Mallinckrodt CEO Mark Trudeau on Tuesday rejected short seller Citron Research's contention that it would face challenges being reimbursed for a high-priced specialty drug.
Shares of Mallinckrodt PLC fell as much as 25 percent and trading was halted multiple times due to volatility after Citron Research tweeted the company had more downside than Valeant Pharmaceuticals at these levels.
Mallinckrodt's shares dropped 17 percent on Monday in the regular trading session, to close at $58.01. The stock was down about 1.7 percent in premarket trading Tuesday.
In an email to CNBC, Citron's Andrew Left said: "The market has been so focused on Valeant that they forgot about other platform companies who are levered and face the same headwinds in reimbursement. We already see these challenges at Mallinckrodt and while Valeant has been taking all the heat, the business model of Mallinckrodt is just as, if not more, in danger of unraveling."
On Tuesday, Trudeau told CNBC's "Squawk Box" the company's model is both "unique" and "classical."
He said it is unique in that Mallinckrodt focuses on areas of "high-end medical need," typically acquiring products and then investing in them to produce clinical data and data that help determine the value of one therapy over another, a discipline known as pharmacoeconomics.
The model is classical in terms of the way Mallinckrodt promotes and develops its drugs because it reinvests in its business to create long-term, sustainable value, he added.