ANAHEIM, Calif., July 26, 2011 /PRNewswire/ -- Questcor Pharmaceuticals, Inc. (NASDAQ: QCOR) today reported record net sales for its second quarter ended June 30, 2011 of $46.0 million, up 62% compared to $28.3 million for the year ago quarter. Net income for the quarter rose 49% from the same period one year ago to $13.9 million, or $0.21 per diluted share.
A 147% year-over-year increase in the number of paid H.P. Acthar® Gel (Acthar) prescriptions for the treatment of multiple sclerosis (MS) exacerbations led to increased shipments of Acthar vials. Paid Acthar prescriptions for the treatment of nephrotic syndrome (NS) also increased sharply in the quarter. In addition, paid Acthar prescriptions for the treatment of infantile spasms (IS) were at the highest quarterly level since the third quarter of 2008.
“Clearly, Questcor had a terrific quarter,” said Don M. Bailey, President and CEO of Questcor. “Our focus on expanding the use of Acthar in the treatment of MS exacerbations drove our record second quarter financial performance. Importantly, in spite of the rapid expansion in the use of Acthar for MS exacerbations, we believe that the prescriber base can continue to grow. Accordingly, growing MS sales remains our number one priority. Also, following our early success in nephrotic syndrome, we are immediately and substantially expanding our nephrology selling effort.”
“To generate data in support of the expanded nephrology selling effort, we recently initiated a company-sponsored Phase IV trial to study Acthar in the treatment of NS associated with idiopathic membranous nephropathy,” continued Mr. Bailey. “And, today, we are announcing our fourth on-label target market for Acthar, systemic lupus erythematosus. We believe that this market has many of the same characteristics as our other three vertical markets for Acthar--MS, NS and IS.”
“In the second quarter, our Specialty Sales Force of 77 representatives continued to achieve increased acceptance of Acthar among neurologists as a second-line therapy for MS exacerbations, resulting in a significant increase in Acthar prescriptions,” commented Steve Cartt, Executive Vice President and Chief Business Officer. “Furthermore, in March 2011, our separate five-person Nephrology Sales Force began promoting Acthar to nephrologists. Based on the encouraging growth in Acthar prescribing by nephrologists in the second quarter, we are immediately expanding this sales team from 5 to 28 representatives. All sales managers in this expanded Nephrology Sales Force have been hired, and the filling of new sales positions is underway. We expect the entire Nephrology Sales Force to be trained and actively promoting Acthar to nephrologists by the end of the third quarter of 2011.”
“Importantly, the primary focus for the 77 representatives in our Specialty Sales Force will continue to be MS. However, since Acthar is already considered by most child neurologists to be the treatment of choice for IS, we now feel comfortable significantly reducing the number of sales calls to child neurologists. This reduction will make time available for our Specialty Sales Force to also call on some nephrologists. Through the planned sales call activity of our two sales forces, we expect the total number of target nephrologists that we call on to increase from less than 400 currently to over 3,000 by the end of the third quarter,” concluded Mr. Cartt.
Systemic Lupus Erythematosus (SLE)
Questcor announced today that the Company has identified systemic lupus erythematosus (SLE) as the fourth on-label disease state that it believes has strong therapeutic and commercial potential. Questcor’s effort to conduct an in-depth exploration of the use of Acthar to treat SLE is underway. Acthar currently has three FDA-approved, on-label indications associated with SLE:
- First, as with MS, Acthar is indicated for use during exacerbations associated with SLE;
- Second, unlike in MS, Acthar is also approved as a maintenance therapy in SLE; and
- Third, Acthar has a kidney related indication for lupusspecifically, for the remission of proteinuria in nephrotic syndrome associated with lupus erythematosus.
Lupus is a chronic autoimmune disease, in which the immune system attacks the body’s own cells and tissue. This can result in swollen, painful joints, skin rash, extreme fatigue, unexplained fever, kidney damage, central nervous system effects and other symptoms. Lupus can lead to arthritis, kidney damage, heart and lung inflammation, central nervous system abnormalities, inflammation of the blood vessels and blood disorders. The course of the disease is unpredictable and, not unlike MS, is often referred to as having a relapsing-remitting character, with periods of disease exacerbation alternating with periods of disease remission.
Unfortunately, SLE treatment options are limited. Oral steroids, often used chronically and at high doses, are the most commonly employed therapeutic approach. The Lupus Foundation of America estimates that 1.5 million Americans have lupus, with SLE accounting for approximately 70% of all cases. Questcor is in the process of estimating the subset of this total patient population likely to be appropriate for possible Acthar use.
Importantly, the Company selected SLE as the next target therapeutic and commercial market for Acthar because of the high unmet need for additional treatments in this disease, the serious and difficult-to-treat nature of SLE, the existence of multiple on-label SLE-related Acthar indications, and the relatively large SLE patient population. In addition, there appear to be distinct parallels between the autoimmune disease processes involved with SLE and the emerging understanding of the multiple mechanisms of action associated with Acthar.
Non-GAAP and GAAP Net Income
Non-GAAP net income for the quarter ended June 30, 2011 was $15.2 million, or $0.23 per diluted common share. Non-GAAP net income for the year ago quarter was $9.9 million, or $0.15 per diluted common share.
On a GAAP basis, net income for the second quarter of 2011 was $13.9 million or $0.21 per diluted common share, including non-cash expenses totaling $1.3 million, or $0.02 per diluted share. Net income for the second quarter of 2010 was $9.3 million, or $0.14 per diluted common share.
The Company believes it is important to share these non-GAAP financial measures with shareholders as they may better represent the ongoing economics of the business and reflect how we manage the business. Accordingly, management believes investors’ understanding of the Company’s financial performance is enhanced as a result of our disclosing these non-GAAP financial measures. Non-GAAP net income should not be viewed in isolation, or as a substitute for, or as superior to, reported GAAP net income. The reconciliation between GAAP and Non-GAAP net income is provided with the financial tables included with this release.
Prescription Trend Information for MS, IS and NS
During the second quarter of 2011, Questcor shipped 2,430 vials of Acthar, up 45% compared to 1,680 vials in the year ago quarter, and up 21% compared to 2,010 vials in the first quarter of 2011. The Company’s quarterly vial shipments continue to be subject to significant variation due to the size and timing of individual orders from Questcor’s distributor, and the timing of these orders can significantly affect net sales and net income in any particular quarter. For this reason, as well as other factors causing quarter-to-quarter variability in Questcor’s operating results, the Company believes that investors should consider the Company’s results over several quarters when analyzing the Company’s performance.
Because Acthar prescriptions are filled at specialty pharmacies, the Company does not receive complete information regarding either the number of prescriptions or the number of vials by therapeutic area for all of the patients being treated with Acthar. However, Questcor is able to monitor trends in payer mix and areas of therapeutic use for new Acthar prescriptions based on data it receives from its reimbursement support center. Questcor estimates that over 90% of new Acthar prescriptions are processed by this support center, but believes that very few refill prescriptions are processed there.
In an effort to help investors better understand historical trends in sales of Acthar for each of its current three key therapeutic uses, acute exacerbations of MS, NS, and IS, Questcor has grouped new prescriptions processed by its reimbursement center into two groups -- “Paid” and “Fully Rebated.” “Paid” prescriptions include those prescriptions for which Questcor retains the full selling price for Acthar, as well as Tricare prescriptions that receive a 24% rebate. “Fully Rebated” prescriptions are those for which Questcor can identify that it has recorded a rebate liability approximately equal to or, for periods prior to the second quarter of 2010, greater than the price charged to its distributor. From time to time during the past two years, the rebate liability for some government insurance programs has shifted between these two categories. Therefore, the prescriptions that fall into the “Paid” and “Fully Rebated” categories have also shifted over time as follows:
“Paid” prescriptions (Rxs) include all prescriptions in the following payer categories:
- Commercial--For all time periods.
- Tricare--For 2008, 2010 and 2011, but not 2009.
- Medicaid Managed Care--For all time periods through March 22, 2010 (see Note 1 below the tables).
