Mallinckrodt to address opioid litigation risk with business split

The principal reason for Mallinckrodt’s (MNK -0.3%) split into two businesses, announced in late 2018, is now much clearer after it was revealed that it was the top manufacturer of opioids oxycodone and hydrocodone in the U.S. Drug Enforcement Agency’s (DEA) database during the years 2006 – 2012.

According to Berenberg’s Patrick Trucchio, the company is facing a financial liability of as much as $5B for its role in the opioid crisis, adding that a more realistic scenario is ~$1.5B paid over a 10-year period.

MNK plans to separate its business into a Specialty Brands company called Sonorant Therapeutics plc (proposed ticker: SRTX) that will market Acthar Gel and a company selling generics and active pharmaceutical ingredients, including opioids, that will do business under the Mallinckrodt name. The unit will be spun off to shareholders later this year.

https://seekingalpha.com/news/3480193-mallinckrodt-address-opioid-litigation-risk-business-split