Why Questcor Pharmaceuticals, Inc. Shares Briefly Popped

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 biopharmaceutical company focused on developing therapies to treat autoimmune and inflammatory disorders, briefly jumped as much as 11% earlier in the trading session after a research firm Mizuho Financial came to its defense. Shares are up a more modest 5% as of this writing.

So what: Shares of Questcor were hammered late last week on a report from noted short-selling firm Citron Research, which claimed that Questcor's lead product, Acthar Gel, was in danger of being pulled from the market due to questionable clinical results of the drug. The FDA confirmed that it was reviewing the materials brought forth by Citron in an email to Bloomberg, adding to investors' fears. Mizuho, however, believes there was merely a label error in testing, and maintains its buy rating on Questcor with a price target of $93.

Now what: Questcor's growth with regard to Acthar has been absolutely phenomenal over the past year, but these gray clouds involving its questionable clinical results simply refuse to go away. Hopefully, with the FDA now examining Citron's lab findings we can get a verdict, once and for all, whether Acthar Gel is as amazing as it appears or if Citron's concerns were warranted. If Acthar is cleared, it could certainly head toward triple digits given its growth rate. Conversely, if Acthar's lab results do raise concerns, with 19 indications and no other FDA approved drugs, Questcor could find itself in a world of hurt. Personally, I'd suggest avoiding this situation altogether until we have better clarity.

Questcor may have soared over the past year, but even it may have a difficult time keeping up with this top stock in 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (5) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 03, 2014, at 2:31 PM, WalterRockford wrote:

    The lack of insight in this MF(ing) article is embarrassing, especially with the author giving credence to the feloniously motivated aspersions of a fraudulent shortseller.

  • Report this Comment On March 03, 2014, at 2:48 PM, EquityBull wrote:

    Citron made many accusations in the past that had nothing to do with Acthar concentrations in the vials. When those all failed they pulled this out? They bought 28 grand vials of Acthar on the open market (how did they get the rx to acquire and test the drug?).

    Citron then goes on without giving color on the chain of custody of the vials and we don't even have proof that they tested it at all. No details were given regarding the lab or custody chain. They could have simply sent a letter to the FDA to cause a panic of some kind.

    Amazing how the other attacks on the principals and the drug rebates didn't work so good and now Citron comes up with a whole new strategy. I believe this will be the final straw proving Citron's short seller motives and QCOR should go after them for libel and put them and the principals into bankruptcy should this be determined.

    I'm sure Citron used all the vague language and no details so they can claim some way out of the mistruths as it has been their mission to take QCOR down for their own profit.

    Over 1/3 of QCOR shares are short. The squeeze is going to be huge and this may be Citron's last gasp to get out with as little loss as they can.

    It is unlikely that all the studies for all 19 indications across multiple institutions and facilities all were faked. In the end the drug works. FDA approved. Shown to be effective. Period. End of story.

    Citron is going down.

  • Report this Comment On March 03, 2014, at 3:10 PM, awallejr wrote:

    I wish you and Keith would do just a little investigation because right I question seriously your motive. ALL the FDA said was it was REVIEWING the report. In layman's terms that means reading it.

    Questco's lab results are not being question by the FDA because they already APPROVED it. Citron's report raised NO issues that would even hint at showing a severe risk of having the FDA pulling the drug which is WORKING. In fact you might want to read QCOR's recent 8k. If anything Citron has opened itself up to a SEC investigation on THEMSELVES for attempting to manipulate a stock with making a materially false allegation.

  • Report this Comment On March 03, 2014, at 3:49 PM, physdude wrote:

    The fact that the FDA is still reviewing it after 2.5 months shows the complete lack of importance that it imputes to the report. If there was any substance to the allegations (other than the fact that they found deamidated ACTH in a vial whose insert claimed to be nothing other than deamidated ACTH) the drug would have been pulled in Dec. itself.

  • Report this Comment On March 12, 2014, at 2:57 PM, drrjv wrote:

    1. Acthar Gel is based on ACTH, an 'orphan' drug. Questcor has done a phenomenal job of pharmaco-economics in making this drug a 'blockbuster'.

    2. No appreciable research has been done on this drug for 30 years or more.

    3. Doubtful that it is any more effective than routine steroids.

    4. The price for a course of treatment is $40,000 - the medical community should demand better evidence that this substance (whatever it is - ACTH? or something else) actually works.

    One does wonder how long this farce will last. The recent research suggesting no ACTH may be the death knell!

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2862155, ~/Articles/ArticleHandler.aspx, 9/16/2014 3:43:12 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement