In a bid to expand into the hospital growth platform, Mallinckrodt plc MNK entered into a definitive agreement to acquire a privately held critical care company Ikaria, Inc. from a Madison Dearborn-led investor group for approximately $2.3 billion.
Transaction Details
The transaction is expected to close in the second quarter of 2015. Assuming scheduled closure, Mallinckrodt expects the acquisition to contribute $150 million to the top line and 25 cents to the bottom-line in fiscal 2015.
Ikaria focuses on development and commercialization of innovative therapies and delivery systems that cater to critically ill infants in hospitals’ neonatal intensive care unit. We note that Ikaria, Inc.’s lead product, INOmax is a vasodilator used in conjunction with ventilatory support and other appropriate agents.
The product is approved by the FDA for the treatment of term and near-term (>34 weeks) neonates with hypoxic respiratory failure associated with clinical or echocardiographic evidence of pulmonary hypertension. The product is intended to improve oxygenation and reduces the need for extracorporeal membrane oxygenation.
Ikaria is currently evaluating additional potential applications for INOmax and INOmax delivery systems along with developing other pipeline assets in rare disease.
Our Take
The acquisition is expected to broaden Mallinckrodt’s footprint in hospitals. It will extend the company’s presence from its current base of diagnostic radiology and multimodal pain management in surgical specialties to include critical care respiratory therapies in neonatal intensive care units.
The acquisition will also add a promising candidate to Mallinckrodt’s pipeline – the terlipressin injection, which is being evaluated for the treatment of Hepato-Renal Syndrome Type 1 (HRS 1) – with no currently approved therapy in the U.S. We note that terlipressin is approved for use and recognized as the standard-of-care treatment for HRS 1 in countries outside the U.S., including several in Europe.
We remind investors that Mallinckrodt has been quite active on the acquisition front lately. The recent Cadence Pharmaceuticals acquisition added Ofirmev to the company’s specialty pharmaceuticals portfolio and expanded its pain management franchise, while the Questcor acquisition added Acthar Gel to its portfolio.
These acquisitions have positively impacted the company’s performance and we expect further uptake hereafter.
Mallinckrodt currently carries a Zacks Rank #2 (Buy). Other well-placed stocks in the health care sector include Actavis ACT, Impax Laboratories Inc. IPXL and Salix Pharmaceuticals SLXP. While Biodel currently carries a Zacks Rank #1 (Strong Buy), the other two carry the same Zacks Rank as Mallinckrodt.
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