Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Insys Therapeutics Inc. Tanked 17% in March

By Cory Renauer – Apr 5, 2018 at 11:24AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

A handful of threats lobbed at opioid-based drugmakers pressured shares of the pain relief specialist following a dismal earnings report.

What happened

Investors worried sinking opioid sales haven't found a bottom yet pushed Insys Therapeutics Inc. (INSY) stock 17.1% lower in March, according to data from S&P Global Market Intelligence. Sales of the pain relief specialist's cannabis-based products weren't nearly strong enough to begin offsetting heavy Subsys losses.

So what 

Insys Therapeutics announced annual sales fell 42% in 2017, and a 43% year-to-year drop in the fourth quarter suggests falling Subsys sales haven't come close to bottoming out yet. Subsys is approved for the treatment of breakthrough cancer pain, but it's been suggested that up to 80% of Subsys sales in past years were the result of off-label prescriptions. 

Upset person holding a downward sloping stock chart.

Image source: Getty Images.

Also last month, President Trump said he was considering suing drugmakers for their role in fueling the opioid epidemic. The company set aside $150 million for legal issues last year, but those funds are associated with an ongoing Department of Justice investigation, not a new federal lawsuit.

Now what

Insys claims it secured some managed care contracts that will help "stabilize" tanking Subsys sales. Combined with the continued rollout of a new drug, management thinks it can stop the top line from contracting further this year. 

Insys launched Syndros, a sublingual spray containing marijuana's main psychoactive ingredient last summer and it generated around $1.4 million in revenue by the end of 2017. Syndros is approved for treatment of chemotherapy-induced nausea and vomiting, plus anorexia associated with AIDS. While it's off to a solid start in this indication, it's important to remember the same active ingredient has been available as a capsule since 1985.

Insys finished 2017 with a $164 million cash balance after losing $47 million last year. If Syndros sales don't start rocketing higher, Insys could find itself strapped for cash before the current year is through.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

INSYS Therapeutics Stock Quote
INSYS Therapeutics
INSY

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
342%
 
S&P 500 Returns
107%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.