U.S. Markets open in 1 hr 26 mins

Questcor shares fall on investigation

The Associated Press

NEWS: Questcor Pharmaceuticals Inc. reported Tuesday that its third-quarter net income jumped nearly 70 percent on increased use of its drugs. But the company disclosed that a regulatory investigation of its business has expanded, which sent its shares plunging in extended trading.

DETAILS: Questcor found out in September that its promotional practices were being investigated by the U.S. Attorney's Office in Pennsylvania. The company said on a conference call Tuesday that the U.S. attorney's office in New York and the Securities and Exchange Commission are also participating in the investigation. The company said it is cooperating and said the development is "not uncommon" in this type of inquiry. It plans to disclose the information formally in a regulatory filing on Wednesday.

This overshadowed an otherwise strong quarter for the company, which was helped by expanded use of its H.P. Acthar Gel, which is approved by the Food and Drug Administration for use in 19 different conditions.

NUMBERS: Net income increased to $94.4 million, or $1.52 per share, from $55.7 million, or 91 cents per share, in its third quarter last year. On an adjusted basis, the company earned $1.68 per share versus 97 cents per share last year.

Revenue increased 68 percent to $236.3 million from $140.3 million.

Analysts polled by FactSet were anticipating earnings of $1.20 per share and revenue of $199.7 million.

FUTURE: Questcor said its future will be driven by increased use of Acthar in existing markets and expansion into new markets, as well as taking sales of two of its drugs global.

The company said it is hiring five to 10 sales representatives to educate pulmonologists about the use of Acthar for respiratory issues tied to symptomatic sarcoidosis, an orphan inflammatory disease for which Acthar is FDA-approved. It expects the team will begin calling on physicians by the end of the fourth quarter.

STOCK: Shares of the Anaheim, Calif., company fell $6.38, a more than 9 percent drop, to $63.35 in after-hours trading. Its shares added $1.76 to close regular trading at $69.73.