Higher Ground for Questcor

Questcor's higher-than-expected shipments of Acthar drive shares higher.

Keith Speights
Keith Speights
Sep 10, 2012 at 12:00AM
Other

Questcor Pharmaceuticals (Nasdaq: QCOR) reported that August shipments of its drug Acthar rose by nearly 33% compared with July. Shares closed up 3.3% on Friday in response to the news after jumping more than 7% at the open.

What it means
The better-than-expected August shipment numbers add to more recent good news for Questcor. Earlier last week, the company announced its eligibility to pay lower Medicaid rebates for Acthar.

Jefferies analyst Biren Amin thinks that the improved August numbers mean that Questcor could significantly beat consensus sales estimates for the third quarter. Analyst Marko Kozul with Leerink Swann concurs. Kozul wrote in a note to investors that the higher shipments indicate a strong third quarter.

While July shipments of Acthar dipped a little from the previous month, the overall trend over the past two years continues to move steadily upward. Paid prescriptions are likewise trending in a positive direction.

Questcor targets Acthar primarily in four markets: multiple sclerosis, nephrotic syndrome, infantile spasms, and rheumatology. Drilling into the estimated August paid prescription numbers for Acthar shows good news on nearly all fronts.

Paid prescriptions for use of Acthar in treating multiple sclerosis grew in August more than 34% compared with July. Growth for nephrotic syndrome exceeded 8% month-to-month. Prescriptions for dermatomyositis/polymyositis (a rheumatology indication) jumped from only one in July to at least 13 in August. Only paid prescriptions for infantile spasms reflected no real growth from July to August.

The bottom line is that increasing shipment volumes and paid prescriptions translates to higher revenue and earnings. That's definitely good news for Questcor.

Looking ahead
Questcor faces competition in its primary markets for Acthar. Other multiple sclerosis drugs include Tysabri from Biogen Idec (Nasdaq: BIIB) and Elan (NYSE: ELN). Novartis (NYSE: NVS) makes Gilenya. Teva Pharmaceuticals (NYSE: TEVA) sells Copaxone, which has as much as 40% of the $10 billion multiple sclerosis market.

However, Questcor is a serious contender. More shipments and higher paid prescriptions of Acthar could mean this stock is headed for even higher ground.


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