(Reuters) - Shares of Mallinckrodt Plc plunged more than 30 percent to an all-time low on Tuesday after the drugmaker reported disappointing quarterly revenue and warned of slower sales of Acthar, its biggest source of revenue.
Acthar, which is used to treat infantile spasms and multiple sclerosis, has been under scrutiny for its costly price tag and was at the center of a federal probe that Mallinckrodt settled in January. At the time, Acthar cost more than $34,000.
Specialty drugs such as Acthar are usually expensive, mainly because they are developed to treat complex diseases.
Acthar - which contributes 42 percent to Mallinckrodt’s overall revenue - generated sales of $308.7 million in the third quarter ended Sept. 30, missing analysts’ average expectation of $326.6 million, according to brokerage Stifel.
The company said Acthar sales were likely to fall further in the fourth quarter from the third.
Acthar sales were dented by unfilled prescriptions, mainly due to reimbursement pressure from insurers.
“It could be because of the amount of hurdles that are put in place by the various payers (insurers), can be because of the amount of time it might take for these patients to get access to the products,” Hugh O‘Neill, president of Mallinckrodt’s autoimmune and rare disease drugs business, said on a call with analysts.
The decline in Acthar sales volumes was likely to raise questions for a product that investors have shown an “unwillingness to give the benefit of the doubt,” analysts at Barclays said.
Mallinckrodt’s net sales fell 10.5 percent to $739.9 million in the third quarter, lagging analysts’ estimates of $811.9 million, according to Thomson Reuters I/B/E/S.
Shares of the company, which have fallen 55 percent this year, were down 32.2 percent at $21.13 in morning trading on Tuesday.
Reporting by Manas Mishra in Bengaluru; Editing by Anil D'Silva and Sai Sachin Ravikumar