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Mallinckrodt plc (MNK) Q4 2022 Earnings Call Transcript

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Mallinckrodt plc (NYSE:MNK) Q4 2022 Earnings Conference Call February 28, 2023 8:30 AM ET

Company Participants

Daniel Speciale - Global Corporate Controller and Chief Investor Relations Officer

Sigurdur Olafsson - President and Chief Executive Officer

Bryan Reasons - Executive Vice President and Chief Financial Officer

Conference Call Participants

Rishi Parekh - JP Morgan

Brendan Hall - Brean Asset Management LLC

Operator

Good day, and convey you for opinionated by. Welcome to nan Mallinckrodt Q4 2022 Earnings Announcement. At this time, each participants are successful a listen-only mode. After nan speakers' presentation, location will beryllium a question-and-answer session. [Operator Instructions] please beryllium advised that today's convention is being recorded.

I would now for illustration to manus nan convention complete to your speaker today, Dan Speciale, Chief Investor Relations Officer. Please spell ahead.

Daniel Speciale

Thanks Tanya. And I would for illustration to invited everybody to today's call. With maine this greeting are CEO, Siggi Olafsson; and Bryan Reasons, our CFO. Siggi will commencement pinch an overview of nan business capacity and Bryan will return you done nan financials.

Before we begin, fto maine punctual you that you'll perceive america make immoderate forward-looking statements, and it's imaginable that existent results could beryllium materially different from our stated expectations. Please note, these forward-looking statements are made arsenic of coming and we presume nary responsibility to update them, moreover successful nan arena a caller accusation aliases existent results aliases early expectations alteration materially. We promote you to mention to nan cautionary statements contained successful our SEC filings for a much in-depth mentation of nan inherent limitations of specified forward-looking statements.

We will besides supply selected non-GAAP adjusted measures related to our financial performance. A reconciliation of these non-GAAP measures is included successful our net release, which tin beryllium recovered connected our website, mallinckrodt.com. We usage our website arsenic a channel to administer important and time-critical institution information, and you should look astatine nan Investor Relations page of our website for this information.

As noted successful nan net release, our 4th fourth ended connected December 30th, 2022 and nan comparative play we'll beryllium discussing this greeting is nan predecessor 4th ended December 31st, 2021. As a consequence of nan exertion of Fresh Start Accounting, nan company's GAAP financial statements for nan periods anterior to June 16th, 2022, nan day of our emergence, are not comparable to those periods consequent to June 16th, 2022. Further, nan results successful nan 4th comparison a normal 13-week play to a 14-week play successful 2021. While nan nonstop quantification of nan effect of nan other trading week successful 2021 is highly difficult to determine, we judge it reduced reported quarterly nett income maturation rates of nan institution arsenic a full by astir six to 9 percent points. The numbers we will talk successful this greeting make nary accommodation for that comparison and are presented connected a changeless rate ground unless different noted.

For nan quarter, Mallinckrodt reported a GAAP nett nonaccomplishment of $250 cardinal and a nett nonaccomplishment of $911 cardinal for nan 2022 fiscal year. After adjusting for specified items, our non-GAAP adjusted EBITDA was $176 cardinal for nan 4th and $675 cardinal for nan fiscal twelvemonth 2022.

With that, I'll move nan telephone complete to Siggi. Siggi?

Sigurdur Olafsson

Thanks Dan. Good greeting everyone. I'm pleased to beryllium pinch you coming to talk our successful 4th for Mallinckrodt and stock immoderate colour connected what is up for our company.

I'll commencement by concisely rubbing connected fewer cardinal highlights astir our afloat twelvemonth performance. We executed good and I'm incredibly proud of really we vanished nan year, exceeding our EBITDA guidance and achieving nan precocious extremity of nett income guidance for nan year. Bryan will supply a further colour connected nan financial results arsenic good arsenic guidance for 2023 later successful nan call, but I wanted to footwear things disconnected pinch these affirmative results arsenic they necktie straight backmost to our strategical initiatives.

As you whitethorn recall, we person been focused connected executing our 3 near-term strategical priorities, strengthening nan equilibrium sheet, stabilizing our portfolio, and making nan correct investments successful our pipeline. We are opening to spot grounds of coagulated execution of these initiatives successful nan afloat twelvemonth results.

We achieved nett income astatine nan precocious extremity of our guidance range, reflecting our team's efforts to stabilize nan portfolio and EBITDA exceeding our guidance scope arsenic we proceed to attraction connected subject costs controls and making thoughtful investments successful our pipeline. We besides saw a flimsy summation successful rate successful manus during nan 4th fourth and judge our liquidity will let america to proceed making important investments successful nan business.

For our portfolio, we made a coagulated advancement successful nan motorboat of Terlivaz, and we proceed to spot a beardown engagement from objective organization connected nan domiciled of Terlivaz successful treating and reversing hepatorenal syndrome, including chat of terlipressin successful a 2023 reappraisal article from nan New England Journal of Medicine. Early objective statement appears to align pinch published objective guidelines, which recommended nan usage of Terlivaz arsenic a first statement therapy for due patients.

We besides precocious welcomed Dr. Peter Richardson arsenic Chief Scientific Officer to oversee efforts to beforehand our pipeline and information retired our executive committee. Peter brings 30-plus years of investigation and improvement acquisition nether proven grounds of executing objective programs and advancing profit improvement pipeline to Mallinckrodt. We are fortunate to person him connected Board.

We made bully advancement passim nan twelvemonth successful achieving different cardinal objectives, including putting successful spot a afloat guidance team, adding manufacture leaders to nan Board arsenic independent directors, and moving to reinvigorate our company's culture.

2023 is simply a pivotal twelvemonth for nan company, and we guidelines fresh to navigate nan opportunities and nan challenges we person up of us. I americium pleased pinch our efforts coming and I person a awesome assurance successful Mallinckrodt's semipermanent expertise to thrust worth for stakeholders.

Now, let's do a deeper dive successful -- connected nan capacity crossed nan business segments during nan 4th quarter, opening pinch Specialty Brands. First up is Acthar Gel, which we judge is showing an early motion of stabilization. We were pleased to spot nan wide marketplace for Acthar maturation somewhat successful 2022. We are besides encouraged by nan stabilization successful diligent request and proceed to activity pinch payers to guarantee due entree for patients that request this therapy.

With our continued committedness to nan product, Acthar remains a apical prime for prescribers and we are continuing to activity intimately pinch them to make this therapy disposable to arsenic galore due patients arsenic possible. That said, location is simply a title successful nan market, which is expected to proceed to person an effect connected capacity successful 2023, wherever we expect nan merchandise gross will diminution by astir 10% from 2022.

As mentioned, past 4th improvement of our Acthar adjacent procreation transportation instrumentality has been completed, but we do not expect a motorboat successful 2023. We proceed to activity towards a solution of a regulatory matter involving 1 of our partners not circumstantial to our device. We stay optimistic astir nan important domiciled nan instrumentality will play successful our portfolio if approved, an easier and much patient-friendly type of Acthar Gel for azygous portion doses. We'll proceed to update you connected immoderate developments connected nan solution of nan third-party matter arsenic nan twelvemonth progresses.

I'm excited to stock our advancement pinch Terlivaz this quarter. In September of past year, Terlivaz became nan first and only FDA approved therapy to amended kidney usability successful adults pinch HRS pinch accelerated simplification successful kidney function, a devastating information pinch a precocious mortality rate. Since approval, we person been moving difficult to prosecute pinch hospitals to summation formulary inclusion of Terlivaz and we person made a bully advancement successful a short magnitude of clip since approval.

As we indicated past quarter, while this process takes time, we person gained formulary support successful immense mostly of those hospitals that person reviewed nan product. What's more, location are complete a 100 further reviews scheduled successful nan coming months. The important enthusiasm we person proceeding from nan cardinal sentiment leaders, organization mixed pinch nan products, inclusion successful curen guidelines, will beryllium cardinal to gaining formulary assets. We expect to person much to stock successful nan coming quarters and stay very optimistic astir nan early of this product.

Looking astatine INOmax, this merchandise continues to beryllium a marketplace leader backed by our best-in-class INOmax full attraction work offering. While we proceed to look title that is expected to persist successful 2023, we expect to proceed to beryllium nan marketplace leader successful nitric oxide for this critically sick patients. Our apical attraction present is our works motorboat of INOmax EVOLVE, nan adjacent procreation transportation strategy of INOmax. If approved, we stay connected spot to motorboat this twelvemonth and we are excited to bring this merchandise to market.

With enhanced car automation and streamlined design, we expect INOmax EVOLVE to supply a meaningful advancement successful nan transportation of our merchandise to thief amended clinician experiences. We person seen a beardown level of liking for this caller action to travel to market, and are looking guardant to adding it to our offering liner later this year.

Moving to Therakos. This is nan world's only afloat integrated and validated a ECP strategy to heighten a patient's expertise to find disease. It represents a level exertion that we judge are nan opportunities for geographic description and imaginable explanation description complete time. We person historically seen this merchandise arsenic a accordant mid to precocious azygous digit grower, and we were pleased to spot a sequential maturation for Therakos successful 2022, arsenic we navigated nan effect of stem compartment transplantation owed to nan pandemic. We judge we are entering 2023 connected a affirmative statement pinch a clear pathway to returning this merchandise to its humanities maturation trajectory.

For StrataGraft, our liking has been good beneath anticipation to date. Despite this, we still judge this innovative curen action for adults pinch heavy bosom wellness fittingness burns has an important spot for patients and doctors and provides a important betterment to autography. We are continuing our speech pinch pain surgeons and physicians to thrust adoptions arsenic good arsenic moving connected nan improved pathways for reimbursement.

Turning to Amitiza. Our attraction remains squarely connected nan Japanese market. The Mallinckrodt expects exclusivity into 2026 and beardown utilization trends continue. We'll proceed to spot yearly value simplification successful nan Japan marketplace until nonaccomplishment of exclusivity, but we expect this merchandise to make a bully rate travel successful nan years ahead.

As a reminder, astatine nan opening of nan year, nan U.S. marketplace became afloat generalized pinch aggregate launches. As we stated successful nan anterior quarter, this will consequence successful a astir $75 cardinal simplification successful Amitiza royalties for 2023.

Now let's move to our Specialty Generics sector. Specialty Generics continued its beardown capacity and has proven to beryllium an important portion of nan Mallinckrodt business. We expected this to -- we expect this to proceed into 2023. As we discussed successful our erstwhile net call, we anticipated that our scheduled acetaminophen APAP accumulation shutdown successful 4th fourth would effect nan capacity of nan merchandise family successful nan quarter. But we person seen betterment successful outputs from caller upgrades arsenic it's returned to afloat operation. For nan remainder of nan portfolio, we person been pleased by nan capacity of nan vanished dosage products, which thief to offset nan APAP shutdown and nan other trading week successful nan anterior year.

Bigger picture, our Specialty Generics business proceed to use from a well-deserved estimation for producing precocious value generic medicines and progressive pharmaceutical ingredients. We are nan only shaper of APAP successful nan U.S. and we made important investments successful our U.S. manufacturing capabilities. These upgrades will use america complete semipermanent arsenic nan expertise to connection customers a unchangeable proviso becomes much important than ever.

Our efforts successful Specialty Generics person group america up for what we judge to beryllium a beardown 2023. We judge this business will stabilize successful 2023 and has nan imaginable to turn owed to nan consistency of proviso and quality.

We closed retired 2022 pinch a beardown capacity successful nan 4th quarter, and we are assured that we are well-positioned arsenic we footwear disconnected 2023, which will beryllium an important twelvemonth for Mallinckrodt. We person immoderate existent opportunities ahead. Namely continued finance successful nan launches of early motorboat of StrataGraft to support their early and looking to summation support and motorboat nan adjacent procreation INOmax EVOLVE product.

At nan aforesaid time, we are prepared to look challenges this twelvemonth arsenic on, including nan nonaccomplishment of royalty owed to make title successful nan U.S. for Amitiza and Acthar competition. While location are immoderate clear challenges to nan business, I judge we are taking nan correct steps to mitigate these operational impacts, and we are seeing encouraging motion crossed some business segments. We expect Therakos to return to maturation this twelvemonth and judge our beardown capacity successful Specialty Generics will continue. The aesculapian community's enthusiasm astir Terlivaz exceeds our first expectation, and we are excited to thrust this motorboat guardant arsenic 2023 progresses.

With that, I'll move nan telephone complete to Bryan.

Bryan Reasons

Thank you, Siggi. I'll statesman by stepping done our results for nan 4th fourth and fiscal twelvemonth successful much item earlier turning to our expectations and guidance for 2023.

Mallinckrodt's full nett income successful nan 4th fourth of 2022 were $489 cardinal arsenic compared to $597 cardinal successful nan 4th fourth of 2021, a alteration of 18% connected a changeless rate basis. Our Specialty Brand conception reported nett income of $321 cardinal arsenic compared to $397 million, a alteration of 19% chiefly owed to nan impacted competition, reduced utilization of definite products owed to nan continued effect of nan pandemic, continued scrutiny connected wide specialty pharmaceutical spending, and nan effect of nan other trading week successful nan anterior year.

During nan quarter, Acthar Gel contributed $141 cardinal successful nett income and our captious attraction products INOmax generated $80 cardinal successful nett income owed to nan continued effect of title successful nan market. We look guardant to bringing nan adjacent procreation instrumentality to market, which we judge will further differentiate our merchandise from offering from competition.

Therakos had $62 cardinal successful nett income and arsenic Siggi mentioned, we expect this merchandise to return to normal maturation successful 2023. Amitiza nett income were $34 cardinal arsenic we knowledgeable continued unit successful nan U.S. from an authorized generic introduced past year. As a reminder, we still expect to suffer astir $75 cardinal successful U.S. nett income successful 2023 owed to nan nonaccomplishment of nan U.S. endo arsenic nan marketplace afloat converts to a generic marketplace pinch aggregate entries.

Turning to our Specialty Generics segment, we reported quarterly nett income of $169 cardinal arsenic compared to $200 cardinal past year, a 16% alteration chiefly owed to a diminution successful nan APAC business, which was impacted by nan scheduled attraction shutdown of our installation during nan 4th quarter, and by nan other trading week successful nan anterior year.

The company's nett nonaccomplishment for nan 4th fourth was $250 cardinal arsenic compared to nan nett nonaccomplishment of $204 million. Diluted nonaccomplishment per stock for nan 4th fourth was $18.94, pinch adjusted EPS of $4.07. Mallinckrodt's adjusted EBITDA was $176 cardinal successful nan 4th arsenic compared to $232 million. This reflects a alteration of 24%, chiefly owed to little nett income and maturation successful investments associated pinch launches of Terlivaz and StrataGraft, partially offset by reductions successful SG&A and R&D disbursal arsenic a consequence of nan company's initiatives to amended its wide costs building and nan favorable effect from overseas currency.

With respect to operating metrics successful nan quarter, adjusted gross profit arsenic a percent of nett income was 64% driven by mix. Adjusted SG&A arsenic a percent of nett income was 25.2% reflecting our finance successful launches of Terlivaz and StrataGraft, offset by continued savings from costs containment measures, organizational changes and favorable FX rates, and R&D arsenic a percent of nett income was 6.1%.

The institution ended nan 4th pinch astir $610 cardinal of liquidity, arsenic we maintained rate and rate equivalents of $410 cardinal and an undrawn relationship receivable in installments installation up to $200 million. Total rule indebtedness outstanding astatine nan extremity of nan 4th fourth was $3.534 cardinal pinch nett indebtedness of $3.125 billion. Mallinckrodt repurchase $48 cardinal rule magnitude of its 2nd thin notes owed successful 2025 and 2029 beneath par capturing $21 cardinal of discount during nan year.

Now fto maine modulation to recap of Mallinckrodt's afloat twelvemonth 2022 performance. Mallinckrodt reported afloat twelvemonth nett income of $1.914 billion, and adjusted EBITDA of $675 million. This reflects nan meaningful strides we've already made to fortify our company. To echo Siggi comments, we are incredibly proud of really we vanished nan year.

With that successful mind, I'd for illustration to springiness immoderate discourse connected nan 2023 guidance shared successful our net merchandise this morning. As we've mentioned before, we expect nan adjacent 12 to 18 months to beryllium nan trough for nan institution from an adjusted EBITDA and operating rate travel perspective, arsenic some of these are expected to diminution successful 2023. We anticipated reductions are owed chiefly to nan nonaccomplishment of Amitiza U.S. royalty stream, expected Acthar diminution of astir 10% from 2022, and finance successful launches of Terlivaz and StrataGraft, and nan planned motorboat of INOmax EVOLVE.

Our guidance for 2023 includes full nett income of betwixt $1.7 cardinal and $1.82 billion, and adjusted EBITDA of betwixt $510 cardinal and $560 million. Overall, I'm pleased pinch nan execution of nan business successful nan 4th arsenic we advancement into 2023, we stay acutely focused connected our upcoming indebtedness maturities and continuing our effort to amended nan equilibrium sheet.

I'll now manus nan telephone backmost to Siggi for immoderate closing remarks. Siggi?

Sigurdur Olafsson

Thank you, Bryan. I'm highly proud of nan teams present astatine Mallinckrodt. They made a tremendous push successful 2022 pursuing our emergence to build a stronger institution and positioned Mallinckrodt for nan future, each while continuing to present precocious value therapies to critically sick patients.

I cognize we person much activity up of us, but I americium grateful for their efforts. We are each eager to proceed nan activity -- to proceed nan activity nether and return fierce action to stabilize nan business. I stay assured successful each that we tin execute together and nan important use we tin proceed to bring to our patients.

So, pinch that, we'll now unfastened up nan telephone for Q&A.

Question-and-Answer Session

Certainly. [Operator Instructions]

And our first mobility will travel from Rishi Parekh of JP Morgan. Your statement is open.

Rishi Parekh

Morning. Thanks for taking my questions. Sorry, I joined late, truthful I apologize if you already addressed immoderate of questions. One connected Therakos. You expect to return to maturation this year. Can you locomotion america done nan drivers down this growth? Is it mostly connected label, but are you besides -- what are you baking successful for nan off-label growth? And past tin you conscionable springiness america immoderate discourse astir pricing for this product?

Sigurdur Olafsson

Yeah. So, Rishi, acknowledgment for nan question. Let maine commencement connected why we spot nan growth. So, first of all, we saw our sequential maturation successful 2022, truthful 4th fourth came retired amended than nan first 3 quarters. So, we saw that.

The main logic we spot is nan off-label usage successful graft versus big illness a consequence of stem compartment transplantation. As we person mentioned earlier connected our call, nan stem compartment transplantation went down during COVID. We saw that pinch each activity of COVID, location was little stem compartment transplantation. And that impacted per Therakos astir six to 9 months later. And we saw that successful nan numbers, truthful pinch now -- we saw that successful 4th quarter, we started to rebound connected nan volume, and that's why we are assured successful nan maturation that we expect to spot successful 2023.

So, possibly connected nan pricing, Bryan.

Bryan Reasons

Yeah. Not to get successful nan circumstantial pricing, but overall, this historically has been a reasonably unchangeable brand.

Rishi Parekh

Okay. And past nan CARES Act money, and again, I apologize if you already mentioned this. I deliberation you're expecting to person astir $140 million. One, is location a timing arsenic to erstwhile you expect to really person it? And past what do you scheme connected doing pinch this cash?

Bryan Reasons

Yeah. That's -- I deliberation you had conscionable asked astir our CARES Act refund. Yeah. That has gone done each nan audits and everything that's required, and we expect that to travel successful astatine immoderate point. So.

Daniel Speciale

Yeah. Rishi, what I'd adhd to that excessively is this is simply a existent receivable connected our equilibrium expanse and has been for nan past 2 quarters astatine this point. And so, obviously, hopefully, we received this successful comparatively short order. Obviously, we are moving pinch nan authorities done that process. Getting nan audit completed was a important step, and we judge it's conscionable a matter of clip earlier it's received.

Rishi Parekh

If I could compression 2 much in. One, tin you conscionable punctual maine aliases reiterate what your motorboat costs were for StrataGraft and Terlivaz?

Bryan Reasons

Yeah. We haven't fixed specifics, but if you look astatine our financials, you tin spot that past year, astir apt adjacent to $50 million.

Rishi Parekh

$50 million. Okay.

Daniel Speciale

Yeah. And I deliberation arsenic we move into 2023, obviously, Rishi, I mean, we're afloat motorboat connected Terlivaz constituent and surely want to make judge that we put appropriately successful that to beryllium capable to get that disconnected of nan crushed and launched appropriately. So, adjacent to presume arsenic our level of finance will summation now that we're successful nan first afloat twelvemonth launch.

Rishi Parekh

And past this twelvemonth is expected to beryllium your trough twelvemonth successful EBITDA arsenic you've communicated coming and your past telephone arsenic well. But tin you conscionable thief america aliases astatine slightest locomotion america done really we should deliberation astir nan jump disconnected from this trough number? Are you expecting double-digit EBITDA gains successful nan pursuing year? Or is it going to beryllium -- is nan maturation going to beryllium much gradual arsenic your 2 azygous products, Terlivaz and StrataGraft ramp up and arsenic those costs travel down, for illustration really should we deliberation astir nan jump disconnected from your trough EBITDA going forward? Is it -- and past long-term, erstwhile you deliberation astir EBITDA, do you expect to spot are you maxing it retired astatine a valuation of a 7 grip successful EBITDA, 8 handle? What do you deliberation EBITDA is going to spell erstwhile you commencement to deliberation astir nan ramp-up successful each these -- successful your 2 main narcotics aliases 2 caller drugs, sorry?

Sigurdur Olafsson

Yeah. So, fto maine commencement by talking a small spot wherever nan EBITDA comes from this constituent from nan guidance this year. I deliberation nan logic why we are optimistic is, first of all, we person 2 caller launches. Probably a bigger opportunity is Terlivaz, we will person much accusation passim nan twelvemonth erstwhile we perceive backmost from nan P&T committees connected nan formulary business that helps us. So, we are excited astir it. I deliberation we're getting each nan correct motion back. But what we person promised investors that hopefully by midyear aliases so, we tin commencement to talk astir nan imaginable for Terlivaz and what nan motorboat curve will beryllium for that merchandise because nan formulary is truthful important successful nan motorboat curve and really quickly. We person 7 years of exclusivity for this product. We are excited. We are moving arsenic accelerated arsenic we tin to present that to nan market. But that will beryllium a cardinal and captious constituent to it.

The 2nd point to support successful mind is nan self-delivery instrumentality of Acthar, which we expect to motorboat successful 2024. That will thief america to stabilize nan Acthar franchise. This is simply a azygous transportation -- azygous dose transportation instrumentality preferred by nan patients to beryllium capable to usage nan merchandise by themselves and don't request nan support to present that. We are still expecting that to beryllium delivered successful -- to motorboat successful 2024. Obviously, location are regulatory challenges pinch our partners, but they are moving connected overcoming and we are supporting. But overall, that's nan adjacent step.

Third thing, which we're excited about, is nan EVOLVE. We are expecting to motorboat EVOLVE later this year. EVOLVE will beryllium nan adjacent procreation of INOmax devices That, I think, will again thief america to stabilize nan INOmax franchise. We person nan full care, which differentiate pinch nan competitors that we person been unfastened astir america arsenic immoderate title impacts nan pricing of nan product. So, bringing nan EVOLVE to nan marketplace will moreover further thief america to stabilize.

And past past but not least, we are still -- nan assemblage is simply a small retired connected StrataGraft. We are excited astir it. We spot immoderate uptake successful that product. But this is an astonishing opportunity. I deliberation this is simply a caller subject and exertion to bring to nan pain units and to nan pain surgeons. The cardinal sentiment leaders are excited, but it takes a small spot much clip than we expected to get that into nan believe successful nan pain unit.

So, pinch each these things successful place, positive you person seen complete nan past fewer quarters, nan stabilization of nan generics, we are excited that 2023, nan effect of nan diminution of Acthar and nan effect of nan diminution of Amitiza and obviously, nan pricing of INOmax gives america this debased point, but we really person nan opportunity to turn from this constituent onwards.

Bryan Reasons

No, that was a very short answer, Siggi. So, I deliberation nan cardinal is mid-year erstwhile we person amended visibility of nan motorboat slope connected Terlavez, I deliberation we'll beryllium capable to springiness you a amended benignant of jumping disconnected constituent astatine nan extremity of nan year.

Daniel Speciale

Thanks, Rich. Any different questions?

Operator

One infinitesimal for our adjacent question. And our adjacent mobility comes from Brendan Hall of Brean Asset Management LLC. Your statement is open.

Brendan Hall

Morning. I conscionable wanted to corroborate connected nan anterior question. Is that $50 cardinal motorboat for each supplier aliases for both? Just to explain that.

Daniel Speciale

No, that would beryllium cumulative. Yeah.

Brendan Hall

Yeah. Got it. And nan 2nd mobility is connected nan opioid spot and prepayment. I judge location was an 18-month hold opportunity to prepay that. I wanted to cognize really you guys are reasoning astir that successful concurrence pinch opportunities to buyback debt, and really you deliberation astir that costs to capital.

Daniel Speciale

Yeah. Sure. So, it's a small difficult to perceive you, but I deliberation possibly conscionable to summarize, nan mobility was, pinch respect to nan opioid spot and nan anticipation of prepayment and really conscionable broadly reasoning astir superior allocation. Bryan?

Bryan Reasons

Yeah. I mean, awesome question. Look, erstwhile we negotiated that, we had -- we put successful an 18-month play that we could prepay that astatine a important discount. Clearly, nan superior markets shifted since then. So, we still person that opportunity, but we're looking astatine nan superior building holistically monitoring nan superior markets. So, from a superior allocation, if that's nan champion return connected our usage of liquidity, we'll do that. But certainly, delevering successful different areas of our headdress building person go very charismatic arsenic good correct now. So -- but we person 18 months from emergence to seizure that discount.

Brendan Hall

And really are those payments conscionable system retired nan year? So, for example, $200 cardinal owed successful 2023.

Bryan Reasons

Yeah. I deliberation you asked really nan payments are system without a discount that we'd have. We had astatine emergence, we had a $400 cardinal payment. And past connected each -- nan adjacent 2 anniversaries, we person $200 cardinal and $200 cardinal and past $150 cardinal and it scales down from there.

Brendan Hall

That’s great.

Daniel Speciale

Any different questions?

Bryan Reasons

SEC document.

Brendan Hall

Got it.

Daniel Speciale

Any different questions, Brendan?

Brendan Hall

No. Yeah. My mobility is conscionable -- I understand nan schedule, conscionable if you salary supra and beyond that, you seizure nan discount for immoderate amounts paid. That was nan genesis.

Daniel Speciale

Yes. Technically, that's really that would work. To nan grade that we paid more, that would use against nan backmost extremity of nan costs astatine a discount. That's correct.

Brendan Hall

Got it.

Daniel Speciale

Okay. Operator, immoderate different questions?

Operator

And I'm showing nary further questions. I would now for illustration to manus nan telephone backmost to Dan for closing remarks.

End of Q&A

Daniel Speciale

Thanks. Appreciate it, and convey you each for your liking successful Mallinckrodt. We expect filing our Form 10-K successful nan coming days. As a reminder, we'll beryllium attending nan Cowen Healthcare Conference adjacent week. For those attending, we look guardant to seeing you all. If you person immoderate questions aliases willing successful gathering pinch america adjacent week astatine nan conference, fto america cognize we'll beryllium happy to help. The champion measurement to get a clasp of america coming will beryllium via e-mail, and Derek and I will activity to get backmost pinch you each arsenic soon arsenic possible.

All nan champion to you and your families and person a bully day.

Operator

Ladies and gentlemen, this concludes today's conference. Thank you for participating. You whitethorn now disconnect.

Editor: Naga



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