Questcor Misses on Earnings & Revs in Q1 - Analyst Blog

Questcor Pharmaceuticals Inc. QCOR reported first quarter 2014 earnings per share of $1.24, up from the year-ago earnings of $0.85 per share. Excluding share based compensation expense and one-time items, earnings stood at $1.40 per share. The Zacks Consensus Estimate was $1.71.

First quarter 2014 revenues climbed 68% to $227.1 million, but missed the Zacks Consensus Estimate of $241 million.

Quarter In Detail

The higher revenues were driven by increased use of H.P. Acthar Gel in patients suffering from dermatomyositis, polymyositis, rheumatoid arthritis, and systemic lupus erythematosus.

Strong performance of H.P. Acthar Gel in the nephrotic syndrome NS, multiple sclerosis MS relapses and infantile spasms (IS) indications also contributed to the substantial growth in revenues.

We note that Acthar, an injectable drug, has been approved by the U.S. Food and Drug Administration for as many as 19 indications. Questcor shipped 7,080 vials of Acthar during the first quarter of 2014, up 47.0% year over year.

In the reported quarter, Acthar's new paid prescriptions were about 2,325 to 2,350, up 35% from the year-ago quarter. Acthar's new paid prescriptions for the treatment of rheumatology-related indications were between 570 and 580, up significantly from 140 to 150 prescriptions filled in the year-ago quarter.

Research and development (R&D) expenses were $19.9 million in the reported quarter, up 84.0% year over year. General and administrative expenses came in at $22.6 million, up 80.3% and selling and marketing expenses were $47.0 million, up 32.7%.

We remind investors that Questcor acquired development and commercialization rights to Synacthen and Synacthen Depot from Novartis NVS in Jun 2013.

Acquisition by Mallinckrodt.

Last month, Mallinckrodt MNK announced that it will acquire Questcor for $5.6 billion.

As per the terms of the agreement, shareholders of Questcor will receive $30.00 per share in cash and 0.897 Mallinckrodt shares for each share of Questcor common stock. The total consideration comes to $86.10 per Questcor share. Mallinckrodt expects to complete the transaction in the third quarter of 2014.

Post merger, Mallinckrodt shareholders will own approximately 50.5% while former Questcor shareholders will own approximately 49.5% of the combined company's stock.

Questcor carries a Zacks Rank #3 (Hold). Currently, companies like Salix Pharmaceuticals SLXP look attractive with a Zacks Rank #1 (Buy).