Questcor Pharmaceuticals: Another Strong Quarter Beset by Potentially Explosive Allegations

Controversial biotech stock Questcor (NASDAQ: QCOR.DL  ) is one of today's losers, down about 5% after reporting earnings earlier this week despite a fairly impressive quarter. Shipments of its flagship product Acthar jumped 28% to 8,100 vials, causing a 51% surge in sales to $243 million. The company also recently repurchased nearly a million shares and received a pair of analyst upgrades. The stock is already up 42% this year, but there are some very dark clouds that threaten to undermine investor gains here, and need to be addressed.

In this segment from Thursday's Market Checkup, Motley Fool health-care analyst David Williamson discusses the growing controversy surrounding Questcor, and the divide among investors. Despite the seeming strength of the business, there are allegations of questionable business practices, including how Questcor markets Acthar. Now, noted short-selling blog Citron Research has published a potentially explosive report, claiming that after testing two vials of Acthar, that virtually no active ingredient was detected. This could be a huge blow to the credibility of either Questcor or Citron, depending on who proves to be correct in these new allegations. David warns that he continues to watch this one from the sidelines, as while it may look cheap, a sudden FDA investigation, or even a freeze on Acthar sales, could be devastating for investors.

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