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Mallinckrodt And Federal Trade Commission Resolve Questcor Matter

-- Mallinckrodt and FTC close legacy Questcor matter with company agreement to license Synacthen® Depot for possible U.S. development in two indications and cash settlement payment of $100 million --
-- Mallinckrodt retains rights to continue U.S. development of product for all other indications, including potential use in treatment of Duchenne Muscular Dystrophy (DMD); continues to own rights to product outside the U.S. --
-- No impact on Mallinckrodt net sales --

STAINES-UPON-THAMES, United Kingdom , Jan. 18, 2017 /PRNewswire/ --  Mallinckrodt plc (NYSE: MNK), a leading global specialty pharmaceutical company, today announced that it has reached agreement with the U.S. Federal Trade Commission (FTC) to resolve, without admission of wrongdoing, the previously disclosed FTC investigation into the acquisition by Questcor Pharmaceuticals, Inc. , of Synacthen® Depot, a synthetic ACTH product, in 2013. The product became part of Mallinckrodt's portfolio with its August 2014 acquisition of Questcor.

Under the agreement, Mallinckrodt will license the drug to a licensee, identified by the FTC as Marathon Pharmaceuticals, LLC , to develop and pursue possible U.S. Food and Drug Administration ( FDA ) approval of Synacthen Depot in two indications – Infantile Spasms (IS) and Nephrotic Syndrome (NS). The licensee will also acquire exclusive rights to the Synacthen trademark in the U.S. Under the agreement, Mallinckrodt will also pay $100 million to settle claims made by the FTC and five states1$90 million of which will be paid within 10 business days, $10 million within 90 days – plus $2 million to reimburse the states' legal fees.

Since acquiring Questcor, Mallinckrodt has cooperated fully with the FTC. A Mallinckrodt spokesperson said, "We are pleased with the agreement reached to resolve this legacy matter, although we continue to strongly disagree with allegations outlined in the FTC's complaint, believing that key claims are unsupported and even contradicted by scientific data and market facts, and appear to be inconsistent with the views of the FDA . Removing the distraction of litigation enables us to focus on advancing our increasingly diversified portfolio of medicines for the benefit of patients. The resolution also allows us to retain the rights to continue manufacturing and marketing Synacthen Depot to patients in other countries around the world where we already have rights. And, more importantly, we can continue to develop the product for all other indications in the U.S. except IS and NS, including our recently announced trial to explore its potential use for patients suffering from DMD."

Mallinckrodt currently derives no U.S. revenue from Synacthen Depot, and the resolution of this matter will not impact Mallinckrodt's net sales.

Synthetic ACTH products are relatively common – Synacthen Depot and others have been on the market outside of the U.S. for years, if not decades – and in Mallinckrodt's view are not especially complex to either formulate or manufacture at scale.

However, history has borne out the FTC's view that there are "high barriers to entry2" for a synthetic ACTH in the U.S. market. Synacthen Depot has never been FDA -approved for use in the U.S. In fact, in all the time it has been commercially available, no owner (including the owner prior to Questcor) ever undertook U.S. development in any indication until after the Questcor acquisition when Mallinckrodt began preparation for development in DMD.

The Commission further states that U.S. market entry would require a sponsor to successfully conduct "clinical trials necessary for FDA approval.3" This supports Mallinckrodt's publicly stated view that the regulatory pathway for U.S. development of the product for either IS or NS would require a sponsor to enroll and successfully complete controlled clinical trials. This would entail convincing patients or the parents of infant patients in fragile, high-risk populations to forego existing approved, effective treatments and enroll in an experimental protocol where they risk receiving less effective treatment or no treatment at all.

In addition, recent market experience demonstrates that the time and resources required even to explore development of a synthetic ACTH for IS and NS can be prohibitive. In 2013, another publicly traded company developed its own synthetic ACTH product and announced plans to enter the U.S. market in IS and NS. Subsequently, in a 2016 call with investors, the company communicated that it would seek to partner with or sublicense the product to a larger company to avoid the "time, effort and resources" required for internal development.

INVESTOR CONFERENCE CALL

Mallinckrodt will hold a conference call for investors on Thursday, Jan. 19 from 7:30 a.m. to 8:00 a.m. Eastern Time . The call can be accessed in three ways:

  • At the Mallinckrodt website: http://www.mallinckrodt.com/investors.
  • By telephone: For both listen-only participants and those who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the U.S. is (877) 359-9508. For participants outside the U.S., the dial-in number is (224) 357-2393. Callers will need to provide the Conference ID of 50844751.
  • Through an audio replay: A replay of the call will be available beginning at 11:30 a.m. Eastern Time on Thursday, January 19 , and ending at 11:59 p.m. Eastern Time on February 2 . Dial-in numbers for U.S.-based participants are (855) 859-2056. Participants outside the U.S. should use the replay dial-in number of (404) 537-3406. All callers will be required to provide the Conference ID of 50844751.

About Synacthen Depot
Synacthen Depot is a synthetic melanocortin peptide with 24 amino acids known as tetracosactide that is used for the treatment of a number of conditions outside the U.S., and Synacthen is a diagnostic formulation of the drug. Synacthen Depot, as formulated, contains benzyl alcohol, which can be toxic to infants.

About Duchenne Muscular Dystrophy
DMD is a genetic disorder characterized by progressive muscle degeneration and weakness. It is one of nine types of muscular dystrophy.

DMD is caused by an absence of dystrophin, a protein that helps keep muscle cells intact. Symptom onset is in early childhood, usually between ages 3 and 5. The disease primarily affects boys, but in rare cases it can affect girls. Symptoms include muscle weakness, which can begin as early as age 3, first affecting the muscles of the hips, pelvic area, thighs and shoulders, and later the skeletal (voluntary) muscles in the arms, legs and trunk.4 Boys with DMD are typically wheelchair bound by age 12 and do not survive past their mid-20s, when their heart and breathing muscles begin to fail.5

About Mallinckrodt
Mallinckrodt is a global business that develops, manufactures, markets and distributes specialty pharmaceutical products and therapies, as well as nuclear imaging products. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics and hemostasis products; and central nervous system drugs. The company's core strengths include the acquisition and management of highly regulated raw materials and specialized chemistry, formulation and manufacturing capabilities. The company's Specialty Brands segment includes branded medicines and its Specialty Generics segment includes specialty generic drugs, active pharmaceutical ingredients and external manufacturing. 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 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.

Cautionary Statements Related to Forward-Looking Statements
Statements in this document that are not strictly historical, including statements regarding the terms of the agreement with the FTC and the expected payment and license, future operating results, 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: any legal or regulatory challenges to the settlement; the ability of Marathon Pharmaceuticals LLC to successfully develop and pursue FDA approval of Synacthen Depot in IS and NS; general economic conditions and conditions affecting the industries in which Mallinckrodt operates; the commercial success of Mallinckrodt's products; Mallinckrodt's ability to protect intellectual property rights; customer concentration; 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; pricing pressure on certain of Mallinckrodt's products due to legal changes or changes in insurers' reimbursement practices resulting from recent increased public scrutiny of healthcare and pharmaceutical costs; complex reporting and payment obligations under healthcare rebate programs; Mallinckrodt's ability to navigate price fluctuations; and competition.

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 30, 2016 . 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

Daniel J. Speciale, CPA
Director, Investor Relations
314-654-3638
daniel.speciale@mallinckrodt.com

Media
Daniel Yunger or Jeffrey Taufield
Kekst
212-521-4879
daniel-yunger@kekst.com
jeffrey-taufield@kekst.com

1 Alaska , Maryland , New York, Texas , and Washington
2 Complaint, FTC, the States of Alaska , Maryland , New York, Texas and Washington v. Mallinckrodt ARD Inc. , formerly known as Questcor Pharmaceuticals, Inc. and Mallinckrodt PLC , paragraph 32
3 ibid
4 https://www.mda.org/disease/duchenne-muscular-dystrophy (Accessed August 21, 2016)
5 http://www.cureduchenne.org/aboutduchenne.html (Accessed August 22, 2016 )

 

 

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SOURCE Mallinckrodt plc