Why Questcor Pharmaceuticals, Inc. Shares Briefly Popped

Questcor Pharmaceuticals shares rebound after Mizuho Financial comes to its defense. Find out why your best bet might be avoiding this stock altogether at the moment.

Mar 3, 2014 at 2:16PM

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
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Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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