Questcor has parlayed one drug and a clever strategy into good growth and profits. But a new law and doubts about new uses for its costly product pose big challenges.
For years, Questcor Pharmaceuticals lost money making Acthar, a drug for desperately ill babies. Then in 2007, it found a success strategy. It raised Acthar's price from $1,650 a vial to $23,000, and has been solidly profitable ever since. Its stock (ticker: QCOR), quoted below 40 cents in 2007, hit a record $16.40 in January, on hopes for added sales of Acthar to patients with multiple sclerosis or kidney disease.
But the one-drug company, whose stock-market value has soared to nearly $1 billion, will see its profits vanish this year on prescriptions covered by Medicaid managed-care programs. The villain: a ...
I'm curious to what the rest of the story says.
The link is:
I've read the entire article. This was not a "balanced" article in search of the truth, but rather a hack job with Alpert as a front for the shorts. The writer twists a bunch of facts and to make readers believe in his lies. In fact, most of this is already OLD news - recall that QCOR got whacked last year and went down to $5 when increased their reserves. Alpert is comparing the prior quarter reserves % to future medicaid reserves in 2011 - comparing apples to oranges.
As for the Cavazza brothers, they sold most of their stock around $5...they're not involved with management or the board. I predict that QCOR will recover before the 7M shares SHORTS are able to cover at a profit. The core longs on QCOR know what they own, the the stock will quickly recover...just like it did when the medicaid news came out last year and stock was $5.
P.S. As a simple example that Alpert is an idiot - Citadel Securities has no research analyst who publish an earnings estimate on QCOR.
The key here is that this Off Wall Street(OWS) piece is old news and came out last summer - Alpert is just recycling it for the shorts to help his buddy Roberts. OWS is terribly desperate and have lost their clients a lot of money shorting QCOR. If you look carefully, you can see the charts and figure out when Off Wall Street first came out with their note last summer (followed by QCOR stock popping after earnings/conference call).
On a separate note, I need to make a correction on Citadal Securities. Citadel DOES have a research analyst - John Newman came from Oppenheimer. However, I was initially confused because Citadel's QCOR report is NOT included in what most wall street people use. I don't recall his updates even making any of the newswires. In looking at Newman's latest "published" note on Jan 31, 2011, QCOR shares even traded slightly below average daily volume.
On Monday, however, my hunch is that Newman will use this opportunity to make a name for himself...and hope his clients trade the stock thru Citadel. After all, I think he only has a few names under his coverage list so this is good timing for him.
Bottom line, there are 7M+ shares of QCOR shorts with most of them carrying a loss, and trying to figure out a way to recover. These guys will be fighting each other to try to cover first their shorts(before the stock rebounds). Further, there are many, many funds who have been waiting for a pullback to add/initiate a position. When people look back, I think people will realize what a gift this has been.
my honest-When Barrons prints an article, the first part of it is always the piece that traders focus on. They almost always throw the other side of the coin somewhere in it (just to say that they are fair) but you are correct...IT IS A HACK JOB.
Thanks for your post and putting some proper perspective on it.
The article is on page 41. States that QCOR is overvalued and may drop 50% on Medicaid rebate rule changes that require a full Acthar rebate for Medicaid patients. This could represent up to 36% of sales for QCOR going forward and drop 2011 EPS by over 50%.
Good luck. I am short as sigma Tau has unloaded 70% of their ownership stake into the run-up.