Shares of Questcor Pharmaceuticals Inc. are extending their decline in premarket trading Thursday after shedding nearly 50 percent of their value a day earlier when a research website said a major health insurer will stop reimbursement for most uses of its main product.
Shares of the Anaheim Hills, Calif., company are down $1.15, or 4.4 percent, to $25.20 in premarket dealings Thursday.
The stock sank to $26.35 Wednesday from its Tuesday closing price of $50.52 in its largest one-day plunge ever, according to FactSet.
Citron Research reported that Aetna Inc. will drop reimbursement for H.P. Acthar gel for all uses except infantile spasms. Questcor also markets Acthar gel as a treatment for multiple sclerosis, neuromuscular conditions, and a kidney condition called nephrotic syndrome.
Citron Research is a short seller's research firm that publishes reports online about companies. Short sellers earn money when a stock declines.
A clinical policy bulletin outlining Aetna's decision had been posted online by the insurer last Friday. An Aetna spokeswoman said the nation's third-largest insurer made its decision based on a lack of clinical evidence that the drug is more effective than steroids. Patients currently receiving Acthar gel will be covered so they can complete their treatment.
Questcor said Wednesday in a brief statement that it does not believe the insurer's decision will materially affect Questcor's results.
However, Jefferies analyst Biren Amin believes other insurers may follow Aetna's move.
"Aetna, in our view, was the first shoe to drop on insurance reimbursement, and possibly may not be the last," Amin wrote in a Thursday morning research note.
The analyst downgraded Questcor shares to "hold" from " buy" and chopped a price target on the stock in half to $30 from $60.