Covidien spinout Mallinckrodt to ditch nuclear imaging biz for $690m

Former Covidien spinout Mallinckrodt plc (NYSE: MNK) said today it is selling its nuclear imaging business to IBA molecular for $690 million.

U.K.-based Mallinckrodt said it is hopeful that the deal will close in the 1st half of the calendar year 2017.

“Mallinckrodt’s Nuclear Imaging operation has a long history going back 50 years, and has been a strong cash-generating business over time. Our team has made significant progress in driving profitability over the past few years. But with our strategic priorities focused on enlarging our portfolio in the high-growth specialty pharmaceuticals space. We believe the sale of our Nuclear Imaging portfolio to IBAM is the best solution for both the business itself and Mallinckrodt,” CEO Mark Trudeau said in a press release.

The sale includes a portfolio of diagonstic imaging products approved for use in “many countries,” Mallinckrodt said, though 2/3rds of the revenue for the biz originates in the U.S.

Included in the portfolio is medical isotope molybdenum-99, which technetium-99m is derived from. Technetium-99m is used in approximately 80% of all nuclear medicine procedures worldwide.

“We are very excited about this acquisition. IBAM’s andMallinckrodt’s Nuclear Imaging business’ complementary footprint and capabilities will substantially broaden our ability to serve patients globally. We are very pleased to welcome our new colleagues to IBAM upon closing and look forward to working together in this next chapter of our company’s development,” IBAM CEO Renaud Dehareng said in a prepared statement.

A workforce of more than 800 employees and 2 manufacturing plants are included in the $690 million deal, which consists of $574 million in up-front consideration, the assumption of approximately $39 million in long term obligations and approximately $77 million in contingent consideration.

Earlier this month, Mallinckrodt said it agreed to acquire Stratatech and its StrataGraft artificial skin graft technology for an undisclosed amount.

Mallinckrodt, the pharmaceuticals business spun out of Covidien in 2013, said the deal also includes Stratatech’s development program for genetically enhanced skin. The acquisition is expected to close before the end of the year, the Dublin-based company said.

StrataGraft, which is in a Phase III trial for treating deep, partial-thickness burns and a 2nd, Phase II trial for treating severe, full-thickness burns, is a cell-based living tissue designed to mimic the properties of natural human skin. Mallinckrodt said today that it expects to win FDA approval for the deep, partial-thickness burn indication by 2020. The product won “orphan” status from the federal safety watchdog in 2012 and is traveling the biologics license application protocol with the FDA that, if granted, would give Mallinckrodt patent protection until 2032.

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