Mallinckrodt Rejects Jim Chanos Thesis: 'Misleading, Not Based On Fact'

A spokesperson for Mallinckrodt PLC MNK rejected on Friday an assertion by short-seller Jim Chanos, who said he was shorting both Mallinckrodt and Express Scripts Holding Company ESRX because their alliance could hurt investors.

Chanos slammed Mallinckrodt’s exclusive alliance with Express Scripts to distribute the drug Acthar. He made the comments Thursday at SkyBridge Capital's SALT conference in Las Vegas.

Chanos called the companies' use of third parties "a really questionable practice" and dubbed the partnership a "murky alliance" because it makes drug prices excessively high, Reuters reported.

Mallinckrodt’s shares fell 3.54 percent Thursday to $40.87.

Company Says Chanos Thesis Unsound

A Mallinckrodt spokesperson rejected Chanos’ reasoning.

“Mr. Chanos is a short seller whose thesis on Mallinckrodt, we believe, is not based on fact and misleading,” the spokesperson told Benzinga on Friday. “Though Acthar is a significant contributor to Mallinckrodt’s overall profitability, it is substantially less than the asserted estimates.”

“H.P. Acthar Gel is a drug that continues to make a significant difference in the lives of thousands of very sick patients with high unmet needs.”

“MNK-1411, formerly Synacthen Depot, is not a ‘generic competitor to Acthar.’ They are two very different drugs. Acthar is a biologically derived, 39-peptide chain that includes more than simply ACTH, while MNK-1411 is a synthetic 24-peptide chain. Mallinckrodt believes the regulatory path for any corticotropin-type new drug application would require FDA approval, which could take years.”

Specific to Express Scripts, Mallinckrodt has arms-length contracts for services with Express Scripts, the spokesperson said.