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Mallinckrodt plc (MNK)

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Mallinckrodt Plc (MNK)

Q1 2017 Earnings Call

May 08, 2017 8:30 am ET

Executives

Coleman N. Lannum - Mallinckrodt Plc

Mark C. Trudeau - Mallinckrodt Plc

Matthew K. Harbaugh - Mallinckrodt Plc

Analysts

Gary Nachman - BMO Capital Markets (United States)

Annabel Samimy - Stifel, Nicolaus & Co., Inc.

Christopher Schott - JPMorgan Securities LLC

Marc Goodman - UBS Securities LLC

Douglas Tsao - Barclays Capital, Inc.

Anthony Petrone - Jefferies LLC

David A. Amsellem - Piper Jaffray & Co.

Elliot Wilbur - Raymond James & Associates, Inc.

David Maris - Wells Fargo Securities LLC

Gregg Gilbert - Deutsche Bank Securities, Inc.

David R. Risinger - Morgan Stanley & Co. LLC

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Mallinckrodt first quarter 2017 earnings conference call. As a reminder, today's conference is being recorded.

I'd now like to introduce your host for today's conference, Mr. Cole Lannum, Head of Investor Relations. Sir, please go ahead.

Coleman N. Lannum - Mallinckrodt Plc

Thank you, Liz, and welcome to today's call on what will certainly be a busy say in spec pharma land. Joining me are Mark Trudeau, CEO, and Matt Harbaugh, CFO. Mark will start us off with some brief comments, and Matt will follow with details of the financials. We'll purposely keep our introductory comments quite short today so as to maximize the amount of time we can spend on your questions at the end of the call.

Before we begin, let me remind you of a few details. On the call, you will hear us making some forward-looking statements, and it is possible that actual results could be materially different from our current expectations. Please note, we assume no obligation to update these forward-looking statements even if actual results or future expectations change materially. We ask you to please refer to the cautionary statements contained in our SEC filings for a more detailed explanation of the inherent limitations of such forward-looking statements.

We'll also provide some non-GAAP adjusted measures related to our financial performance. A reconciliation of these adjusted measures to GAAP is detailed in our earnings release and its related financial tables, which can be found on our website, mallinckrodt.com. We use our website as a channel to distribute important and time-critical company information, and you should look to our Investor Relations page on the website for this information.

As noted in our press release, unless otherwise specified, all comparisons are to the comparable 2016 period. In addition, the revenue growth ranges we'll be discussing will be on a constant currency basis unless otherwise noted.

For the first quarter of 2017, we reported GAAP diluted earnings per share from continuing operations of $0.28 compared to prior year of $0.88. After adjusting for specified items, our non-GAAP adjusted diluted earnings for the quarter came in at $1.68 per share versus $1.81 in the prior year. We made no changes to any of our previous guidance numbers this morning. We provide much greater detail on specific line items in our release, and I will refer you there accordingly.

And with that, let me turn it over to Mark. Mark?

Mark C. Trudeau - Mallinckrodt Plc

Thank you, Cole, and thanks to all of you for joining us on the call today. I'm pleased to report that Mallinckrodt delivered solid balanced performance overall in the first quarter 2017. Specialty Generics did better than expected, though it remained down overall. A substantial proportion of that segment is our API business, which had a notably good quarter.

Results in the Specialty Brands segment were consistent with our expectations, with our diversified hospital portfolio driving modest increases across the business. As in previous quarters, INOMAX led performance in this portfolio.

Acthar performed well in the quarter, delivering growth within our expected long-term range of mid-single to low double digits, reflecting gains from both volume and price. We're especially pleased with the progress in pulmonology and ophthalmology, our newer areas of focus.

Of particular note, we continue to strengthen formulary positions and access to Acthar. Since the beginning of the year, we've made good progress with a number of payers, including a major insurer, major PBM, and a significant closed-model healthcare system to improve access to Acthar for appropriate patients in both the commercial and public environments. These actions include relaxing or removing previous formulary restrictions, and in at least one case, adding Acthar to a formulary for the first time.

We're pleased with the ongoing progress and further stabilization we're achieving within the payer landscape and believe the high unmet medical need and low market penetration in most indications will support increased demand growth for Acthar. Going forward, our enduring focus on operational execution will help ensure we expand our reach to a growing universe of appropriate patients. In fact, operational execution remains our strategic focus across the entire portfolio, as we continue to generate evidence for key marketed products and build out an organic Specialty Brands pipeline.

Our key development programs are advancing nicely, and we're very pleased with the progress of the terlipressin trial. Completion of the Phase 1 MNK-1411 study in patients with Duchenne muscular dystrophy or DMD, as well as the recently announced Phase 2 StrataGraft study in patients with full thickness severe burns.

Near the mid-term, look for us to announce a number of other notable milestones, enrolling the first patients in several of our company-sponsored trials, including the randomized placebo-controlled pilot study of Acthar in multiple sclerosis flares, the StrataGraft Phase 3 trial in deep partial thickness severe burns, a prospective observational study of the use of INOMAX in premature infants, the Acthar Phase 2 trial in patients with ALS, and the Phase 2 proof-of-concept trial of MNK-1411 in the treatment of DMD.

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