Remember I was saying I was told a story about the shorts... well it's public knowledge now. Printed in the NYTimes.
The SHORTS are Cramer, Adam F, and their little buddy (ex Cramer lackey) Martin Shkreli. They were trying to round up investors to beat Questcor's bid but Novartis didn't fall for it. Martin's company RTRX is a shell holding company used for trying to bring drugs to market but so far he doesn't really have anything.
So now you know why Cramer and Adam were bashing QCOR and you also know who was shorting... them and whatever investors they found to get the $16 million offer together.
As many fund managers I've spoken to have said the last few months, it's only the stupid shorts left. The smart ones left long ago.
ROTFLMAO. Cramer and his little ill informed butt buddies. Too friggin' funny, aye?
Questcor Pays $135 Million to Acquire Rights to a Competitor’s Drug
By ANDREW POLLACK
Published: June 14, 2013
A pharmaceutical company that has reaped huge profits by selling a 60-year-old drug for $28,000 a vial has eliminated the most obvious threat of competition from a much cheaper drug by acquiring the rights to it.
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H.P. Acthar Gel, a treatment for immune-related ailments.
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Questcor Pharmaceuticals Incorporated
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The company, Questcor Pharmaceuticals, has acquired the rights to Synacthen, a drug from Novartis, that is sold in Europe but not in the United States. Synacthen is similar to Questcor’s drug, which is called H.P. Acthar Gel and used to treat various immune-related ailments.
Questcor’s agreement to pay Novartis at least $135 million trumped a bid from a start-up company called Retrophin that had hoped to sell Synacthen in the United States for a few hundred dollars a vial, sharply undercutting Acthar’s price, according to people briefed on Retrophin’s negotiations.
Questcor’s stock shot up 15 percent on Tuesday, the day its deal to acquire Synacthen was announced. “We believe the acquisition removes a key overhang as a potential competitor to Acthar is removed,” Biren Amin, an analyst at Jefferies & Company, wrote in a note.
One antitrust lawyer, not involved in the negotiations, predicted the deal would receive “intense scrutiny” by federal antitrust regulators.
“The type of acquisition that raises the most concern under the antitrust law is when a dominant firm acquires a potential rival,” said the lawyer, David A. Balto, a former policy director of the Federal Trade Commission who now calls himself a public interest antitrust lawyer.
But Steve Cartt, the chief operating officer of Questcor, disagreed. He said Questcor did not have to report the transaction to antitrust regulators because Novartis, the licenser, would retain some manufacturing rights to Synacthen.
The Federal Trade Commission is now proposing new rules to end such exemptions from notification.
A spokesman said the trade commission did not comment on whether it was reviewing particular transactions but said it could even when that was not required.
Questcor, based in Anaheim, Calif., has achieved huge success with Acthar, a hormone purified from pig pituitary glands that was selling for only about $40 a vial when the company acquired the drug in 2001.
Questcor began increasing the price. In 2007, it was raised to about $23,000 a vial from $1,650, provoking howls from some doctors and patients, and has continued to raise the price since then.
The company initially said the high price was necessary because the main use of the drug was to treat a very rare condition that causes spasms in babies. But the company has aggressively marketed the drug for more common immune-related disorders like multiple sclerosis and nephrotic syndrome. Sales reached $509 million in 2012, and the price of the company’s stock has soared since 2007.
But insurers are now making sure that Acthar is used only when far cheaper steroids cannot be. The federal government is investigating Questcor’s marketing practices. And many short-sellers have been betting Questcor’s stock will fall.
The most obvious threat to Questcor’s business was the possibility of someone bringing Synacthen to the United States. Synacthen is a synthetic fragment of the hormone in Acthar.
Questcor eliminated that competitor by licensing the exclusive rights to the drug in the United States and various other countries, excluding 13 in Europe, according to a company regulatory filing.
Its initial payment of $60 million to Novartis greatly exceeded the $16 million Retrophin was offering, according to a summary of the tentative deal terms that Retrophin was circulating to investors in an effort to raise money to buy Synacthen. Retrophin, however, was offering Novartis a 20 percent royalty on sales, which is likely to be far higher than what Questcor agreed to pay.
Retrophin, which went public through a reverse merger with a shell company, is based in New York and is run by Martin Shkreli, a former biotechnology hedge fund manager. He declined to comment for this article.
It is not clear if there were other bidders. Novartis declined to comment.
Novartis can revoke the rights if Questcor does not meet deadlines in terms of testing Synacthen in clinical trials and seeking approval to market it in the United States, according to a regulatory filing by Questcor. The deadlines are not being made public.
Mr. Cartt of Questcor said the company would spend millions of dollars testing Synacthen to see if it could help American patients. “That is the essence of discovery and competition, not their elimination,” he said in an e-mail.
In the past Questcor executives have disparaged Synacthen.
“We believe it is unlikely to be a competitor to Acthar,” David Young, Questcor’s chief scientific officer, said in a call with analysts last July. He said it was not a protein produced by the body like Acthar was and added, “Synacthen contains benzyl alcohol, which is toxic to children and can potentially cause gasping syndrome, which can be fatal.”
But in a news release this week, Dr. Young said that Questcor intended to test the drug “not only in conditions different than Acthar but also in conditions where Synacthen would potentially provide a clinical benefit over Acthar.”
If you ever watch that AH Cramer, his callers in are the most uninformed booyah boobs you would ever encounter. These are the unsophisticated #$%$ investors who know from nothing. Cramer fits in perfectly with the NBC type of "reporters". He probably should have been under federal indictment for his macinations. The small time little guy retail shorts are left holding the bag. Crooks beget crooks.
Sentiment: Strong Buy
DESPERATION and GRASPING AT STRAWS. Good luck covering 18 million shares when price is STILL going up, accumulation is strong, more are holding with fewer selling, and volume is drying up until earnings!! SQUEEEEEEZE!!
Sentiment: Strong Buy
FWIW...virtually no chance this will get past first look by FTC...can't even begin to make a case on a potential monopolistic acquisition that may be 1-2-3 years out if EVER even qualifies for investigation...and never get past the investigation stage...way too many barriers to a qualified case. IGNORE ANY SUCH REFERENCES...PERIOD!!!
Right Max--antitrust is ridiculous. Near term impact, in my opinion, will be wider availability outside the US, spurred by educational and detailing efforts, for challenged patients who need Synacthen.
Longer term impact will be another therapy for challenged patients in the US--probably directed at populations different than Acthar Gel.
The Times just misses this thesis entirely--these are boutique drugs serving small populations of very challenged patients. Seriously--who cares how much it costs? Treatment of these challenged patients who fail inexpensive therapies is gong to be expensive no matter how you slice it.
Sentiment: Strong Buy
Curious... should we go after other drug companies that have 2 different drugs potentially for the same indication, that the FDA says are two different chemical entities.
Why does everyone think these are the same drug?
Doesn't BIIB and a few others have 2 drugs for MS?
Does not compute in my brain.
Two words: QCOR WINS.
That's what I got from the NYT article.
Betting lots of other investors will size it up the same way.
And once they complete DD?
QCOR WINS again.
Short attack Monday? Shares get sucked up so fast--won't last an hour.
I'm putting in large and laddered buy orders now just in case of a temporary drop.
Thanks mikey--for the usual crisp and insightful commentary.
Sentiment: Strong Buy
Mikey.. Do you think this will get traction? I don't even see a link to the article on yahooooooooo, so not sure if this latest short story will impact pps?? Regardless, I purchased protective puts (my short repellent, lol) late last week to guard against this bologna.
Sentiment: Strong Buy
thank you again mikey. following this stock for years, seen it move from $10 to 4. must be enough material for a book. heck, add a love interest and i will wait for the movie. long and strong. walking.
This needs to be shouted from the rooftops. This fraud must be exposed to the public, not only to increase the price on our girl Da Q, but to expose the #$%$ that goes on these days, usually without legal punishment (of course monetary punishment can only sting hard enough on the wealthy) This can only spell another gap up in the near future.
Wow - the rtrx chart from this week says quite a bit (should be required viewing on this board). The only thing I hate is that I had no idea about this whole angle even being in play to this degree.
“The type of acquisition that raises the most concern under the antitrust law is when a dominant firm acquires a potential rival"
Didn't acquire "a potential rival" (Novartis), Novartis retains manufacturing and sales rights in certain countries. Also, Novartis is a Foreign Company so why would the USCC be concerned?
Just incredible! Each time he responded to QCOR queries on his show, his negative bias had various reasons ie: on one occasion he said to a caller, there is too much hot money in questcor, I don't want you in it. ....shortly after that show to another lightning round caller, he feigned, not really knowing about questcor, asking the caller, " is that the one (confused facial expression commences) that has that drug that cures everything? ...I don't like it, I don't like that drug." Now it all makes sense, but it smells.