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How StrataGraft Could Benefit Mallinckrodt’s Hospital Portfolio

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StrataGraft

StrataGraft, if approved, will be the first biological off-the-shelf skin substitute for treating severe burns. In 2012, the drug won orphan product status from the FDA (U.S. Food and Drug Administration). This is a major win for Mallinckrodt’s (MNK) hospital portfolio. For more detail on Mallinckrodt’s hospital portfolio, please read, Where Else Have We Seen Mallinckrodt’s ‘Acquire to Invest’ Strategy?

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What’s StrataGraft?

The current standard of care for severe burns involves human skin autografting. However, autograft has significant negative impacts on patients in terms of excessive scarring, increased infection risk, and painful harvesting of donor skin that creates a new wound. All these effects lead to hospitalization of unspecified length. 

With such high unmet need, StrataGraft has the potential to serve ~10,000 burn patients annually in the US. The drug’s potential can be judged in terms of the opportunity available for the skin graft products, which amounts to ~$300 million. Following the approval of its Biologic License Application, StrataGraft will hold exclusivity until 2032. As noted by Mallinckrodt, Stratatech’s proprietary tissue engineering technology produces living tissues that mimic human skin and promote tissue regeneration.

It’s often risky to directly invest in the equity of a pharmaceutical or biotechnology company. If you want to stay on the safer side, you can opt for diversified exposure to Mallinckrodt with the Health Care Select Sector SPDR Fund (XLV), which holds 0.29% of its total holdings in Mallinckrodt. Other major holdings in XLV include Johnson & Johnson (JNJ), Amgen (AMGN), and Pfizer (PFE).

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