Specialty pharmaceutical company Mallinckrodt added $US500 million to its share buyback program on Thursday.
This is in addition to the company’s $US200 million remaining from its share repurchase program announced in January. The company’s board also authorised management to reduce outstanding debt.
“In this unusually volatile marketplace, we believe this is an excellent use of our strong capital position, while still enabling us to continue to identify, acquire and invest in underdeveloped assets to further our volume-driven growth strategy,” CEO Mark Trudeau said in a statement.
Trudeau added: “Mallinckrodt’s growth strategy differs from that of other specialty pharmaceutical companies. We ‘acquire to invest‘, targeting unique, highly durable assets that provide effective treatment alternatives, particularly for small, underserved and poorly penetrated patient populations. We then focus on building those assets through manufacturing modernization, lifecycle management, market expansion, and label enhancement.”
The stock closed Wednesday at $US57.61 per share. The stock has collapsed more than 40% this year.
The company has also recently become a target of short-seller Andrew Left, the founder of Citron Research. Left has also been targeting Valeant Pharmaceuticals.
Mallinckrodt was among the drug companies to see a sharp sell-off in its share price in the aftermath of the Martin Shkreli saga in mid-September. The overnight price hike of a drug called Daraprim by a biotech company led by Shkreli became national news, with presidential candidate Hillary Clinton describing the move as “outrageous.”
That put a focus on drug-price gouging, which in turn put a focus on Valeant and, to a lesser extent, Mallinckrodt.
Morgan Stanley analysts said in October that the two companies were among the most exposed to risks arising from a focus on drug pricing.
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