When investing in biotech stocks, investors have to be aware of the numerous risks involved. While binary events such as clinical trial data releases or FDA approval decisions are the most notable, even companies with approved and commercialized drugs can carry serious risks and exposures.

One example of this is Questcor Pharmaceuticals(UNKNOWN:QCOR.DL). Sales of its top drug, Acthar, are growing at incredible rates, but the stock's valuation has dropped considerably. In the following video, Brenton Flynn runs through the situation and highlights the key areas investors need to watch with this stock.