Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Questcor Pharmaceuticals (NASDAQ: QCOR ) , a specialty biopharmaceutical company, skyrocketed as much as 37% after the company announced a deal to purchase Synacthen and Synacthen Depot in the U.S. from Novartis (NYSE: NVS ) .
So what: Under the terms of the deal, Questcor will pay Novartis $60 million upfront for Synacthen and will make at least $75 million in additional payments over the coming years -- perhaps more depending on whether it gains approval by the Food and Drug Administration and reaches certain milestones. The purchase is crucial for Questcor because Synacthen is merely the generic version of the active ingredient in its lead drug, Acthar Gel, which is indicated for 19 different diseases. With the threat of it being introduced at a fraction of the price out of the way, and Questcor looking to utilize Synacthen in various other disease areas, it paves the way for Acthar sales to grow unabated.
Now what: This looks like nothing more than the, "If you can't beat them, buy them" strategy. Although there's nothing wrong with that, I still have my fair share of concerns regarding Questcor. Acthar sales in the first quarter were disappointingly low, and there still remains an ongoing investigation with regard to its sale and marketing practices of Acthar Gel. I wasn't much a fan of Questcor prior to today's move, and I'd have to say I'm even less of a fan now.
Craving more input? Start by adding Questcor Pharmaceuticals to your free and personalized watchlist so you can keep up on the latest news with the company.
While you can certainly make huge gains in biotechs like Questcor, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.