Why INSYS Billionaire CEO's Net Worth Dropped $470 Million Since September
11/7/2016 7:08:23 AM
November 7, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Fortunes can disappear overnight if most of that money is based on stocks. Forbes recently wrote about John Kapoor, the chief executive officer, chairman and founder of Insys Therapeutics (INSY). The company’s stock dropped to $10.02, about 2.8 percent, on Thursday, which cropped about $470 million off Kapoor’s net worth.
The company markets a spray version of fentanyl for cancer patients called Subsys. But the company is under investigation by both the state of California and Massachusetts. In Illinois, the state is charging that Insys is marketing the drug for off-label usage, apparently for patients without cancer. According to Forbes, physicians in at least six states who have connections to the company are under investigation.
The company’s third-quarter financials showed the company is taking a hit. Net revenues dropped almost 40 percent, down from $91.3 million in the third quarter of 2015 to $55.2 million in this year’s third quarter. And net income collapsed, dropping 99 percent from $26.1 million in 2015 to $190,000 this year.
“Although Subsys volumes declined in the quarter, we are pleased to have maintained a mid-40 percent market share and believe the product will continue to provide a solid financial foundation for growth and to support our R&D efforts,” Kapoor said in a statement.
Kapoor took over as chief executive at Insys about a year ago, shortly after CNBC ran a report about the company’s marketing practices. But he indicated in September that he expects to exit as chief executive soon and that a search is underway.
Forbes writes, “Unless Kapoor sells his shares in Insys, he will likely continue to wield influence over the embattled drug maker. He currently owns about 67 percent of the company’s shares directly and through family trusts. Another large piece of his fortune comes from Akorn (AKRX), a generic drug company, of which Kapoor holds a 26 percent stake and serves as chairman. But it was Insys’s stock performance that made him a billionaire in October 2013 when the split-adjusted share price reached $14.”
Although currently a one-product company, Insys has Syndros, which was approved by the U.S. Food and Drug Administration (FDA) in July. Syndros is a synthetic THC cannabis-related product to treat nausea caused by chemotherapy. It is not marketed yet because it is waiting for the Drug Enforcement Administration (DEA) to make a scheduling determination.
There have been some deaths reported related to use of Subsys for off-label diagnoses. One was Sarah Fuller, age 32, who died in March 2016 from taking Xanax and Subsys. Fuller had been in two car accidents, and suffered from back and neck injuries, and fibromyalgia. Kapoor, however, told Forbes that it “doesn’t make sense” to give patients with fibromyalgia Subsys.
The company is also being investigated for kickbacks. In 2015, a Connecticut nurse practitioner pleaded guilty to accepting money from Insys to prescribe Subsys to Medicare patients that didn’t have cancer. A former Insys sales rep also pleaded guilty in Alabama for kickbacks to two doctors.
Insys stock is currently trading for $11.81.
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