All longs--invitation to comment on the following when it suits your schedule--let's get a dialog going.
QCOR cheerleading welcome--but also hardball analysis. As a long group, we are growing farther apart from the analyst herd
My 2013 EPS projection is moving around a bit--but even with a $10M set aside for potential investigation settlement and discounting impact of share buybacks and discounting Biovectra to near zero--still landing just over $6 (seconded by a competent CPA). It is reassuring to see Maxdad's 2013 EPS of $6.79 given his bullseye for Q4. I sort of remember Mikey generally agreeing with Maxdad's EPS range in an offhand comment on some post or another.
QCOR is not all that complicated a company to break down--and with their margins--the bet is basically this: do you believe revenue will grow significantly in 2013 and 2014?
So what in the world are analysts doing at consensus $4.51? Seriously $4.51? Meaning QCOR goes into topline neutral or even reverse for 2013?
--with NS cranking up at 5 vials per script, and,
--with a few dozen more reps pounding the pavement, detailing Acthar in a promising, 5-vial per script rheumatology arena?
--with Fed reimbursement phasing in?
--with reimbursement issues basically put to rest (c'mon--I could maybe, possibly project some push back from insurers for MS scripts--but appropriate patients for IS, NS and PM/DM? No way in Hades.).
I can't get to $4.51, even factoring in a 1.5 vial per script MS slowdown of 10% (which I don't believe--I think MS scripts will plateau, growing a few percent thru 2013).
Max--tks for the shout out on the rheumatology research. Another positive for rheumatology indications is the potential sales efficiency. Rheumatologists who experience positive patient response to Acthar for refractory PM/DM have potential to begin multiple-vial scripts for several other equally challenging patient populations.
Sentiment: Strong Buy
Whiz--appreciate the sanity check. Truth be told, have paid scant attention to analyst projections for the past decade or so, could be only me that is surprised. The only way I get to 4.51 is loss of a quarter due to a meteor landing on the new QCOR reimbursement assistance center.
Uh-oh--Southern Cal meteor shower might be next short thesis.
Sentiment: Strong Buy
Pharmaman, Great post and it correlates completely with my analysis of why $4.51 consensus is patently ridiculous. EPS will be about $5.20 with ZERO GROWTH solely based on simply annualizing Q4 eps (multiplying it by 4 quarters) = $4.36 PLUS 70 to 80 cents from Fed reimbursement changes PLUS a nickel to a dime from Biovectra. In effect, they could go on autopilot and get above $5.00 EPS !!!
While you and I have differered on whether it will be NS or Rheumatology that will lead the charge into extraterrestrial earnings (said with a smile) your research and analysis has been very compelling. So let me share with you my evolving view on these two sectors:
1. Rheumatology clinical and sales activities still lags NS by at least six months though it is clear they have gotten very aggressive about this sector (EXACTLY AS YOU HAD PREDICTED) in both clinical AND marketing terms. But it is still at a relatively early stage of roll-out given the short time all the new reps have been around AND a much more complex selling environment than NS. So while they should both move aggressively NORTH this year, Rheumatology indications (much broader than the singular NS) will take more time.
2. Conversely, while NS has the inherent attributes to grow fairly asymptotically over the next few years, the span of Rheumatology AUTOIMMUNE diseases potentially supported by Acthar is much more likely to be of a viral growth (a network of a family of diseases with Acthar spreading in trials from one to another to another each of which having the potential for quantum growth).
3. So while I believe the growth trajectories of both will be incredible, I am coming to the conclusion that the long term SUSTAINED UPSIDE potential is much greater (slower) than NS...And if that's the message you've been trying to get across to me and the rest of the Questcor community here, KUDOS...I NOW GET IT AND believe it to be probabilistically a much larger potential market(S).
Another view is that while Acthar has 19 FULLY APPROVED FDA Indications (including NS and Rheumatology), RHEUMATOLOGY's auto-immune population splinters into dozens and dozens of diseases ranging anywhere from those with modest consequences to those with progressive and horrendous death spirals. Some will NOT be likely (or economic) for Acthar, but many and perhaps most will be both economic and clinical candidates as will only be born out over time...Which is why we need to stay on top of the biological and clinical developments very closely.
Finally, IF (and I believe likely WILL) the biological and clinical research into Autoimmunes continues to bear fruit, it is very likely that one or more of these conditions will likely provided Questcor the ready opportunity to re-boot ORPHAN STATUS FOR SEVEN MORE YEARS...AND PROBABLY SEVERAL MORE VARIATIONS FOR 7 YEAR PERIODS THEREAFTER.
One emerging thought on some of the heat Questcor has taken for being a "one drug pony"...With other Pharma's possessing Orphan drugs once their 7 year period is up, it's OVER. They would have to develop (full cycle) a totally different drug to be their ultimate cash cow. Whereas one of the great benefits to Questcor's model (the supposed PIPELINE that they don't have) is that they can roll ORPHAN from one indication to another to another (with the rigors that come with it) for a drug that has achieved decades of safety record which is totally behind them now...making NEXT ORPHAN infinitely easier and HUNDREDS OF MILLIONS LESS EXPENSIVE, for those of you who know the cost of development and FDA approval life-cycles. Can't believe this is just coming to me but thanks to Mikey for original thesis on this!!!
What longs need to focus on, is all the analysts PPS targets are discounted for disasters. So that really is the low end of the spectrum after meteors hit QCOR HQ!
Once some of those risks pass, we will get upgrades. However, even more institutions will have accumulated by then.
Hate to sound like a broken record, but there is a time to trade and a time to go long and hold.
My PPS estimated are in the mid 5s but I'm not sharing the math as the shorts need to do their own homework.