Mallinckrodt sells Therakos unit on at a discount

Ireland-headquartered pharma group Mallinckrodt has agreed to divest its subsidiary Therakos to private equity firm CVC Capital Partners for $925 million, well below the $1.33 billion it paid for the business almost a decade ago.

St Louis, Missouri-based Therakos' primary business is extracorporeal photopheresis (ECP) technology used to deliver autologous immunotherapies for skin manifestations of various blood cancers, including cutaneous T-cell lymphoma (CTCL), and to treat transplant rejection and graft-versus-host disease (GvHD).

ECP involves taking a patient's blood and then isolating and treating abnormal white blood cells with UV light before returning them to the body. Therakos makes instruments to extract and reinfuse the cells under the Cellex brand, as well as photosensitising agents and other consumables used in the process.

Mallinckrodt – a specialty pharma group selling branded and generic medicines – has been struggling to recover from a protracted period of instability linked to litigation over its alleged role in the opioid epidemic in the US. That resulted in two separate filings for bankruptcy protection, in 2020 and 2023, with the company emerging from the latter last November.

At the time, Mallinckrodt said that a "return to growth" for Therakos was a key part of its recovery plan. Now, it says the sale to CVC will allow it to cut its net debt by more than 50%.

In its first-quarter results, the company recorded net sales of $468 million, up 10%, with a net loss of $65 million and outstanding debt of $1.39 billion. Therakos revenues were $58 million in the three-month period, flat on the first quarter of 2023.

"We see significant opportunities ahead to expand Therakos' indications, enter new geographies and bring this innovative treatment to more patients around the world," said CVC's Cathrin Petty and Phil Robinson, speaking on behalf of the private equity firm's healthcare team.

"We look forward to working closely with the talented Therakos team and adding this best-in-class ECP system with an unparalleled efficacy, safety and tolerability profile to our portfolio of healthcare businesses," they added.

The transaction is expected to close in the fourth quarter of 2024, subject to regulatory approvals and other customary closing conditions. Mallinckrodt has said that "key employees" who work on Therakos will transition with the business, without going into details.