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Questcor Beats Both on Earnings & Revs

Zacks Equity Research

Questcor Pharmaceuticals Inc. (QCOR) reported third quarter 2013 earnings per share (excluding one-time item) of $1.54 up from the year-ago earnings of 92 cents per share. Earnings surpassed the Zacks Consensus Estimate of $1.34 per share. Including one-time items, third quarter 2013 earnings were $1.52 per share.

Third quarter 2013 revenues climbed 68% to $236.3 million, surpassing the Zacks Consensus Estimate of $204 million. Revenues consisted of $227.3 million from Acthar and the remaining from BioVectra. Strong performance of H.P. Acthar Gel in the nephrotic syndrome (NS), dermatomyositis, polymyositis, systemic lupus erythematosus, rheumatoid arthritis, multiple sclerosis (MS) relapses and infantile spasms (:IS) indications contributed to the substantial growth. 

Acthar, an injectable drug, is approved by the U.S. Food and Drug Administration (:FDA) for as many as 19 indications. The company shipped 8,132 vials of Acthar during the third quarter of 2013, up 45% year over year and 15.3% sequentially.

In the reported quarter, Acthar’s new paid prescriptions were about 2,450 to 2,500, up 30% year over year.Acthar’s new paid prescriptions for the treatment of MS relapse reached a record high of 1,370 to 1,400 prescriptions, up about 4% year over year. 25% to 30% of Acthar’s business comes from MS relapse prescriptions.

In the third quarter of 2013, research and development (R&D) expenses were $17.1 million, up 113.8%. R&D rose on account of the company’s efforts to develop its pipeline. In the reported quarter, general and administrative expenses were $15.4 million, up 85.1% and selling and marketing expenses were $40.7 million, up 28.2%.

Acthar is currently under evaluation for amyotrophic lateral sclerosis (phase II), acute respiratory distress syndrome (phase II to begin shortly), diabetic nephropathy (phase II – enrolment expected to be completed in first half of 2014), idiopathic membranous nephropathy (phase IV) and lupus (phase IV).

Questcor acquired development and commercialization rights to Synacthen and Synacthen Depot from Novartis (NVS) in Jun 2013.

Our Take

This was a strong quarter for Questcor with demand for Acthar rising mainly because of expanded commercialization efforts. Questcor’s growth going forward will be driven by increased penetration of Acthar in current markets, expansion into additional on-label markets, globalization of Synacthen and Acthar, development of new indications and markets, and the appropriate deployment of cash.

Questcor carries a Zacks Rank #3 (Hold). Currently, companies like Actelion Ltd. (ALIOF) and Isis Pharmaceuticals, Inc. (ISIS) look more attractive with a Zacks Rank #1 (Buy).

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