Please ensure Javascript is enabled for purposes of website accessibility

What Has Insys Theraepeutics Shares Crashing 20% Today

By Todd Campbell - Apr 11, 2016 at 3:56PM

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

Disappointing first-quarter sales for Subsys are taking a toll on the company today.

Image source: Insys Therapeutics.

What: Following the release of preliminary first-quarter sales of its only commercialized drug, shares in Insys Therapeutics (INSY) are collapsing 20.6% at 3:00 p.m. ET today.

So what: Insys Therapeutics markets the opioid pain killer Subsys, and earlier today, management told investors that it expects sales of Subsys totaled between $61 million and $62 million in Q1.

That estimate significantly trails industrywide consensus expectations for Subsys sales of $86 million. Fourth-quarter Subsys sales were $91.1 million, up 38% year over year, and first-quarter 2015 Subsys sales were $70.5 million.

The drop-off in sales marks the first significant drop in Subsys demand since allegations of improper off-label marketing emerged last year, and it increases concern that the company's best days for growth are behind it.

Now what: Investors have become increasingly concerned that bad news, including scrutiny over the company's marketing practices and increasing concern over opioid misuse, could crimp Subsys demand, and clearly, today's news adds oxygen to those flames.

Today's revelation is also worrisome because it comes only weeks after a delay in the FDA's timeline to review Syndros, a reformulated version of the marijuana based drug marinol that Insys Therapeutics has touted as a potential nine-figure opportunity. In March, the FDA delayed its decision date for Syndros to July 1 from April 1.

Given slumping demand for Subsys and the Syndros delay, investors are right to wonder if Insys Therapeutics profitability is in jeopardy. Insys Therapeutics' management says it expects to remain profitable at this lower sales rate, but today's sales figures will undoubtedly cause industry watchers to cut their outlook for EPS this year.

Overall, until Insys Therapeutics shows that Subsys demand is stabilizing, or reports that Syndros has cleared regulatory hurdles, there's little reason to take on the risk of buying shares on this drop. Instead, investors might want to consider other opportunities.

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

*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 service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/17/2022.

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.