Why Questcor Pharmaceuticals Shares Exploded Higher

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.

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Comments from our Foolish Readers

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  • Report this Comment On June 11, 2013, at 3:38 PM, NotTheDroid wrote:

    Sad that you are so uninformed.

    Synacthen is NOT an ingredient in Acthar. They are two different chemical entities.

    You also apparently still aren't keeping up with company goings on. Three overseas presentations in the last 2 months. New orphan disease trials finishing, starting, in progress.

    Oh the list goes on... but why bother, you never spend even a minute to educate yourself or your readers.

    Have fun shorting, you will be getting burned again soon.

  • Report this Comment On June 11, 2013, at 4:26 PM, Grayhouse wrote:

    Directly from the package insert:

    DESCRIPTION

    Synacthen is the first corticotrophic preparation to be produced entirely by synthesis and displays all of the pharmacological properties of endogenous ACTH. It is a long-chain polypeptide composed of the first 24 of the 39 amino acids contained in the naturally occurring ACTH (corticotrophin) molecule.

    Acthar has all 39 amino acids.... doesn't sound like a generic to me. Besides, have you seen any generics for insulin, botox..... or any other biologic? The FDA does not even have an approval system in place for biologics.

    And lets not talk about the fact that purchasing synacthen doesn't just "buy" the competition. It opens up dozens of international country's that Questcor currently does not have a presence in. Gee, that doesn't help diversify now does it?

  • Report this Comment On June 11, 2013, at 6:14 PM, NotTheDroid wrote:

    Grayhouse,

    Good points and let's also not forget that the FDA considers Synacthen an NCE, they do not consider it to be Acthar. In reality and according to it's pharmacology, it isn't.

    It will require clinical trials, is not viable for IS per Propthink, Red Acre, and Michael Fuller (Seeking Alpha) research last October, and has not been used in most countries of the world.

    In fact, in many countries including the USA, it has been refused import because of lack of testing. That right there tells you its an NCE, if someone didn't feel like calling the FDA (which many of us doing research last October did).

    Good plan by QCOR and follows their stated mission to expand immune response arsenal.

  • Report this Comment On June 11, 2013, at 9:21 PM, Vitamanrocks wrote:

    It seems many writers are like weather 'advisors'. They can get it wrong time and again, and even appear completely ignorant on what they are writing about, yet still keep their jobs. If not short or long, at least research what you're writing about and don't make uninformed negative (or positive) comments. It will just detract from what you say in the future. Perhaps you have friends that are short Questcor and you want to help them out. If you're going to critique, at least get facts write and do so in a professional manner. I'm basically trying to help your career here.

  • Report this Comment On June 16, 2013, at 5:55 AM, zzlangerhans wrote:

    Lol @ "get facts write".

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