Mallinckrodt committee of unsecured creditors objects to VTS-270 sale

By Sarah Lizee

Olympia, Wash., June 11 – Mallinckrodt plc’s official committee of unsecured creditors objected to the company’s motion to sell to Mandos LLC its VTS-270 assets, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The debtors announced the $1.2 billion acquisition of Sucampo Pharmaceuticals, Inc. Months earlier, Sucampo had acquired VTS-270, a drug in development for the treatment of Niemann-Pick Type C1 disease, for $200 million upfront consideration plus contingent consideration through its own acquisition of Vtesse, LLC.

“Notwithstanding that the VTS-270 accounted for approximately $200 million of the $1.2 billion Sucampo acquisition, and has a patient population that believes in the effectiveness of VTS-270 based on clinical trials and the expanded access programs, the debtors are focused on hastily shutting down their VTS-270 program and selling VTS-270 and related assets in a private sale after ‘very limited’ outreach for approximately $1.75 million, plus other contingent consideration,” the committee said in its objection.

The group said that more than two weeks after the sale motion was filed and both formal and informal discovery served, specific details about the debtors’ marketing efforts “remain a mystery.”

The committee said that a further valuable aspect of the transaction is that the rights to an FDA priority review voucher, if approved by the FDA, will be transferred to the buyer under the asset purchase agreement, an asset potentially worth up to $100 million, if approved.

“Equally troubling is the debtors’ anemic efforts to market VTS-270, an asset that was sold for over $200 million less than four years ago, either prior to or since the execution of the APA,” the committee said.

The group noted that the debtors are unwilling to conduct an auction of VTS-270 if additional prospective buyers surface.

“Underscoring these concerns is that the APA does not even require the court’s approval of the sale motion until Aug. 1, with the APA not requiring a closing until Sept. 17,” the committee said.

“Nevertheless, the sale motion attempts to secure court approval within the shortest time permissible under the federal rules of bankruptcy procedure.”

Dublin-based Mallinckrodt develops, manufactures, markets and distributes specialty pharmaceutical products and therapies. The company filed Chapter 11 bankruptcy on Oct. 12, 2020 under case number 20-12522.

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