Why Questcor's Latest Clinical Study is a Big Deal

Two clinical studies kicking off in one year sets a record for Questcor Pharmaceuticals (NASDAQ: QCOR  ) .

The biotech announced on Tuesday the initiation of a phase 2 trial to see how well its H.P. Acthar gel works in treating patients with acute respiratory distress syndrome, or ARDS. Questcor cranked up another midstage study focusing on amyotrophic lateral sclerosis, or ALS, in July.

Source: Questcor Pharmaceuticals. 

While two clinical studies would barely be worth mentioning for most biotechs, it's a big deal for Questcor. The ARDS and ALS trials are the only studies the company has announced in years. Acthar was approved by the U.S. Food and Drug Administration for most of its indications way back in 1958.

Granted, the ARDS study could be just a shot in the dark. An ARDSNet study from several years ago that included 180 patients examined the use of steroids in treating ARDS and found no clinical benefit. Questcor Chief Scientific Officer Dr. David Young admits that Acthar's "exact mechanism of action is unknown," so the company can't specify how it expects Acthar to help ARDS patients.

So why move forward with the new clinical trial? One study from 2002 found that methylprednisolone helped reduce inflammation in ARDS patients. Methylprednisolone is a corticosteroid. Acthar increases the production and release of corticosteroids. Based on Questcor's review of scientific literature and nonclinical data, the company thinks that Acthar's potential anti-inflammatory and immune-modulatory properties could help patients with the often-fatal respiratory disease.

Also, no drugs have been approved yet to treat ARDS. If even modest benefits are found, Questcor could ultimately pick up yet another indication for Acthar. With an estimated 141,500 new cases of ARDS in the U.S. each year, the company could find itself in a new market if all goes well.

There is perhaps an even more significant reason why this latest study and the ALS study are important for Questcor, though. The credibility of Acthar has come under fire in the past couple of years because of the lack of clinical support for the efficacy of the drug.

In 2012, Aetna (NYSE: AET  ) restricted reimbursement for Acthar except for infantile spasms. The big insurer's stance remains that no studies have proven Questcor's drug to be effective for other indications. Along the way, short-sellers launched attacks against Questcor, suggesting that other insurers would follow suit. There hasn't been any further fallout, but doubts about Acthar persist. 

Questcor's decision to pursue clinical studies for new indications could help improve the perception of the company and its primary product. If those studies produce positive results, the company could be elevated into another league.

ALS, for example, has attracted the attention of some well-respected biotech and pharmaceutical firms. Sanofi (NYSE: SNY  ) claims the only approved drug for the disease with its Rilutek. However, Rilutek isn't a big revenue-generator for the French drugmaker -- mainly because it's not terribly effective in slowing the progression of ALS.

Biogen Idec (NASDAQ: BIIB  ) hoped to achieve success with dexpramipexole. However, the biotech abandoned its development program for the drug earlier this year after disappointing late-stage results. Biogen CEO George Scangos commented that he didn't "know any disease that's in more need of therapy than ALS."

Questcor's clinical studies show that the company is making progress. Maybe these studies won't pan out. Then again, perhaps they will. Either way, it's a big deal for Questcor.

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