2012-10-09 15:43:18 -

By David Moskowitz

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.

Read this article in its original form, by clicking here.

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