Mallinckrodt sells Therakos to CVC for $925m

Mallinckrodt, a specialty pharmaceutical company, has entered into an agreement to sell its Therakos business to CVC Capital Partners for $925 million. The company plans to utilize the proceeds from this deal to significantly reduce its net debt by over 50%. The transaction is expected to be finalized in the fourth quarter of 2024.

Mallinckrodt, headquartered in Ireland, originally acquired Therakos in 2015 for $1.33 billion. Since then, the company has been embroiled in financial struggles, largely stemming from its involvement in the opioid crisis. In 2020, Mallinckrodt filed for bankruptcy in response to numerous lawsuits alleging that the company had downplayed the risks associated with its opioid products. That year, the company reached a tentative settlement of $1.6 billion with 47 states, territories, and various lawyers in the United States to resolve these legal issues.

Despite the settlement, Mallinckrodt's financial troubles continued, leading to another bankruptcy filing in August 2023. This was primarily due to a sharp decline in sales of its flagship drug, Acthar. According to company financial records, Acthar, a gel used for treating autoimmune and skin diseases, saw a decline in net sales by $90.7 million in 2023 compared to the previous year. However, Mallinckrodt emerged from bankruptcy in November 2023, announcing that it had reduced its total funded debt by $1.9 billion.

The decision to sell Therakos is part of Mallinckrodt's strategy to optimize its capital structure and concentrate on its core areas of expertise. The company believes this move will help it create more value for its stakeholders. Commenting on the deal, Mallinckrodt’s CEO, Siggi Olafsson, stated, “Today’s announcement underscores our commitment to executing our strategic priorities and creating value for our stakeholders. This transaction provides the Therakos business with an ideal partner to invest in its continued growth, and we look forward to closely working with CVC to transition Therakos for the benefit of patients, healthcare providers, partners, and employees.”

CVC Capital Partners, the buyer, will take over the development of Therakos and its main product, the Therakos Cellex System. This system is used in extracorporeal photopheresis (ECP), a treatment that involves removing a patient's blood, exposing it to ultraviolet light outside the body, and then re-infusing it. ECP is employed to treat specific cancers such as cutaneous T-cell lymphoma (CTCL).

This strategic divestiture is expected to provide Therakos with growth opportunities under CVC Capital Partners, while enabling Mallinckrodt to streamline its operations and financial standing. The sale marks a significant step for Mallinckrodt in its ongoing efforts to stabilize its financial situation post-bankruptcy and focus on its core pharmaceutical operations.

Overall, this move is designed to benefit both companies: Mallinckrodt can reduce its debt burden and focus on its core business areas, while CVC Capital Partners aims to expand and invest in Therakos, enhancing its product offerings and market reach.