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Mallinckrodt's Stock Crashes Following FTC Lawsuit

Mallinckrodt's Stock Crashes Following FTC Lawsuit
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Allegedly acting on a complaint from Martin Shkreli, the Federal Trade Commission is about to file charges against Mallinckrodt PLC (NYSE: MNK), which maintains a monopoly on lupus and multiple sclerosis treatment and has hiked prices 2,165 percent over the years.

The suit is expected to address the product Acthar Gel, which sells for $28,000 per dose. In 2005, the treatment cost $1,235.

The New York Post first reported the story Wednesday afternoon and noted that Mallinckrodt had been under FTC investigation for years.

A Season Of Poor Publicity

The latest news follows a string of poor press for Mallinckrodt.

In November, Citron Research accused the company of fraud for lying to investors about its dependence on Medicare. The firm compared Acthar to EpiPen and valued the then-$60 stock at $20. Shares traded 9.2 percent down at the time.

Company shares immediately plummeted on the latest report, and trading was halted for six minutes after values fell 13 percent. Trading opened for another 10 minutes before halting on pending news.

Values presently rest at $45.32 — 8.3 percent down on the day.

Benzinga Pro posted the following headline at time of publication:

"Mallinckrodt responds to media reports regarding previously disclosed FTC investigation, says they entered into settlement agreement staff to fully resolve this matter subject to approval by the commission."

In volatile late-afternoon trading, the stock recovered after hitting a low of $42.67, trading recently around $49.15.

Update at 3:48 p.m.: "FTC has said Mallinckrodt will pay $100 million to settle commission state charges related to allegations co. maintained monopoly of specialty drugs," according to Benzinga Pro.

Posted-In: Citron Research Martin ShkreliBiotech News Short Sellers Legal Movers General Best of Benzinga


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