Shares of pharmaceutical company Mallinckrodt fell as much as 14.55% on Tuesday after a federal court in Delaware invalidated 11 of its patents.
Specifically, the judge threw out the company’s Inomax respiratory treatment system patent as part of a suit brought by Mallinckrodt against specialty chemical company Praxair, which is trying to sell a generic version of the treatment, according to Reuters.
Inomax makes up approximately 15% of the St. Louis-based company’s revenue, according to Mizuho Securities, which reiterated its “buy” rating on the stock (with a $US70 price target) after the unexpected ruling.
Mallinckrodt’s stock price has had a rough year, falling 53% in the past 12 months, from a high of $US77.39, as Wall Street continuously accuses it of jacking up the price of Acthar — a drug dating back to the 1960s that now costs almost $US40,000 — for its revenue growth.
“The negative here is that additional Inomax competition would create an even higher dependence on Acthar,” Mizuho said in the note. “The stock has already reacted as if the majority of Inomax has evaporated, which we believe is excessive.”
The company missed Wall Street revenue expectations during the second quarter, it reported last month.