Despite Mallinckrodt’s years-long effort to become a leading maker of innovative drugs, the U.K. company is best known for two of the industry’s biggest scandals.

First, it grabbed attention from critics for the price of its anti-inflammatory gel Acthar, which, after a history of astronomical price hikes under previous owner Questcor, now bears a list  price of about $38,000 per vial, up from $32,000 when Mallinckrodt bought it. Media coverage, some featuring sick children, took issue with the cost, and some critics compared Mallinckrodt executives to Martin Shkreli, the now-imprisoned biopharma entrepreneur who became infamous for drug price hikes.

Then Mallinckrodt got in hot water with the DEA, which investigated it for allegedly failing to prevent its version of the opioid oxycodone from being diverted to drug dealers. More recently, a whistleblower sued the company, claiming it used "dirty data" to persuade payers to cover Acthar.

Now Mallinckrodt is taking its biggest step yet as it continues to try to make over its image, announcing today it will spin off a new company consisting of its specialty generics products, active pharmaceutical ingredients and the constipation drug Amitiza, which it acquired in its $1.2 billion purchase of Sucampo a year ago.

The spinoff will take the Mallinckrodt name, the company said. The remaining "independent Specialty Pharmaceutical Brands company" has yet to be named, the company said in a statement. Both entities will be publicly traded, and the deal will be completed through a tax-free distribution of common stock to shareholders that should be completed in the second half of next year.

"We believe this separation will further enhance our strategic focus and strengthen our balance sheet. It should also provide us with additional liquidity to support investments in our in-line brands and development portfolio and strategically allocate capital," said CEO Mark Trudeau in a statement.

The unnamed spinoff will have its work cut out for it, to be sure. The company, which brought in sales of $2.3 billion in the 12 months ended in September, will include Acthar, which Mallinckrodt picked up in a $5.6 billion acquisition of Questcor Pharmaceuticals in 2014, along with three other branded drugs sold to hospitals.

Acthar alone is expected to grow far beyond its $1.2 billion in annual sales, and several trials reading out in 2019 and 2020 will determine whether it will get there, analysts say. The company is testing the drug in amyotrophic lateral sclerosis (ALS), which would be a new indication, and it has ongoing trials in six diseases it's already approved to treat, including lupus and multiple sclerosis.

In a recent note to investors, Leerink analysts said they met with Mallinckrodt’s management and were told that if even half of these trials pan out "it could help change Acthar’s sales trajectory." Leerink added it would "be closely watching for these data readouts, as well as updates from potential competition, to get more comfortable with the medium/longer term sustainability of this franchise."

But there are still several clouds hanging over Acthar. The company had hoped to introduce a patient access program for the drug, but in November, the Office of the Inspector General of the Department of Health and Human Services shot down the plan. The proposed program "would present more than a minimal risk of fraud and abuse under the antikickback statute," HHS said in a letter (PDF).

Then there’s the whistleblower suit that emerged earlier this year. A former marketing executive brought the action, which alleges the company used insufficient data to secure coverage for Acthar. Mallinckrodt had already paid a $100 million settlement to the Federal Trade Commission over a deal it made to buy a potential Acthar rival in 2013, and last year it got hit with a lawsuit from Medicare Advantage organizations alleging it stifled Achtar competition.

Analysts will be counting on growth from the company’s other branded drugs to help draw attention away from Acthar. Next year, the company is expected to release key data on Terlipressin to treat hepatorenal syndrome and Stratagraft for deep partial thickness burns. Jefferies analyst Anthony Petrone met with Trudeau and a colleague just a couple of weeks ago and came away feeling that a turnaround was in the realm of possibility, he said in a note to investors. All told, the company has "over 12 pipeline assets valued at $1.5 billion in risk-adjusted peak sales potential where even a 50% win-rate would prove transformative to the story," Petrone wrote.

Editor's note: This story was updated to show that Acthar's previous owner, Questcor, took the biggest price increases on the drug before Mallinckrodt bought the company; Mallinckrodt continued to raise the list price, but by lower percentages.

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