Opioid lawsuit settlement by Mallinckrodt; Purdue bankruptcy prospects

UK-incorporated specialty pharmaceutical company Mallinckrodt (NYSE: MNK), along with its wholly-owned subsidiaries Mallinckrodt LLC and SpecGx, have reached a settlement in principle with Cuyahoga and Summit Counties in Ohio in connection with lawsuits pending in multidistrict opioid litigation (MDL) in the US District Court for the Northern District of Ohio, with the news sending the firm’s shares leaping 17.6% to $1.87 by close of trading on Friday.

If finalized, the settlement will fully resolve the Track 1 Cases against all named Mallinckrodt entities that are currently scheduled to go to trial in October, 2019 in the MDL. The Track 1 Cases assert various claims related to the opioid business operated by SpecGx. Under the agreement, Mallinckrodt will pay a total sum of $24 million in cash and donate $6 million in generic products, including addiction treatment products, and all named Mallinckrodt entities will be dismissed with prejudice from the lawsuit. The value of the settlement should not be extrapolated to any other opioid-related cases or claims.

"Mallinckrodt is pleased we were able to reach a settlement in principle with the counties that made sense for all parties," said Mark Casey, general counsel at Mallinckrodt, adding: "Resolving the Track 1 Cases gives us the necessary time to continue to work towards a global resolution of the opioid lawsuits."