This News Should Get Your Blood Pumping

ABIOMED (NASDAQ: ABMD  ) shareholders, you've just been given clearance to breathe a sigh of relief.

Following the close of the bell yesterday, ABIOMED released a statement announcing that U.S. regulators had closed a 20-month-long investigation into the company's marketing and promotion practices of the Impella Recover LP 2.5 Percutaneous Cardiac Support System.

Regulators had honed in on what it considered to be unapproved claims regarding the Impella 2.5's usage time frame, which was set at six hours or less and in only certain instances, and based on comparisons the company had made that its blood-pumping device was superior to other technology on the market. While no specifics were detailed as to how ABIOMED remedied the FDA's requests originally sent in June 2011, it nonetheless resulted in the closure of the investigation. 

This might appear to be another ho-hum moment, but it actually should get investors' blood flowing again. U.S. regulatory investigations can sometimes end with incredible tough financial damages levied against the accused company, or can dramatically drag down a company's share price.

Health-care conglomerate Johnson & Johnson (NYSE: JNJ  ) paid the second-highest settlement ever levied by U.S. regulators against a pharmaceutical company last June -- $2.2 billion. The scope of the case had to do with J&J's marketing of anti-psychotic drug, Risperdal, as well as two other drugs.

Similarly, Amgen (NASDAQ: AMGN  ) paid a hefty $780 million settlement of its own in October 2011 stemming from the marketing, dosing, and pricing of Aranesp and Epogen, as well as clinical trial information disseminated about these drugs.

Sometimes it doesn't take a fine, but the sheer overhang of an investigation to do the damage. Questcor Pharmaceuticals (NASDAQ: QCOR  ) , which supplies Acthar gel for more than a dozen diseases, is currently being probed by the U.S. government for its marketing practices. Specifically, it appears questionable to regulators why the drug carries a $23,000 price per vial across all 19 of its indications despite having orphan drug status that protects it from competition. Shares of Questcor are down about 50% from their 52-week high.

For ABIOMED, this means the investigatory cloud has been lifted, and it can focus entirely on its heart device line. ABIOMED's most recent quarterly results highlighted a 19% increase in sales to $38.3 million, with Impella devices accounting for 87.5% of sales and demonstrating 21% growth. ABIOMED isn't exactly cheap at 30 times forward earnings, but with the stock plunging better than 30% at one point last year because of the investigation, it could have some moderate upside potential.

Will a U.S. probe permanently derail Questcor?
Questcor is one of the most debated names in all of biotech. Its premium priced drug, Acthar, is growing at a torrid pace -- and minting money in the process. However, recent events have created significant doubts about Questcor's future. Will insurance companies continue to cover the drug? Will a government investigation lead to huge fines? We highlight these high-profile issues inside our brand new premium research report on Questcor. In it, you'll learn about the key opportunities and threats facing the company, as well as multiple reasons to buy and sell the stock. We're providing a full year of analyst updates as key news hits, so make sure to claim a copy today by clicking here now.


Read/Post Comments (8) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On February 21, 2013, at 3:46 PM, NotTheDroid wrote:

    Oh no you didn't!!! Yes you did... you made up BS about Questcor as absolutely NOTHING has been even leaked about what it is regarding.

    Oh yea, this one goes to the SEC.

    Not that anyone listens to you anymore though, it's obvious the MF is a shill for shorts trying to cover.

  • Report this Comment On February 21, 2013, at 5:09 PM, drdonrs wrote:

    MF does its best to plant negative innuendos about Questcor. Brokerage recommendations are coming in, thick and fast. No one has said that the government is investigating the price per dosage, only you. Insurance companies are reimbursing with pre- authorization required, no different than with any other high tier drug. When is Motley Fool going to stop being the FOOL and stop aiding and abetting the short community? Oh is this campaign your effort to act like an ANALyst and sell your less than premium reports?

  • Report this Comment On February 21, 2013, at 9:04 PM, earthunit wrote:

    I agree with drdonrs 100%.

    The only one who should be investigated around here is MF.

  • Report this Comment On February 21, 2013, at 11:30 PM, Itsawhiz wrote:

    How's that sheer overhang doing on Questcor? Well,

    Institutional Investors have/are adding to their position, Analysts are upgrading to Buy and

    the has Stock risen from 26 to 31 in a week, still

    Technical Indicators are BULLISH. They purchased their manufacturer BioVectra along with it their trade secrets securing the fact that a generic is even farther out then 5 yrs. Maybe it effected their cash OH. Nope, they had 155 million in cash as of 1/1/2013 an increase over last qtr by 44m with no debt, and announced record scripts for the 4th quarter, or it must be the dividend of nearly 3% that they pay. Must be the Sales. Nope, can't be record scripts were announced, especially since they have 50 new reps for NS sales, well we will find out for sure next Tuesday the 26th after hours when they report earnings. Boy they have growth of over 150% YOY going hope they keep it up. That's impressive too. I am not surprised that you didn't mentioned that all the major carriers since September are covering Acthar unlike the rumor that was spread which caused it to drop back then. Hmm perhaps what you should do is tell the Short who asked you to write this article to cover his shares, instead of trying to manipulate your community away from an outstanding value.

    Anyone interested in learning more, please come visit us on Yahoo Message Board QCOR is the symbol. We will give you the straight answer.

  • Report this Comment On February 22, 2013, at 3:00 AM, MostAgreeableGuy wrote:

    The ole MF'ers are desperate! Posting more nonsensical articles to further their short agenda.

    You should be ashamed of yourselves.

  • Report this Comment On February 22, 2013, at 6:13 AM, mapres wrote:

    I'd also like to know your source - how do you know what regulators are concerned about? Also, is the US attorney for the eastern district of Pennsylvania really a regulator? Sounds like part of the Judicial branch to me.

  • Report this Comment On February 22, 2013, at 3:51 PM, IFIONLYHAD wrote:

    Articles like this is why i stop a long time ago from subscribing to any of your newsletters!

  • Report this Comment On February 22, 2013, at 5:30 PM, drdonrs wrote:

    Hey Motley Fool do you ever monitor your board and try and respond, in a logical way, to the mostly negative feelings that many investors and traders have towards you? Do you ever wonder why?

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