Mallinckrodt shares plummeted by as much as 18.47% to $56.98 per share during regular trading hours today after short-selling firm Citron Research tweeted that the company is a “far worse offender” than Valeant Pharmaceuticals. You may remember that Citron’s commentary caused Valeant shares to plunge last week.
Citron tweets about Mallinckrodt
Citron, which is headed up by Andrew Left, is apparently planning a full report on Mallinckrodt. Here’s a look at the damaging tweet from today:
At these prices $MNK has signif more downside than $VRX– far worse offender of the reimb sys – more to follow. VRX can’t live in a vacuum
— Citron Research (@CitronResearch) November 9, 2015
Mallinckrodt distances itself from Valeant
Citron’s report on Valeant Pharmaceuticals triggered a massive selloff in the stock, resulting in a more than 40% decline in the drug maker’s stock price. The firm called into question Valeant’s relationship with specialty pharmacies and whether the drug maker has been faking some of its sales, although Valeant vehemently denies this and most analysts don’t think it’s true.
Last month, Mallinckrodt contrasted itself with Valeant, saying that it doesn’t own or even have a stake in any specialty pharmacies, reports Bloomberg. However, it does have a contract with some specialty pharmacies for distribution of some of its treatments for autoimmune disorders like lupus. Mallinckrodt acquired those treatments through its purchase of Questcor Pharmaceuticals last year.
Mallinckrodt raises prices
Bloomberg notes that Mallinckrodt has faced scrutiny for some of the same behaviors Valeant has, particularly for buying older drugs and then raising their prices. In early 2014, for example, Mallinckrodt reportedly paid $1.3 billion to acquire the maker of Ofirmev, which is acetaminophen in a form that can be injected. After the acquisition, Mallinckrodt reportedly raised the drug’s price by more than double.
Many major hospital systems reported that the higher price upped their expenses by at least $1 million annually, while others took a bite out of Mallinckrodt’s revenue growth by looking for other options.