August 10, 2015 / 10:15 AM / 3 years ago

Mallinckrodt buys immunotherapy maker Therakos in $1.33 billion deal

(Reuters) - Drugmaker Mallinckrodt Plc (MNK.N) agreed to buy immunotherapy company Therakos Inc in a $1.33 billion deal, its second major acquisition this year to bolster its presence in hospitals.

Therakos’s flagship system is used to treat symptoms associated with a common form of blood cancer in patients who have been unresponsive to prior treatments.

The platform is used by academic medical centers, hospitals and treatment centers in more than 25 countries.

Devices based on Therakos’s technology are the world’s only approved fully integrated systems for extracorporeal photopheresis, or ECP, in which blood is treated with a photosensitizing agent and irradiated with light.

Shares of Mallinckrodt, which makes generic and specialty drugs as well as medical imaging agents, were little changed in afternoon trading on Monday.

Dublin-based Mallinckrodt said it would focus on selling more of Therakos’s devices in the United States, where it is approved only for a form of blood cancer.

Outside the United States, the device is also used to treat Crohn’s disease, among other applications.

Mallinckrodt’s purchase of Therakos from investment firm Gores Group adds to its line of products that cater to surgical pain management and respiratory therapies in neonatal intensive care units.

Mallinckrodt, spun off from Covidien Plc in 2013, has relied on acquisitions to fuel growth.

Last year, it bought Questcor Pharmaceuticals for about $5.9 billion and Cadence Pharmaceuticals for about $1.3 billion.

Mallinckrodt said in March it would buy privately held Ikaria Inc, a maker of a respiratory drug and its delivery system, for $2.3 billion.

The Ikaria deal gave Mallinckrodt access to INOMAX, the only approved product to treat hypoxic respiratory failure in infants.

The Therakos acquisition fits with the INOMAX buy, Mallinckrodt executives said on a call with analysts.

Mallinckrodt plans to sell Therakos’s devices to hospitals already using INOMAX and expects to generate sales of $500 million or more annually.

Mallinckrodt will finance the acquisition with cash and debt.

It said it expected the deal to add at least 10 cents per share to adjusted profit in 2016, assuming a close in late fiscal 2015 ending September.

Gores Group bought Therakos from Ortho-Clinical Diagnostics Inc, a former subsidiary of Johnson & Johnson (JNJ.N), in 2012.

Barclays advised Mallinckrodt on the deal, while Jefferies was Therakos’s adviser.

Up to Friday's close, Mallinckrodt's shares had risen 47 percent in the past 12 months, outperforming an 8 percent rise in the S&P 500 Index .SPX.

(This version of the story corrects to “blood” from “skin” cancer in second and sixth paragraphs)

Reporting by Natalie Grover and Ankur Banerjee in Bengaluru; Editing by Sriraj Kalluvila, Savio D'Souza and Don Sebastian

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