Mallinckrodt (MNK) Stock Lower Today After FDA Drug Reclassification

NEW YORK (TheStreet) -- Shares of Mallinckrodt Plc (MNK) are down 6.36% to $87.08 today after the specialty pharmaceuticals company criticized the FDA's reclassification of its generic attention-deficit hyperactivity disorder drug, the Wall Street Journal reports.

The Dublin-based company said the FDA has informed it that it has reason to believe that its methylphenidate hydrochloride tablets might not be therapeutically equivalent to Concerta, which is made by Johnson & Johnson's (JNJ) Janssen Pharmaceuticals., the Journal said.

"We believe that the FDA's actions are not supported by sound scientific evidence and not consistent with the best interests of patients," Mallinckrodt CEO Mark Trudeau said, adding, "Based on our review of Mallinckrodt's safety database and the conclusions the FDA has shared with the company, we remain confident in the safety of our methylphenidate ER products."

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Separately, TheStreet Ratings team rates MALLINCKRODT PLC as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MALLINCKRODT PLC (MNK) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. Among the areas we feel are negative, one of the most important has been very high debt management risk by most measures."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Currently the debt-to-equity ratio of 1.67 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Even though the debt-to-equity ratio is weak, MNK's quick ratio is somewhat strong at 1.20, demonstrating the ability to handle short-term liquidity needs.
  • In comparison to the other companies in the Pharmaceuticals industry and the overall market, MALLINCKRODT PLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • The gross profit margin for MALLINCKRODT PLC is rather high; currently it is at 56.09%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -3.69% is in-line with the industry average.
  • Net operating cash flow has improved to $26.90 million from having none in the same quarter last year. Since the company had no net operating cash flow for the prior period, we cannot calculate a percent change in order to compare its growth rate with that of its industry average.
  • MALLINCKRODT PLC has improved earnings per share by 10.6% in the most recent quarter compared to the same quarter a year ago. This year, the market expects an improvement in earnings ($4.50 versus $0.06).
  • You can view the full analysis from the report here: MNK Ratings Report

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