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Mallinckrodt: Acthar's Next Multi-Billion-Dollar Indication

Summary

Mallinckrodt's Acthar Gel has been shown to benefit ALS symptoms in a pre-clinical study.

A Phase 2 trial was completed last year, and data analysis is underway.

Mallinckrodt's sales could more than double with success in treating ALS.

Mallinckrodt (NYSE:MNK) is investigating its Acthar Gel as a potential treatment for ALS (amyotrophic lateral sclerosis), also known as Lou Gehrig's disease. An ability to treat ALS would be a huge win for MNK, as it could provide access to a blockbuster-level market with little competition.

MNK is a global specialty biopharmaceutical company, developing a diverse portfolio of products. MNK's sales are 60% specialty brands, 30% specialty generics, and 10% nuclear imaging products.

Acthar is an FDA-approved specialty pharmaceutical used to treat several disorders, including infantile spasms, multiple sclerosis, rheumatoid arthritis, and lupus, among others. It accounts for about half of MNK's specialty brands sales and 30% of its total sales.

MNK supports Acthar clinical studies to develop new efficacy data for a variety of on-label indications and is supporting the ALS study as a potential new indication.

Here's why Acthar is believed to be a useful medication for the treatment of ALS and its investment implications.

ALS

ALS is a relatively rare CNS (central nervous system) disease in which the neurons that control voluntary muscles die. There are 10,000-15,000 cases in the U.S., of which 5-10% are inherited. Typical survivability is 2-5 years after the onset of symptoms. It is a grim disease in which the quality of life rapidly degrades owing to the deterioration of muscle control.

ALS has no cure and only one minimally helpful treatment, Sanofi's (NYSE:SNY) Rilutek, that lengthens survival by up to several months. The expectation is that Acthar will reduce the severity of ALS or slow its progression. Owing to the lack of medical options, there is a low bar for a new drug to show benefit and even a minor one would be welcomed.

Pre-Clinical Evidence

A mouse model using a genetic modification to the SOD1 (superoxide dismutase) gene, which is associated with a subtype of ALS, is currently the best test for pre-clinical drug treatments. SOD1 is an antioxidant enzyme that protects the body from free radicals produced during normal metabolism. A defect in the SOD1 gene can be toxic if either too little or too much gene function occurs. With too much, as in the ALS case, the accumulation of SOD1 may damage proteins and disrupt cellular functions.

In mid-2015, the results...


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