It's been a hideous morning for Wall Street's most hated pharma stock

Mallinckrodt Pharmaceuticals plunged more than 7% on Tuesday after reporting a Q2 earnings miss on revenue and declining sales in its specialty drug portfolio.

The company reported revenues of $US824.5 million, missing consensus expectations for $US830 million. Sales of the company’s blockbuster drug Acthar of $US319.4 million also missed expectations for $US326.9 million. Specialty drugs Therakos, Ofirmev, and InoMax missed significantly as well.

These specialty numbers really matter, especially when it comes to Acthar — a controversial drug that makes up over half of the company’s revenue.

For over a year, Wall Street has been accusing Mallinckrodt of relying on jacking up the price of Acthar — a drug dating back to the 1960s which costs almost $US40,000 — for its revenue growth. The company denies this, but analysts on the conference call following these dismal earnings wouldn’t let the question go.

Mallickrodt executives explained that Acthar would see a mix of price and volume growth leading revenue from quarter to quarter, until ultimately the drug’s sales revenue could sustain itself on organic volume growth.

This is a tune Wall Street has heard before with pharma — namely with Valeant Pharmaceuticals, 2015’s disaster stock. Even before Valeant fell 90% on accusations of fraud, detractors accused that company of depending on unsustainable acquisitions and price hikes for growth.

Looks like no one’s in the mood to see the same movie twice right now.

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