Mallinckrodt (MNK) Short Report Appears to Overstate Acthar CMS Sales - Leerink
- Wall Street surges to new highs; transports set record
- lululemon athletica (LULU) Tops Q3 EPS by 4c; Adj.-Comps Outpaced Views
- Abbott (ABT) Files Complaint to Terminate Alere (ALR) Acquisition
- Costco Wholesale (COST) Tops Q1 EPS by 5c; Comps Up 1%, 2% Ex-Gas
- After-Hours Stock Movers 12/07: (VYGR) (LULU) (HRB( Higher; (OHRP) (VRNT) (CMTL) Lower (more...)
Get access to the best calls on Wall Street with StreetInsider.com's Ratings Insider Elite. Get your Free Trial here.
Leerink Partners analyst Jason Gerberry said Citron Research's latest short report on Mallinckrodt plc (NYSE: MNK) appears to overstate Acthar CMS sales.
Gerberry commented, "MNK shares are down -7-8% based on a “short report” citing CMS dashboard data which call into question Acthar Gel sales derived from government sources (“CMS”; Medicaid & Medicare). The report (LINK) appears to overstate Acthar CMS sales as a percent of total product sales, as the methodology utilized by CMS drug spending dashboard for Medicare spend is based on gross sales, not net., although it's unclear to what extent Acthar CMS sales are overstated. The report suggests MNK mgmt understated combined Medicaid/Medicare sales on an investor call, saying it was “about a little bit higher than a quarter of the business” vs. gross sales on CMS dashboard implying sales were 61% of total Acthar net revenue (an apples to oranges comparison). We don’t know the exact net sales of Acthar to Medicare/Medicaid, but we believe it is safe to assume Medicaid, after CPI price penalties had high discounts/rebates and assuming an 80% gross-to-net ratio on the Medicare book ($504m gross) suggests Acthar net sales would be closer to 38-45% range vs. the 61% figure cited in the short-report. Why this may matter – Acthar Gel is an old product lacking good randomized, controlled data consistent with most products approved in the modern era. The report appears to be an attempt to call into question whether the government should be paying Acthar’s average $80-100k net price/patient/year by calling to this to the attention of government figures who have been targeting excessive drug pricing issues. This type of issue became a major headache for MYL (OP) investors recently with EpiPen. MNK is presenting at a competitor's conference today and investor relations should become available to address questions soon, but on first blush it appears the short-report does overstate Acthar CMS derived sales but we need more data to say this is definitely a non-issue for MNK."
The firm maintained an Outperform rating and price target of $92 on MNK.
Shares of Mallinckrodt plc closed at $67.80 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Oppenheimer Assumes Mallinckrodt plc (MNK) at Outperform
- Twitter (TWTR) Shares Continue Higher
- The Container Store Group (TCS) January calls active into January quarterly earnings report
Create E-mail Alert Related CategoriesAnalyst Comments, Short Sales, Trader Talk
Related EntitiesCitron Research
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!