Mallinckrodt's Inhaled Xenon Gas Therapy Enters Phase III

Mallinckrodt plc (NYSE:MNK) and partner NPXe Limited announced enrollment of the first patient in the phase III study of xenon gas for inhalation (XENEX) for Post Cardiac Arrest Syndrome (PCAS). XENEX is being evaluated to improve the functional outcomes and the survival rate of patients resuscitated after a cardiac arrest. The safety and effectiveness of xenon gas for inhalation for PCAS has not yet been established by the FDA.

The study is expected to enroll 1,400 patients, who will be put under 24 hours of xenon gas treatment in combination with the targeted temperature management (TTM). This evaluation will be compared with TTM alone, which is the current standard of care. The study is estimated to include about 70 study centers across the United States and Europe. An interim analysis of the study is likely to occur in the fourth quarter of 2019 and the program is expected to complete in 2020. The FDA has approved a Special Protocol Assessment for the study and the candidate has been granted a Fast Track designation. NXPe expects the regulatory submission to be a drug and delivery device combination.

NPXe has signed a long-term distribution agreement for the exclusive marketing rights to XENEX in North America, Japan and Australia with Mallinckrodt. In Europe, NPXe has a similar agreement with Linde AG (DE:LING) (''Linde''), the large industrial gases company. Mallinckrodt will pay NPXe $5 million as recognition of the milestone achievement per the terms of the license and collaboration agreement between both companies.

A tentative approval of XENEX will expand Mallinckrodt's portfolio of hospital drug-device combination products providing therapies for patients.

Mallinckrodt’s stock price has declined 29% year to date, comparing unfavorably with the industry’s fall of 27%.

Mallinckrodt is in the process of streamlining its organization, thereby seeking to dispose of non-core assets as well as restructuring its operating model to increase efficiency and productivity, thus allowing greater investment in its Specialty Brands segments. It completed the sale of Hemostasis business — PreveLeak Surgical and Recothrom Thrombin topical products to Baxter International, Inc. (NYSE:BAX) in March 2018. Notably, the company acquired these products from The Medicines Co (NASDAQ:MDCO) .

Zacks Rank and Stock to Consider

Mallinckrodt carries a Zacks Rank #3 (Hold). A better-ranked stock is Gilead Sciences Inc. (NASDAQ:GILD) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead’s earnings per share estimates have moved north from $6.71 to $6.93 for 2018 and $6.64 to $6.84 for 2019 over the past 60 days. The company delivered a positive earnings surprise in three of the trailing four reported quarters, the average beat being 6.99%.

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