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In response to Mallinckrodt PLC (NYSE:MNK)’s Thursday report downplaying recent safety and cost concerns for its controversial HP Acthar Gel, Citron Research noted that the company is in “full damage control mode” and rejected its attempt to abate public fears.
Considering adverse events rising nearly 280 percent between 2012 and 2016 against single-digit boosts in unit sales, according to Citron’s analysis of U.S. Food and Drug Administration data, Andrew Left called Mallinckrodt’s concession of harmful effects an implicit warning for patients to lawyer up, and he assessed a stock valuation of zero.
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The claims were vindicated by a May statement from Express Scripts Holding Company (NASDAQ:ESRX), Left wrote in a Thursday note. The firm, whose subsidiaries distribute HP Acthar Gel, asserted that the drug was old, overpriced, addressed a limited need and was being used for indications without clinical evidence of efficacy.
DOJ To Step In?
The latter justifies criminal prosecution, by Left’s estimation.
“Citron believes the reason for the increase in adverse events is the company's aggressive expansion of Acthar into new indications, where it has not conducted clinical trials in order to prove its safety for those conditions,” he wrote.
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A recent lawsuit filed by Barry Franks, former sales manager of the company’s Autoimmune and Rare Disease Division, corroborates Left’s theory of intentional malfeasance.
“The reason for the ‘explosive growth’ of other Rheumatology sales teams at that point in time was due, in part, to Mallinckrodt requesting that its representative promote the Acthar drug in an illegal, off-label manner,” the legal filings read.
Additionally, Citron accused Mallinckrodt of affiliation with “unscrupulous” doctors and of negligence for marketing HP Acthar without true understanding of the drug’s mechanism.
Emerging competition from Eton Pharmaceuticals, spun off Wednesday from Imprimis Pharmaceuticals Inc (NASDAQ:IMMY) with the explicit purpose of developing cheaper alternatives to HP Acthar Gel, will disincentivize Mallinckrodt practices and further threaten the stock price.
Left had previously criticized Mallinckrodt by comparing its HP Acthar Gel to Mylan NV (NASDAQ:MYL)'s controversially priced EpiPen.
On his latest report, company shares fell 0.9 percent and were continuing downward at the time of publication.
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Citron's Andrew Left: Move Your Money From Nvidia To GoogleAndrew Left: Exact Sciences Cologuard Test Is Not Worth The Cost_______Image Credit: By U.S. government - Extracted from PDF file available here., Public Domain, via Wikimedia Commons
Crypto Whales Are Loading Up — Are You?
New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.