QCOR Posts Positive Script Trends For Acthar; Analyst Comes Back Around

Questcor Pharmaceuticals (NASDAQ:QCOR) announced prescription trend data this morning for its primary revenue driver, H.P. Acthar Gel (Acthar), and the news is positive, sending the shares higher. In addition, the stock is benefitting from an upgrade today by broker dealer, Jeffries, which initially downgraded to Hold on the negative reimbursement change by Aetna (NYSE:AET) in September. Jeffries upgraded the shares today from Buy to Hold, and raised its price target from $24 to $28. Both the prescription trend data provided by the company and the upgrade today support the case that Acthar will continue to be reimbursed by health insurers and that the base of sales is more stable than the stock is implying. We calculated that under $20, the stock was indicating Acthar sales being cut in half (see PropThink’s prior story). Company prescription trend data out Monday suggest that Acthar is still growing strong, not declining.


In an 8K filing Monday, Questcor noted: “Patients with serious, difficult-to-treat medical conditions continue to have access to Acthar, through commercial insurance, Medicare, Medicaid and other government programs as well as through our free drug program. We continue to position Acthar as an appropriate treatment alternative for patients when other FDA-approved therapies have not provided the intended treatment outcome, and for such patients insurance coverage for Acthar remained favorable in September 2012.”

Notably, the prescription trend data for September require an adjustment, given that last month only had 19 business days (days which the company’s distributor was open for business), vs. 23 days in August, and 21 days in July. On a “days adjusted” basis, prescriptions for nephrotic syndrome (NS) in September were up strongly over July and August, with prescriptions for multiple sclerosis (MS) up significantly over July, but flat with August. Volume in rheumatology indications continued to grow, but prescriptions for infantile spasm (IS) lagged from the July and August numbers, primarily because month to month volatility is typical for that indication. The number of business days per month varies in a range of 19-23, and going from peak to trough can skew these data. In November, however, there are 23 business days, and going from trough to peak next period could favor the next release of script numbers. Based on the figures in the 8K, the company reported that quarterly paid prescriptions were up 66% year over year, and up 16% sequentially (3Q 2012 vs. 2Q 2012). While insurance policy changes are essentially still to come, we note that unit growth of Acthar remains impressive, and at the current stock price, growth is not being factored in at all.

Expect QCOR shares to continue their run up after bottoming out last month, with a key technical level at $22.75 (prior resistance). Should the shares close higher than $22.75, the short interest may need to aggressively run for cover. Things could get interesting with the company expected to begin buying back shares given its new upsized repurchase program, and the newly established dividend has potential to attract new investors to the story.