Newspaper article St Louis Post-Dispatch (MO)

Short Seller Keeps Up the Pressure on Mallinckrodt

Newspaper article St Louis Post-Dispatch (MO)

Short Seller Keeps Up the Pressure on Mallinckrodt

Article excerpt

Having made a lot of money in Mallinckrodt shares, short-sellers might be expected to declare victory and move on.

Nope. Andrew Left of Citron Research, at least, remains a thorn in the side of the drugmaker, which has its U.S. headquarters in Hazelwood.

Left, whose Los Angeles firm first announced its short position in November 2015, renewed the attack Nov. 26 with blistering tweets about Mallinckrodt's top-selling drug, Acthar. One tweet highlighted a regulatory opinion critical of the drug; another asserted that it had "just FAILED its only real clinical trial."

Mallinckrodt shares sank 8 percent that day as Citron and other short-sellers, who bet on stocks they think are about to fall, counted their gains.

They made money last year when Mallinckrodt shares lost 54 percent of their value. Sales fell short of forecasts as insurers balked at Acthar's price tag, which has risen to $38,000 per vial.

The company has beaten profit estimates this year, and its shares are up 7 percent in 2018 even after Citron's latest attack.

Mallinckrodt issued a statement saying it is "fully committed" to Acthar and has sponsored seven clinical studies of the drug's effectiveness. Acthar is used to treat infantile spasms, multiple sclerosis and other diseases.

Mallinckrodt said the trial mentioned by Citron was initiated by an independent researcher, not by the company. It also wasn't new: The study was presented at a medical conference in May.

The study aimed to see if Acthar could effectively treat childhood kidney disease. Patients may have been negatively affected by the rapid withdrawal of their previous steroid treatment, Mallinckrodt's statement says.

Citron also called a Department of Health and Human Services report a "major blow" to Mallinckrodt. The department's inspector general said Mallinckrodt shouldn't be allowed to give hospitals free doses of Acthar for patients suffering from infantile spasms, and its report was critical of the drug's pricing. …

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