STAINES-UPON-THAMES, United Kingdom, Aug. 4, 2017 /PR Newswire/ -- Mallinckrodt plc (NYSE: MNK), a leading global specialty pharmaceutical company, and InfaCare Pharmaceutical Corporation today announced that they have entered into an agreement under which Mallinckrodt will acquire InfaCare, a privately held specialty pharmaceutical company focused on development and commercialization of proprietary pharmaceuticals for neonatal and pediatric patient populations. InfaCare's developmental product stannsoporfin, a heme oxygenase inhibitor, is under investigation for its potential to reduce the production of bilirubin, the elevation of which can contribute to serious consequences in infants.
In July 2016 InfaCare and the U.S. Food and Drug Administration (FDA) reached agreement that a New Drug Application (NDA) could be filed for stannsoporfin using the totality of the drug's data package, including:
- a positive Phase 2(b) trial as its pivotal study, and
- data from a second positive Phase 2(b) trial, with
- no additional studies required pre-approval.
This allowance reflects the medical need in infants at risk of developing severe jaundice. There are also challenges in conducting controlled trials in this fragile population.
In December 2016 the FDA also granted stannsoporfin its Fast Track designation, a process designed to facilitate development and expedite the review of drugs to treat serious conditions and fill an unmet medical need1. Fast Track status allows for a "rolling" NDA data submission that has recently begun, and approval is anticipated in the first half of 2018. Post-approval commitments required by the FDA would include conducting trials in pre-term infants less than 35 weeks gestational age as part of the pediatric requirements. If approved, the drug will have substantial durability both as a new chemical entity2 and through its intellectual property which is valid until 20323.
"Severe hyperbilirubinemia can result in serious complications in infants, including brain damage and, rarely, death," said Steven Romano, MD, Chief Scientific Officer and Executive Vice President of Mallinckrodt. "We look forward to bringing this much-needed treatment option to babies at greatest risk for the consequences of this condition."
"We believe stannsoporfin has the potential to help thousands of infants whose severe jaundice is unresolved by current treatments," said Dan Burns, President and Chief Executive Officer, InfaCare. "We're also excited by the additional development capability and commercial reach that can be gained by becoming part of Mallinckrodt. Together I'm confident we can successfully bring this important treatment to market."
Understanding Severe Jaundice (Severe Hyperbilirubinemia)
Jaundice, or hyperbilirubinemia, is a common clinical condition seen in both term and pre-term newborns. Though lower levels of bilirubin can be benign, some newborns are at greater risk as a result of hemolysis (accelerated breakdown of red blood cells) contributing to the potential of reaching severe bilirubin levels. If a baby develops severe jaundice, there is a risk of bilirubin passing into the brain, a syndrome called acute bilirubin encephalopathy – which can be a serious condition. Prompt treatment may prevent significant lasting damage. But persistent, high levels of bilirubin in the brain can progress to kernicterus, a rare condition associated with severe and permanent brain damage. Symptoms include poor feeding, shrill cry, muscle rigidity, markedly arched back with a backwards hyperextension of the neck, seizures, and stupor or coma. Complications may also include hearing loss and death4,5. American Academy of Pediatrics guidelines recommend all newborns be assessed for the risk of hyperbilirubinemia prior to discharge from the hospital6.
Stannsoporfin Reduces Potential for Developing Severe Jaundice through Novel Method of Action
Current therapies focus on removing excess bilirubin from the infant's system. Preliminary data from controlled clinical studies show that stannsoporfin's novel method of action demonstrated a robust effect in inhibiting bilirubin production. The drug has also been shown to have a good safety profile when compared to placebo, and has convenient administration through a single intramuscular injection. If approved, this proprietary therapy is expected to be the first and only pharmacologic treatment indicated for treatment of newborns at risk for developing severe infantile jaundice in the U.S.
"We believe stannsoporfin has the potential to significantly alter the treatment paradigm for infants with this condition which, if unchecked, can have devastating impact to the patient," said Mark Trudeau, Chief Executive Officer and President of Mallinckrodt. "The addition of this highly durable, unique developmental asset to our growing hospital business is an excellent example of Mallinckrodt's investment strategy."
InfaCare's founder and Chairman, Robert Vukovich, added, "A number of years ago we recognized the potential medical importance of stannsoporfin and the role it would play in treating severe neonatal jaundice and the potential serious neurological consequences of elevated bilirubin levels in newborns. Stannsoporfin is a breakthrough therapy and I am delighted to see that, with this transaction, the dream we have had to successfully develop this drug is coming to fruition, and we look forward to making it available for clinical use."
Global Severe Jaundice Market and Existing Treatment Paradigm
In the U.S., the total number of term births is estimated at 3.7 million per year7,8 and, of those, approximately 750,0009 infants are treated for jaundice. Of those treated, a significant number may be unresponsive to phototherapy – the current standard of care – even with extended and repeated courses of the treatment10 and face the risk of developing severe jaundice prior to discharge. In severe recurrent or refractory cases, physicians currently must resort to invasive treatment options, most often blood exchange transfusion and less frequently intravenous immunoglobululin infusions (IVIG), both of which have a more complex and lengthy administration than stannsoporfin's single injection. A small percentage of full-term infants may experience elevated bilirubin levels after discharge and be at risk of severe jaundice11, requiring hospital readmission. It is anticipated stannsoporfin could reduce the incidence of readmission. The combined potential patient treatments required annually in the U.S. for severe jaundice is approximately 70,000 to 125,000.
Severe jaundice requires extended or recurrent treatment, with current U.S. treatment costs approximately $5,000 per patient12,13 for infants treated for the condition, which implies an annual cost to the U.S. healthcare system of roughly half a billion dollars.
InfaCare holds worldwide rights to stannsoporfin, and Mallinckrodt estimates the market for severe jaundice patient treatments for term babies in key international countries14 to be in the range of 150,000 to 275,000 annually. Mallinckrodt will assess regulatory pathways for approvals in markets outside the U.S. post-acquisition.
Stannsoporfin, if approved, is expected to be a highly effective therapy used for near- and full-term infants at risk of developing complications associated with severe jaundice. This new treatment option may reduce the number of newborns advancing to bilirubin levels requiring more intrusive, less specific therapies.
If approved, the drug may also decrease the risks associated with other treatments (e.g., bilirubin rebound) and the risk of prolonged and/or severe bilirubin elevation, which can impact central nervous system development.
If approved, Mallinckrodt expects stannsoporfin to be commercialized by the company's existing sales organization which currently supports INOMAX® (nitric oxide) gas, for inhalation, therapy in neonatal centers across the U.S. At launch, patient access to this unique treatment option would also be supported and enhanced by the company's strong relationships with hospital networks, insurance companies and group purchasing organizations. Mallinckrodt's existing infrastructure of clinical and medical affairs experts will also support both approval and launch of the product. Mallinckrodt will be working with existing InfaCare talent on a smooth integration of the development process and regulatory filings.
Financial Considerations and Closing
Financial terms of the transaction include an upfront payment of $80 million, with additional payments of up to $345 million dependent on regulatory and sales milestones. Mallinckrodt expects the acquisition to be dilutive to adjusted diluted earnings per share by $0.15 to $0.20 for 2017 and modestly higher in 2018. Guidance on the impact of the acquisition to the company's GAAP15 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 such impact. Subject to customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, the company estimates the transaction will close in the second half of 2017. InfaCare is headquartered in Trevose, Penn.
InfaCare is an emerging specialty pharmaceutical company focused on the development and commercialization of proprietary pharmaceuticals for the neonatal and pediatric patient population. InfaCare's lead product, stannsoporfin, is a first-in-class pharmacologic treatment currently in development for neonatal jaundice, known clinically as hyperbilirubinemia.
Mallinckrodt is a global business that develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. 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; and analgesics and hemostasis products. 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 (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, changes in fair value of contingent consideration obligations; inventory step-up expenses; significant legal and environmental charges ; pension settlement charges; recurrent cash tax payments to the IRS associated with internal installment sales transactions; 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.
Cautionary Statements Related to Forward-Looking Statements
Statements in this document that are not strictly historical, including the proposed acquisition of InfaCare Pharmaceutical Corporation, the expected timetable for completing the transaction, statements regarding future financial condition and operating results, economic, business, competitive and/or regulatory factors affecting Mallinckrodt's and InfaCare'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: general economic conditions and conditions affecting the industries in which Mallinckrodt and InfaCare operate; InfaCare's ability to obtain regulatory approval to market its product or the timing of such approval process; the commercial success of Mallinckrodt's products and InfaCare's product; the parties' ability to satisfy the acquisition agreement conditions (including required regulatory approvals) and complete the InfaCare acquisition on the anticipated timeline or at all; Mallinckrodt's ability to realize anticipated growth, synergies and cost savings from acquisitions (including the InfaCare acquisition); 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 successfully integrate acquisitions of operations, technology, products and businesses generally and to realize anticipated growth, synergies and cost savings (including with respect to the InfaCare acquisition); 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; 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; limited clinical trial data for H.P. Acthar Gel; complex reporting and payment obligations under healthcare rebate programs; Mallinckrodt's ability to navigate price fluctuations; future changes to U.S. and foreign tax laws; 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; the effectiveness of information technology infrastructure; and cybersecurity and data leakage risks.
These and other factors are identified and described in more detail in the "Risk Factors" sections 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.
Coleman N. Lannum, CFA
Senior Vice President, Investor Strategy and IRO
Daniel J. Speciale, CPA
Director, Investor Relations
Senior Communications Manager
Chief Public Affairs Officer
2 Adis Insight
3 U.S. Patent and Trade Office
9 HCUP (Healthcare Cost and Utilization Project) KID Data
10 Mallinckrodt market research/management projections
12 Mallinckrodt market research/management projections
14 Estimated number is inclusive of the U.S., as well as initial ex-U.S. targets including Europe, Japan, Australia and Canada
15 Accounting principles generally accepted in the U.S.
SOURCE Mallinckrodt plc