St. Paul drug startup being acquired for $100 million in cash

Mallinckrodt, the pharmaceuticals business of publicly held Covidien of Ireland, will pay $100 million in cash for St. Paul-based CNS Therapeutics, a five-year-old specialty pharmaceutical company.

CNS uses a Medtronic implantable pump to deliver its drugs to the central nervous system to treat neurological disorders and intractable chronic pain. CNS currently has one commercial product, Gablofen, and several other products in the pipeline.

"This acquisition supports our strategy of leveraging our therapeutic expertise and our core capabilities in manufacturing, regulatory and commercialization to serve patients," said Mark Trudeau, President of Mallinckrodt's pharmaceuticals business. "CNS Therapeutics' ... central nervous system and pain management products in development complement our pipeline and address an important need for patients."

The principal investors in CNS are Minneapolis-based medical venture capitalist Thomas McNerney & Partners and Interwest Partners of California.

Pete McNerney, a managing partner in Minneapolis-based McNerney & Partners, declined to specify the size of the firm's 2007 investment.

"I can tell you that it was a successful investment for us," McNerney said. "We invested because we saw an opportunity for some additional suppliers in the two fields they were focused on -- pain and movement disorders. We were attracted to the management team that had experience and knowledge and a sound business plan."

CNS, with 27 employees in downtown St. Paul, expects to be absorbed into Mallinckrodt, based in suburban St. Louis, over the next year. It's unclear whether any CNS operations will remain in the company's offices at the First National Bank building.

Another founder, Dr. Richard Penn, is a veteran neurosurgeon who pioneered the use of implanted drug pumps to deliver medications directly to the spinal cord.

Mallinckrodt says it is the largest U.S. supplier of powerful opioid pain medications and among the top 10 generic pharmaceutical manufacturers in the U.S. It operates labs and factories in several states and outside the country. The transaction is expected to be completed by the end of the year.

Huge Covidien has a market value of $29 billion. The Irish medical conglomerate plans to spin off Mallinckrodt, which has about $2 billion in revenue, into an independent publicly held company to shareholders. That transaction is expected to be completed next year.