Mallinckrodt Pharmaceuticals, the UK-domiciled, US-focused specialty drugmaker, plans to break up into two differentiated companies, with one focused on innovative specialty pharmaceutical brands, the other on niche specialty generic products, active pharmaceutical ingredients (APIs) and non-promoted brands.

The separation is projected to be completed in the second half of 2019 or sooner, following final approval by the company’s board of directors. It will be executed through a pro-rata distribution of common stock to shareholders, an option that is generally tax-free for US federal income tax purposes, Mallinckrodt said. 

The Specialty Pharmaceutical Brands company – which by its own account focuses on improving outcomes for underserved patients with severe and critical conditions – will be headed by Mark Trudeau, Mallinckrodt’s current president and CEO. It is planned to be listed on the New York Stock Exchange under the Mallinckrodt name and ticker symbol (MNK).

With net sales exceeding $2.3 billion (including a $1 billion hospital portfolio) and what Mallinckrodt describes as a robust innovative pipeline), the company is expected to gain additional liquidity and financial flexibility from the transaction to enable continued strategic transformation and growth, the drugmaker said. 

Mallinckrodt hopes to achieve a number of key milestones for its branded pharmaceuticals in the upcoming quarters, with “top-line results” expected from both the completed rheumatoid arthritis clinical trial and multiple sclerosis registry for H.P. Acthar Gel as early as the first half of 2019. Clinical trials are also under way for other key products.

Specialty Generics, incorporating Amizita (lubisprostone), a branded constipation treatment, will be renamed and spun off to shareholders. Its ordinary shares will continue to be traded on the New York Stock Exchange but under a new name.

This company, to be headquartered in the St. Louis, Missouri, area of the US, will be headed by Matthew Harbaugh, currently Mallinckrodt’s chief financial officer. The generics producer with 1,600 employees is to be positioned financially to grow its ANDA1 pipeline and launch as many as five new products in 2019

An acetaminophen business, a portfolio of both API and generic finished dose forms of controlled substances and other drugs will round out the niche specialty generics development portfolio with a focus on the US market. The inclusion of Amitiza as a non-promoted asset will add manufacturing facilities and employees in Japan.

Angus Russell, Mallinckrodt's chairman, said the board believes there is a “strong rationale and opportunity to create two new, appropriately capitalized, independent companies that have the potential to unlock and increase value over the long term,” adding that the separation is expected to result in greater strategic focus