Top-selling Acthar is considered one of the most expensive drugs currently being reimbursed by Medicaid. In the past Citron questioned whether Acthar was effective for certain indications. CEO Mark Trudeau promised to provide studies to prove Acthar’s effectiveness, yet no conclusion has been reached. Last quarter Acthar finally cracked; Mallinckrodt’s Q4 revenue fell by 5% Y/Y, while Acthar declined by 9%. Acthar represents 38% of total revenue and is one of the company’s highest margin businesses.
MNK is now hovering near its 52-week lows. S&P recently downgraded the company to junk status, and Mallinckrodt is facing unknown liabilities related to the opioid crisis. According the Shocking The Street, an investment service in conjunction with Seeking Alpha, Mallinckrodt could be exposed to lawsuits for fraudulent conveyance. Is this the next shoe to drop?
