G

Image source: Insys Therapeutics.

What: Amid ongoing concern that regulatory scrutiny over its marketing practices could erode demand for its fast-growing cancer drug and lead to profit unfriendly settlements, investors sent shares in Insys Therapeutics (NASDAQ:INSY) reeling by 39.4% in January, according to S&P Capital IQ.

Take Long View

So what: Insys has been on the hot seat for marketing practices associated with its fast-growing opioid cancer drug Subsys.

Subsys won Food and Drug Administration approval in 2012 and it has since become the top-selling fentanyl opioid pain drug in the country, with third-quarter sales exceeding $91 million, up 57% from a year ago.

However, investigations are ongoing to determine whether Insys Therapeutics bulked up sales by marketing Subsys to doctors as a therapy for use in patients suffering from conditions that aren't listed on its label. Although doctors have the freedom to prescribe medicine off-label, drugmakers are prohibited from marketing their drugs for such use. 

G

Image source: Insys Therapeutics.

Now what: Investor concern has spiked following a $1.1 million settlement with Oregon's attorney general last fall and reports that the company's prescription support center helped push through reimbursement for non-cancer indications.

So far, however, the cloud hanging over Insys Therapeutics HQ hasn't dented Subsys sales or Insys Therapeutics' profitability. In the first nine months of 2015, the company's net income totaled $41.5 million, up from $28.6 million in the comparable period of 2014.

Obviously, it's unknown how all this is going to shake out and what -- if any -- penalties may be looming, but there are some reasons why risk-tolerant investors may want to consider picking up Insys Therapeutics' shares on sale.

Insys Therapeutics' oral formulation of the long-standing HIV and cancer nausea drug marinol is one reason. The FDA is expected to issue an approval decision on Insys Therapeutics' formulation in the next few months, and if approved, Insys Therapeutics thinks it could have nine-figure sales potential.

Insys Therapeutics' sales could also eventually benefit from research underway on marijuana-based therapies for epilepsy and from other medicines the company is working on that leverage Subsys spray technology.

Overall, Insys Therapeutics' profitability, debt-free balance sheet, and potential products make its shares intriguing, but it's unlikely that they'll move markedly higher until it can put this overhang behind it. 

 

Todd Campbell owns shares of Insys Therapeutics. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.