UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 2.05. | Costs Associated with Exit or Disposal Activities. |
On January 4, 2024, Mallinckrodt plc (the “Company”) committed to a plan to cease commercialization and clinical development and wind down production of its StrataGraft® product (allogenic cultured keratinocytes and dermal fibroblasts in murine collagen - dsat) (“StrataGraft”), a regenerative skin tissue that is an allogeneic cellularized scaffold product derived from keratinocytes grown on gelled collagen containing dermal fibroblasts indicated for the treatment of adults with thermal burns containing intact dermal elements for which surgical intervention is clinically indicated (deep partial-thickness burns). The Company expects to complete this process by the end of the first quarter 2025.
The decision to discontinue StrataGraft was made following a slower-than-anticipated commercial uptake of the product and slower-than-anticipated enrollment in clinical trials. The Company is evaluating its next steps with respect to StrataGraft, which could include pursuing a sale, out-license or other strategic arrangement.
In connection with ceasing commercialization and clinical development and winding down production of StrataGraft, the Company currently expects to incur pre-tax charges, exclusive of impairments, of approximately $15 million, which include (i) approximately $5 million of one-time termination benefits, (ii) approximately $5 million in contract and lease termination costs, and (iii) approximately $5 million of other associated costs. The Company plans to recognize the majority of these charges in the first fiscal quarter of 2024, with the remaining amount to be recognized over the course of fiscal 2024 and into the first fiscal quarter of fiscal 2025. These estimated charges are expected to be cash charges. The Company also expects to incur an impairment charge related to its existing StrataGraft inventory for which it cannot provide an estimate at this time. The discussion in Item 2.06 below is incorporated in this Item 2.05 by reference.
| Item 2.06. | Material Impairments. |
In connection with the Company’s plan to cease commercialization and clinical development and wind down production of StrataGraft, the Company expects to recognize an impairment charge related to its existing StrataGraft inventory in the first fiscal quarter of 2024. The Company cannot currently estimate the size or materiality of the impairment charge because it is currently assessing the fair value of its assets as a result of the adoption of fresh-start accounting in connection with the Company’s emergence from bankruptcy on November 14, 2023. The Company expects to complete the ongoing fresh-start accounting adoption contemporaneously with the filing with the U.S. Securities and Exchange Commission (the “SEC”) of its Annual Report on Form 10-K for the fiscal year ending December 29, 2023. The Company will include an estimate of the impairment charge, to the extent material, in a future filing with the SEC. The Company does not expect the impairment charge to result in future cash expenditures.
The information in Item 2.05 of this Current Report on Form 8-K is incorporated in this Item 2.06 by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MALLINCKRODT PLC | ||
| By: |
/s/ Mark Tyndall | |
| Mark Tyndall | ||
| Executive Vice President, Chief Legal Officer & Corporate Secretary | ||
Date: January 9, 2024