What happened

News that the DEA ranked Syndros as a Schedule II drug caused Insys Therapeutics' (INSY) shares to drop 16.4% in March, according to S&P Global Market Intelligence.

So what

Demand for Insys Therapeutics' opioid spray Subsys has been sliding, so investors were eyeballing Syndros' launch as a valuable new source of growth.

Marijuana sits around an open prescription bottle.


Syndros is a liquid formulation of dronabinol, a THC-based drug that's been on the market since the 1980s, and that's used to treat anorexia in AIDS patients and nausea and vomiting in chemotherapy patients.

The market for dronabinol is valued at $200 million, and it's currently dominated by generics. But Syndros can be more easily dose-adjusted, and it's easier to swallow, so Insys Therapeutics believes it can capture a significant share of sales, despite its brand-name pricing.

While that may still prove to be true, word that the DEA decided on Schedule II means that prescribing it won't be as easy as prescribing dronabinol, which is a Schedule III drug. Prescriptions for Schedule II drugs require a doctor's physical signature, and they can't be faxed. Furthermore, they can't be as easily refilled as those for Schedule III drugs.

Now what

Any amount of Syndros revenue will be welcomed by the struggling drugmaker. Investigations into improper marketing of Subsys, plus an overall decline in prescribing opioids because of risks of addiction, has taken a big toll on Insys Therapeutics' top line. For example, the company's sales crashed 41% to $55 million in the fourth quarter.

The scheduling decision wasn't unexpected, but it does mean there's a bit more uncertainty to the Syndros opportunity than there would have been otherwise. The company recently announced it had completed an internal review of its practices, and it's restating some of its prior financials. It also recently hired a new CEO. That's good news because it removes an overhang, but until investors see some sales trends for Syndros, Insys Therapeutics remains a risky stock to buy.