Anaheim-based Questcor Pharmaceuticals Inc. landed an endorsement from a large insurer in advance of the release of its 2012 and fourth-quarter results this week.
The drug maker’s shares have been on a roller coaster in recent months, thanks in part to critical press and some insurers’ decisions on covering its H.P. Acthar Gel.
The company is set to release its results on Tuesday. Wall Street expects it to post a profit of $58.1 million on sales of $141.8 million for the fourth quarter.
Analysts see a full-year profit of $190 million on sales of $490.6 million.
Acthar is an injectable drug that’s approved for 19 uses. It primarily sells the drug for nephrotic syndrome—a kidney disorder—and for treating multiple sclerosis flare-ups.
Acthar is Questcor’s sole drug. The company has billed it as a “pipeline in a bottle” because of its many potential uses, including rheumatology.
Questcor plans to expand its sales force in its rheumatology group from 12 to 50 people, according to a Securities and Exchange Commission filing.
The company got its recent boost when Chicago-based Blue Cross Blue Shield of Illinois, which has 7.4 million members, updated its policy on coverage of Acthar earlier this month.
The insurer said that Acthar could be considered medically necessary for treating conditions if “there are medical contraindications or intolerance to corticosteroids that are also not expected to occur with use of repository corticotrophin injection.”
That prompted some positive press—in contrast to a number of reports that sent the company’s shares down late last year.
• Headquarters: Anaheim
• Business: Drug maker
• Founded: 1990
• Ticker symbol: QCOR (Nasdaq)
• 2011 revenue: $218.2 million
• Recent earnings: $55.7 million for Q3
• Market value: About $1.82 billion
• Notable: Stock has been volatile in recent months; scheduled to release Q4 results this week
“The vast majority of payers continue to acknowledge Acthar as a real last-ditch treatment for patients with serious medical conditions,” Jake King, a researcher for New York-based PropThink LLC’s research team, said in a Seeking Alpha article.
King disclosed that he’s a long-term shareholder in Questcor.
The company declined comment on the Blue Cross Blue Shield of Illinois action in the run-up to its earnings release.
Other analysts weighed in on Questcor’s prospects as the earnings report loomed last week.
Mario Corso of New York-based Mizuho Securities upgraded its shares following checks that indicated what he called reduced concerns about Acthar’s reimbursement, among other things.
Acthar usually costs between $40,000 and $100,000 per treatment, depending on how much is used.
Questcor has had occasional dust-ups over Acthar’s pricing and insurers’ decisions on coverage during the past six months.
Citron
Investors sent the drug maker’s shares about 37% down in mid-September after short seller and company critic Citron Research reported in an online newsletter that Aetna Inc. planned to limit coverage of Acthar.
Hartford, Conn.-based Aetna later issued a policy bulletin that reversed its previous coverage of Acthar. It said clinical research supported use of the drug only for infantile spasms.
Citron has repeatedly argued that Acthar’s cost can’t be justified by claims of superiority over steroids, which also are used to treat MS flare-ups.
Questcor responded to the online article by saying that it did not expect Aetna’s decision to limit coverage of Acthar to hurt business. Questcor Chief Executive Don Bailey told analysts and investors back then that Aetna only accounted for 5% of the company’s total prescriptions for Acthar.
The company’s response prompted a partial rebound in Questcor shares.
They dropped again in December, when Detroit-based Blue Cross Blue Shield of Michigan, which has 4.4 million members, said it would limit paying for Acthar to infantile spasm treatment.
Some analysts took that in stride.
“Recently reported Acthar reimbursement policies by payers, such as UnitedHealthcare [Group Inc.] and Blue Cross Blue Shield of Michigan, in our opinion, did not materially change the outlook of Acthar revenue growth as prior authorization and treatment for steroid-nonresponsive conditions [has] already been practiced by [Questcor] for a few years,” said Yale Jen, a drug industry analyst for Newport Beach-based Roth Capital Partners LLC.
Questcor’s shares are up 18% so far in 2013 with a market value of about $1.8 billion as of late last week.
Wall Street now is looking for benefits from Questcor’s $51 million January buy of Canadian contract manufacturer BioVectra Inc.
Roth analyst Jen said he viewed the BioVectra buy as “strategic, as the company has brought all Acthar manufacture know-how and trade secrets back in-house to further secure its competitive edge.”
