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Biotech / Medical : QCOR Questcor Pharmaceutical
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From: Savant9/25/2012 10:32:38 AM
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UPDATE: Questcor Says U.S. is Investigating Promotional Practices

Last Update: 9/24/2012 10:36:21 AM

--US government probes Questcor's promotional practices, company says

--Revelation sinks stock price, on top of last week's losses

--Probe news follows Aetna's move to limit reimbursement for company's primary
product

(Adds details and background throughout)

By Peter Loftus

Questcor Pharmaceuticals Inc. (QCOR) said Monday that the U.S. government is
investigating its promotional practices, adding more uncertainty to a company
that has lost more than half its value over the past week.

The company said in a brief filing with the U.S. Securities and Exchange
Commission that it "became aware of a U.S. government investigation involving the
Company's promotional practices" on Sept. 21.

Questcor didn't elaborate on the probe. The company said it would cooperate with
the investigation.

Shares of Questcor dropped 27% to $21.81. The stock touched a 52-week low of $20
earlier and is now down more than 50% since Sept. 18.

The revelation of the investigation follows a recent decision by health insurer
Aetna Inc. (AET) to limit reimbursement for Questcor's primary product, H.P.
Acthar Gel, a drug approved for various conditions including multiple sclerosis,
a kidney disorder and infantile spasms. Aetna said it would limit reimbursement
to infantile spasms because clinical evidence didn't support its necessity for
other conditions.

Questcor generates nearly all of its revenue from the drug, which had net sales
of $218 million for 2011.

Last week, Questcor said it didn't expect Aetna's move to have material impact on
its business. The company planned to submit additional information to Aetna ahead
of a scheduled Aetna policy update in October.

Some analysts on Monday said the recent negative news made Questcor shares a
riskier bet.

"In our view, the U.S. government investigation coupled with recent potential
reimbursement headwinds create great uncertainty around an investment in QCOR
shares," Ladenburg Thalmann analyst Juan Sanchez wrote in a research note. "We
believe it could take some time until the Street gains clarity on the
implications of these two issues."

Ladenburg downgraded its rating for Questcor shares, as did Leerink Swann, which
said there is a risk that other large health insurers will also clamp down on
reimbursement for Acthar.
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