The Fall And Rise Of Questcor

(RTTNews) - There can be no two opinions on how volatile the biotechnology sector is. Mind you, the volatility is even more pronounced if the company's fortunes depend on the sales of a single drug. Questcor Pharmaceuticals Inc. (QCOR) is a case in point, with its flagship product H.P. Acthar Gel acting as the key driver and drag of its stock price.

Acthar Gel, also called Acthar, is a repository corticotropin injection that is approved by the FDA for the treatment of 19 indications.

Of these 19 indications, Questcor currently generates substantially all of its net sales from five indications namely, multiple sclerosis in adults, nephrotic syndrome, infantile spasms, collagen diseases and rheumatic disorders, according to the company website.

Things were going perfectly fine for Questcor until early September 2012. The stock, which had been consistently making higher lows and higher highs, touched a high of $53.85 on September 7. But then came news about insurer Aetna Inc.'s (AET) decision to limit coverage of Acthar Gel on Sep.19, 2012.

Though Questcor clarified that the revised insurance policy bulletin of Aetna related to Acthar will not have a material impact on the results of its operations, the stock took a hit - cratering 54% to a low of $22.26 that day.

Misfortunes never come singly and so was it for Questcor last September. Following the Sep.19, 2012 news of insurance coverage, came another bad news.

On September 24, 2012 Questcor revealed that the U.S. government is investigating its promotional practices, which resulted in a 37% drop in its stock price to close at $19.08.

But there's always light at the end of the tunnel. After bottoming at around $17.25 on Sep.27, 2012, QCOR has been on a rebound, regaining its lost sheen.

In extended trading yesterday (July 30, 2013), QCOR rose more than 14 percent to $59.50, following the announcement of Q2 results.

In the second quarter ended June 30, 2013, Questcor's adjusted net income rose to $83.3 million or $1.35 per share from $44 million or $0.65 per share in the year-ago quarter. On a non-GAAP basis, excluding an incremental Medicaid rebate liability, net sales for the second quarter of 2013 were $196.1 million, up 74 percent over the second quarter of 2012.

Questcor shipped 7,050 vials of Acthar during the second quarter of 2013, up 50 percent compared to 4,710 vials in the year ago quarter. The company also believes that insurance coverage for Acthar continues to remain favorable, when Acthar is prescribed for on-label indications for patients in need of an additional FDA-approved treatment alternative.

Not the one to be complacent with 19 approved indications for Acthar, the company is also exploring further therapeutic areas for the drug. The company has initiated a phase II study of Acthar in amyotrophic lateral sclerosis while another phase II trial evaluating the drug in diabetic nephropathy is underway.

After all, Acthar is effectively a pipeline in itself, according to Questcor!

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