical and imaging business that develops, manufactures, markets and distributes specialty pharmaceutical products and imaging agents. Areas of focus include therapeutic drugs for autoimmune and rare disease specialty areas like neurology, rheumatology, nephrology and pulmonology; immunotherapy and neonatal respiratory critical care therapies; and analgesics and central nervous system drugs. The company's core strengths include the acquisition and management of highly regulated raw materials; deep regulatory expertise; and specialized chemistry, formulation and manufacturing capabilities. The company's Specialty Brands segment includes branded medicines; its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing; and the Nuclear Imaging segment includes nuclear imaging agents. To learn more about Mallinckrodt, visit www.mallinckrodt.com.

Mallinckrodt uses its website as a channel of distribution of important company information, such as press releases, investor presentations and other financial information. It also uses its website to expedite public access to time-critical information regarding the company in advance of or in lieu of distributing a press release or a filing with the U.S. Securities and Exchange Commission (SEC) disclosing the same information. Therefore, investors should look to the Investor Relations page of the website for important and time-critical information. Visitors to the website can also register to receive automatic e-mail and other notifications alerting them when new information is made available on the Investor Relations page of the website.

NON-GAAP FINANCIAL MEASURES

This press release references adjusted diluted earnings per share, which is considered a "non-GAAP" financial measure under applicable SEC rules and regulations.

Adjusted diluted earnings per share represent adjusted net income divided by the number of diluted shares.  Adjusted net income represents amounts, prepared in accordance with accounting principles generally accepted in the U.S. (GAAP), adjusted for certain items (on an after-tax basis) that management believes are not reflective of the operational performance of the business. Adjustments to GAAP amounts include restructuring and related charges, net; amortization and impairment charges; discontinued operations; acquisition-related expenses, significant legal and environmental charges and other items identified by the company.

The company has provided these adjusted financial measures because they are used by management, along with financial measures in accordance with GAAP, to evaluate the company's operating performance. In addition, the company believes that they will be used by certain investors to measure Mallinckrodt's operating results. Management believes that presenting these adjusted measures provides useful information about the company's performance across reporting periods on a consistent basis by excluding items that the company does not believe are indicative of its core operating performance.

These adjusted measures should be considered supplemental to and not a substitute for financial information prepared in accordance with GAAP. The company's definition of these adjusted measures may differ from similarly titled measures used by others.

Because adjusted financial measures exclude the effect of items that will increase or decrease the company's reported results of operations, management strongly encourages investors to review the company's consolidated financial statements and publicly filed reports in their entirety.

Quantitative guidance on the impact of the acquisition on the company's fiscal year 2016 and 2017 diluted earnings per share has not been provided due to the inherent difficulty of forecasting the timing or amount of items that would be included in calculating these measures.

Cautionary Statements Related to Forward-Looking Statements

Statements in this document that are not strictly historical, including statements regarding future financial condition and operating results, economic, business, competitive and/or regulatory factors affecting Mallinckrodt's businesses and any other statements regarding events or developments that we believe or anticipate will or may occur in the future, may be "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve a number of risks and uncertainties.

There are a number of important factors that could cause actual events to differ materially from those suggested or indicated by such forward-looking statements and you should not place undue reliance on any such forward-looking statements. These factors include risks and uncertainties related to, among other things: the parties' ability to satisfy the conditions to the hemostasis products acquisition and complete the acquisition on the anticipated timeline or at all; general economic conditions and conditions affecting the industries in which Mallinckrodt operates; the commercial success of Mallinckrodt's products; Mallinckrodt's ability to realize anticipated growth, synergies and cost savings from its recently completed acquisitions; conditions that could necessitate an evaluation of Mallinckrodt's goodwill and/or intangible assets for possible impairment; changes in laws and regulations; Mallinckrodt's ability to identify, acquire or close future acquisitions; Mallinckrodt's ability to successfully integrate acquisitions of operations, technology, products and businesses generally and to realize anticipated growth, synergies and cost savings; Mallinckrodt's ability to successfully develop or commercialize new products; Mallinckrodt's ability to protect intellectual property rights; Mallinckrodt's ability to receive procurement and production quotas granted by the U.S. Drug Enforcement Administration; customer concentration; Mallinckrodt's reliance on certain individual products that are material to its financial performance; cost containment efforts of customers, purchasing groups, third-party payers and governmental organizations; the reimbursement practices of a small number of public or private insurers; limited clinical trial data for H.P. Acthar® Gel; complex reporting and payment obligations under healthcare rebate programs; Mallinckrodt's ability to achieve anticipated benefits of price changes; Mallinckrodt's ability to achieve expected benefits from restructuring activities; complex manufacturing processes; competition; product liability losses and other litigation liability; ongoing governmental investigations; material health, safety and environmental liabilities; retention of key personnel; conducting business internationally; and the effectiveness of information technology infrastructure.

These and other factors are identified and described in more detail in the "Risk Factors" section of Mallinckrodt's Annual Report on Form 10-K for the fiscal year ended September 25, 2015. The forward-looking statements made herein speak only as of the date hereof and Mallinckrodt does not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise, except as required by law.

CONTACTS

Investor Relations
Coleman N. Lannum, CFA
Senior Vice President, Investor Strategy and IRO
314-654-6649
cole.lannum@mallinckrodt.com 

Media
Rhonda Sciarra
Senior Communications Manager
314-654-8618
rhonda.sciarra@mallinckrodt.com 

Meredith Fischer
Senior Vice President, Communications and Public Affairs
314-654-3318
meredith.fischer@mallinckrodt.com

1 Generally Accepted Accounting Practices

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SOURCE Mallinckrodt plc