=Mallinckrodt (MNK) : Stock plummets as major opioid trial nears

Mallinckrodt stock plummeted Thursday on a report the pharmaceutical company could restructure to contend with legal action stemming from the opioid crisis.

Meanwhile, shares of other pharmaceutical companies tied to the opioid crisis also fell. Teva Pharmaceutical (TEVA) lost 5.4% to 6.79 as Endo (ENDP) crumbled 17.2% to 2.10.

The trio is among a cadre of pharmaceutical companies facing accusations they overstated the benefits of opioids and understated their risks. This led to thousands of deaths and addictions in the U.S. — a phenomenon known as the opioid crisis.

Mallinckrodt reportedly hired restructuring advisors to help limit its potential liabilities, people familiar with the matter told Bloomberg. The pharmaceutical company could explore a bankruptcy to contain a payout potentially in the billions of dollars, the sources said.

Mallinckrodt stock has been particularly hard-hit for its alleged role in the opioid crisis. At their peak in mid-2015, shares of the pharmaceutical company traded close to 130. Likewise, Teva stock topped out around 70 in mid-2015. That year, Endo stock almost reached 90.

In October, a jury will examine roughly 1,600 claims related to the opioid crisis. Pharma companies Allergan (AGN) and Endo have already settled cases with two counties in Ohio for a respective $5 million and $10 million. Privately held Purdue Pharma is reportedly considering a settlement around $10 billion to $12 billion.

Mallinckrodt is also reportedly negotiating a deal, people familiar with the matter told Bloomberg. To make matters more complicated, the pharmaceutical company had $5.35 billion in debt as of June 28. On Aug. 28, the company borrowed $95 million as part of a revolving loan worth $900 million.

That credit line is now fully tapped out. The loan will come due in February 2022.