The melanocortin system is a neuroimmunoendocrine hormone system that constitutes the fulcrum in the homeostatic control of a diverse array of physiological functions, including melanogenesis, inflammation, immunomodulation, adrenocortical steroidogenesis, hemodynamics, natriuresis, energy homeostasis, sexual function, and exocrine secretion. The kidney is a quintessential effector organ of the melanocortin hormone system with melanocortin receptors abundantly expressed by multiple kidney parenchymal cells, including podocytes, mesangial cells, glomerular endothelial cells, and renal tubular cells. Converging evidence unequivocally demonstrates that the melanocortin-based therapy using the melanocortin peptide adrenocorticotropic hormone (ACTH) is prominently effective in inducing remission of steroid-resistant nephrotic syndrome caused by various glomerular diseases, including membranous nephropathy, minimal change disease and focal segmental glomerulosclerosis, suggesting a steroidogenic-independent mechanism. Mechanistically, ACTH and other synthetic melanocortin analogues possess potent proteinuria-reducing and renoprotective activities that could be attributable to direct protection of glomerular cells and systemic immunomodulation. Thus, leveraging melanocortin signaling pathways using ACTH or novel synthetic melanocortin analogues represents a promising and pragmatic therapeutic strategy for glomerular diseases. This review article introduces the biophysiology of the melanocortin hormone system with an emphasis on the kidney as a target organ, discusses the existing data on melanocortin therapy for glomerular diseases, and elucidates the potential mechanisms of action
At the heart of much of the negative sentiment seems to be a sense of incredulousness that the QCOR management team managed to take a 50 year old drug which the company acquired for $100,000 and, over time, get it approved for an orphan indication and raise the price from $50 per vial to ~ $20,000+ per vial. There seems to be a sense of unfairness or an inherent assumption that management must be up to something criminal.
On twitter especially, the critics of QCOR are vociferous, yet this same community cheers and champions other companies that are pursing exactly the same business model. Case in point is Retrophin (NASDAQ:RTRX). Not only is Retrophin pursuing the same indications (infantile spasms for instance), but after recently acquiring Manchester pharmaceuticals, RTRX has taken a 70 year old drug, chenodal, and raised it's price 5-fold from approximately $100,000 per year to approximately $500,000 per year. Somehow the same twitter users denouncing Questcor for price increases in ACTHAR cheer on RTRX as it makes one of it's recently acquired drugs the most expensive drug in the world.
There has been some analyst and general online commentary suggesting that Mallinckrodt did a poor job of due diligence on this acquisition. The jury is still out on this point. Much will depend on the outcomes of federal trade commission investigations as well as investigations by the US attorney's office regarding Questcor's marketing practices. Our view is that MNK likely did deeper due diligence than most of QCOR's critics regardless of how much money those critics have invested in their QCOR short position.
At the end of the day, this acquisition was a big win for QCOR longs who can put behind them once and for all the frustrations of repeated short attacks on their stock. whether the QCOR shorts now become MNK shorts remains to be seen. If one's view is that ACTHAR is fundamentally a flawed medicine that will be pulled from the market, there is little reason for a buyout
The historical numbers for the combined company from 10-k's of mnk, cadx(just finished acquisition) and qcor are as follows:
mnk = 2.2 b
cadx = 112m
qcor = 800m (798 if anyone wants to quibble, I'll just round it up to 800)
That would be a total of 3.1 b in historical revenues.
For this coming year you have average analyst estimates for mnk and qcor as follows:
MNK = 2.38 b
qcor = 1.06 B
That would be 3.4 B in projected revenues for this year.
Given that mnk did 2.2 b and just acquired 112m in last years revenues for cadx and the fact that mnk just got another drug approval the 2.38 seems very conservative for mnk.
Given that qcor has been regularly beating analyst revenue estimates the 1.06b for qcor also seems conservative.
I think mnk can generate a conservative 10 percent growth in revenues this year which puts them at 2.42b in revenues. I think they can do more but I'll be conservative.
I think qcor can do 1.1b this year.
That puts the combined company end of 2014 revenues at 3.5b.
The combined company will have about 112m share outstanding after completion of the merger.
112m x 62.55 = almost exactly 7b market cap for the combined company. That means the combined company is currently trading at a rev to market cap multiple of 2. That's about as low as you will see for a profitable pharma company.
So, the first question is why so low a valuation on mnk ?
If you buy qcor stock today for 80.12 you get 30.60 in cash and dividends. For each 1000 shares of qcor at 80.12 you are left with 80,120 - 30,600 = 49,520. For that 49,520 you get 897 shares of mnk.
Market in correction? Questcor Pharmaceuticals (QCOR) must not have gotten the memo.
The drugmaker has risen for four straight weeks despite wide swings in the major averages during much of that time. The stock jumped above its 10-week line in heavy volume in the week ended Jan. 17 and is pushing toward a possible 70.27 buy point in a deep double-bottom base.
Questcor got a boost Jan. 16, when it soared 11% after CEO Don Bailey said the company was examining "all options" for deploying the company's large cash stockpile
Questcor's fundamentals are strong. It enjoys the best-possible 99 Composite and Earnings Per Share ratings, on par with market leader Jazz Pharmaceuticals (JAZZ) in the highly rated Medical-Ethical Drugs industry group.
Profit for Q4 is seen rising 52% from a year ago to $1.66 a share, slowing from gains of 96% and 73% in Q2 and Q3, respectively. Such growth would still be impressive, given tough comparisons to the year-earlier period, when earnings more than doubled.
Revenue for the period is expected to climb 52% to $244.15 million, which would be the slowest pace in three quarters.
Questcor is still vulnerable to any disruption in its main drug Acthar, which is used to treat multiple sclerosis and a range of other diseases.
The stock plunged 40% in September 2012 after short-seller Citron Research made negative comments about the drug.
But Questcor has recovered, hitting an all-time high last August. The latest base shows some wide intraday price swings, but it also shows accumulation.
The stock's Accumulation/Distribution has climbed to B from D- over the past two weeks, indicating positive demand for the shares.
Fund ownership has risen four straight quarters, with Fidelity OTC Portfolio fund and Legg Mason Capital Management Opportunity Trust adding to their positions
New article by IBD posted to Stock Twits reads in part:
IBD found 49 best-performing funds the past three months loaded Questcor Pharmaceuticals (QCOR) in their latest reporting periods, investing an estimated $119 million. The $10.5 billion Fidelity OTC Fund added shares as of its latest reporting period.
The Anaheim, Calif.-based drug firm focuses on treating patients with autoimmune and inflammatory disorders such as multiple sclerosis, spasms in infants with epilepsy, a kidney disorder called nephrotic syndrome, rheumatoid arthritis and lupus.
Questcor has one superdrug, called Acthar, to treat all these ailments. Its earnings grew 96% and 73% the past two quarters on 64%-plus revenue growth.
The stock is working on the right side of a 24-week base. The current market slide has hardly made a dent in its formation. It's sitting at just 14% from its 52-week high of 75.
Let me see. A guy on a Yahoo Message Board tells the world he is going to bet over 7 Million against QCOR going into earnings with Bailey able to say pretty much anything he wants regarding the Strategic Cmte. Ok yeah I'm with ya MSS that makes sense to me....clearly a rational and smart decision. Sheeeesh.
Hope your talkin about the guy we know who was friends with Left and former wife. If so I would say the source is pretty good.............Beegz.
Would it also surprise you that Martin is asking for advice on Twitter for suggestions for his next orphan drug. This guy is the cream of the crop...too funny.
argoalpuche For what's it's worth I always enjoyed your posts...so Thank You. Just curious if you are still in Qcor and holding through the Meger or are waiting to establish a possible position in MNK at a later date. It NMB was just curious.
Thanks for youre efforts..........Beegz.
Or maybe that was 120K dollars instead of shares. Either way yeah I'm with ya.....Beegz.
If anyone is interested in all the HFT stuff going on there is a good documentary on You Tube entitled "The Wall Street Code (Marije Meerman, VPRO)" very interesting for people such as myself that may not be fully aware as to what is going on. It's a little long but was worth watching for me......Go back to sleep now.
This daily shorting activity makes no sense to me the last week or so. I can't figure out what these short HF's are thinking at this point. They have the same information that we have with respect to Q4 earnings and the script data thus far in Q1.
If they are not covering now the question is will they even cover after Feb 25th. I say they can't afford to cover and send Qcor vastly higher. Hope I'm wrong but I don't think they will cover. It's like they are snubbing their nose to the Longs.
Some will say that they have made their money back with Options which may be true. But at some point they have to cover.
Still don't trust em....Thoughts welcome.............Beegz.
Seems like I heard on the News yesterday that a judge ruled or was about to rule on a suit against Yahoo requiring them to turn over the ID's of certain posters who allegedly made false statements involving either another person or company. Did anyone else see this or have the facts. I'll try to find it...Thanks.....Beegz.
John this is part of the case that is on their website:
SEC Sues Short-Seller for Spreading False Rumors
April 25, 2008
In one of the first actions of its kind, the Securities and Exchange Commission (SEC) yesterday brought suit against Paul S. Berliner, a former trader at Schottenfeld Group, LLC, for spreading false rumors about Alliance Data Systems Corporation (ADS) while short-selling ADS's stock. The SEC alleges that Berliner manipulated the price of ADS's stock by disseminating false information about merger negotiations between ADS and The Blackstone Group, and that Berliner sold ADS's stock short in order to profit from the false information. The SEC filed a complaint in federal court in New York charging Berliner with violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) of the Securities Exchange Act of 1934, which prohibit fraud in the offer or sale of securities, and Section 9(a)(4) of the 1934 Act, which prohibits securities manipulation. The SEC also seeks a court order enjoining Berliner from violating those provisions of the securities laws and requiring him to disgorge all trading profits and to pay appropriate civil penalties.
The SEC's decision to pursue Berliner, a trader who sought to profit by manipulating the price of a stock he was shorting, is nearly unprecedented and may signal an increased focus by the SEC on preventing market manipulation of all types and on exercising increased oversight over short-sellers