- Company Name
- Mallinckrodt plc
- Stock Symbol
- Class Period
- February 28, 2018 to July 16, 2019
- Motion Deadline
- September 24, 2019
- Southern District of New York
The complaint charges Mallinckrodt and certain of its officers with violations of the Securities Exchange Act of 1934. Mallinckrodt, together with its subsidiaries, develops, manufactures, markets, and distributes specialty pharmaceutical products and therapies in the United States, Europe, the Middle East, Africa, and internationally. The Company markets its branded products to physicians, pharmacists, pharmacy buyers, hospital procurement departments, ambulatory surgical centers, and specialty pharmacies.
Among other products, Mallinckrodt’s portfolio includes H.P. Acthar Gel (“Acthar”), an injectable drug for various indications, such as rheumatoid arthritis, multiple sclerosis, infantile spasms, systemic lupus erythematosus, and polymyositis. During the Class Period, Acthar was in a Phase 2B trial designed to assess its efficacy and safety as an investigational treatment for amyotrophic lateral sclerosis (“ALS”).
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding the Company’s business and prospects. Specifically, defendants failed to disclose that Acthar posed significant safety concerns that rendered it a non-viable treatment for ALS and, accordingly, Mallinckrodt had overstated the viability of Acthar as treatment for ALS. As a result of this information being withheld from the market, Mallinckrodt securities traded at artificially inflated prices during the Class Period, with its stock price reaching a high of more than $35 per share.
Then on July 16, 2019, after the market closed, Mallinckrodt announced that it was permanently discontinuing its trial to assess the safety and efficacy of Acthar as a treatment for ALS. Mallinckrodt stated that it had decided “to halt the trial after careful consideration of a recent recommendation by the study’s independent Data and Safety Monitoring Board,” which “was based on the specific concern for pneumonia, which occurred at a higher rate in the ALS patients receiving Acthar Gel compared to those on placebo. . . . [T]he board also mentioned other adverse events specific to this patient population.” On this news, Mallinckrodt’s stock price fell $0.64 per share, or nearly 8%, to close at $7.56 per share on July 17, 2019.