Image source: Insys Therapeutics.

What: After the company reported second-quarter revenue and earnings that were better than industry watchers' forecast, shares in Insys Therapeutics (NASDAQ:INSY) are rallying more than 15% at noon EDT today.

So what: Pushback against the rising use of opioids to treat pain caused sales of Insys Therapeutics' lone commercial drug, Subsys, to fall in the first quarter, and that prompted industry watchers to ratchet back their outlook for the second quarter.

Earlier today, Insys Therapeutics' management reported top- and bottom-line results that suggest that analysts may have overshot when they reined in their estimates. Sales of Subsys fell again this quarter. However, despite a 13% year-over-year drop in sales, revenue still came in at $67.1 million, and adjusted earnings per share were $0.13, which was $0.06 better than Wall Street anticipated.

Insys Therapeutics also said that although sales of Subsys, a fentanyl spray approved for breakthrough cancer pain, dropped, Subsys maintained its 44% market share among fentanyl products.

Management also touted the recent FDA approval of Syndros as reason for optimism. Syndros is a liquid formulation of the long-standing marijuana drug Marinol, which is used to treat anorexia in AIDS patients, and chemotherapy-induced nausea and vomiting in cancer patients. The FDA approved Syndros on July 5.

Now what: The opioid crisis in the U.S. has doctors carefully screening patients, and hesitancy to prescribe fentanyl products is likely to continue to present headwinds to Subsys sales. Therefore, the biggest driver of Insys in the coming months will be Syndros. 

Insys Therapeutics believes that Syndros' dosing flexibility and bioavailability offer advantages over Marinol that will allow it to capture the lion's share of the nearly $200 million in annual Marinol sales. If that scenario plays out, Syndros will give Insys Therapeutics, which is already a profitable company, a second nine-figure drug on the market.

Beyond Syndros, Insys Therapeutics continues development of additional drugs that could have similar market opportunity. The company is working on sublingual sprays of buprenorphine for chronic pain and buprenorphine/naloxone for opioid dependence, and it's also conducting studies for use of the marijuana cannabinoid CBD in rare forms of epilepsy.

Overall, Insys Therapeutics is a profitable company with two drugs on the market and potentially more drugs coming. However, it has been under the microscope due to allegations of improper marketing of Subsys, and that makes investing in this company riskier than it would be otherwise. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.