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| 8-K - FORM 8-K - QUESTCOR PHARMACEUTICALS INC | d360089d8k.htm |
 June 6,
2012 Jeffries
NASDAQ:
QCOR
NASDAQ:
QCOR
Exhibit 99.1
1 |
 2
Safe Harbor Statement
2
Note: Except for the historical information contained herein, this press release contains
forward-looking statements that have been made pursuant to the Private Securities
Litigation Reform Act of 1995. These statements relate to future events or our future
financial performance. In some cases, you can identify forward-looking statements by terminology such as
"believes," "continue," "could," "estimates," "expects,"
"growth," "may," "plans," "potential," "should," "substantial" or
"will" or the negative of such terms and other comparable terminology. These statements
are only predictions. Actual events or results may differ materially. Factors that could
cause or contribute to such differences include, but are not limited to, the following:
Our reliance on Acthar for substantially all of our net sales and profits; Reductions in vials used per
prescription resulting from changes in treatment regimens by physicians or patient compliance
with physician recommendations; The complex nature of our manufacturing process and the
potential for supply disruptions or other business disruptions; The lack of patent
protection for Acthar; and the possible FDA approval and market introduction of
competitive products; Our ability to continue to generate revenue from sales of Acthar to treat
on-label indications associated with NS, and our ability to develop other therapeutic
uses for Acthar; Research and development risks, including risks associated with
Questcor's work in the area of NS and potential work in the area of Lupus, and our reliance on third-
parties to conduct research and development and the ability of research and development to
generate successful results; Our ability to comply with federal and state regulations,
including regulations relating to pharmaceutical sales and marketing practices;
Regulatory changes or other policy actions by governmental authorities and other third parties in
connection with U.S. health care reform or efforts to reduce federal and state government
deficits; Our ability to receive high reimbursement levels from third party payers; An
increase in the proportion of our Acthar unit sales comprised of Medicaid-eligible
patients and government entities; Our ability to estimate reserves required for Acthar used by
government entities and Medicaid-eligible patients and the impact that unforeseen
invoicing of historical Medicaid prescriptions may have upon our results; Our ability to
effectively manage our growth, including the expansion of our NS selling effort, and our
reliance on key personnel; The impact to our business caused by economic conditions; Our ability to
protect our proprietary rights; The risk of product liability lawsuits; Unforeseen business
interruptions and security breache Volatility in Questcor's monthly and quarterly Acthar
shipments, estimated channel inventory and end-user demand, as well as volatility in
our stock price; and Other risks discussed in Questcor's annual report on Form 10-K for the year ended
December 31, 2011 as filed with the Securities and Exchange Commission, or SEC, on February 22,
2012, and other documents filed with the SEC. The risk
factors and other information contained in these documents should be considered in evaluating Questcor's
prospects and future financial performance.
|
 3
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
Questcor
3 |
 4
Flagship Product:
Flagship Product:
•
Profitable, cash flow positive, $122M** in cash, debt-free
•
Profitable, cash flow positive, $122M** in cash, debt-free
•
19 approved indications
•
19 approved indications
Key Markets*:
Key Markets*:
•
Nephrotic Syndrome, Multiple Sclerosis, Infantile Spasms
•
Several billion dollar market opportunity
•
Nephrotic Syndrome, Multiple Sclerosis, Infantile Spasms
•
Several billion dollar market opportunity
Strategy:
Strategy:
•
Continue to grow Acthar sales in each key market
•
Develop Rheumatology and other on-label markets for Acthar
•
Continue to grow Acthar sales in each key market
•
Develop Rheumatology and other on-label markets for Acthar
Financials:
Financials:
*In
this
presentation,
the
terms
“Nephrotic
Syndrome,”
“Multiple
Sclerosis,”
and
“Infantile
Spasms,”
and
their
abbreviations,
refer
to
the
on-label
indications
for
Acthar
associated
with
such
conditions.
Investors
should
refer
to
the
FDA
approved
Acthar
label,
which
can
be
found
at
http://www.acthar.com/files/Acthar-PI.pdf
.
**As
of
6/4/12
Questcor Overview
4 |
 5
5
Questcor
Strategy
-
Pursue
Acthar
Markets
Nephrotic Syndrome (NS)
Multiple Sclerosis (MS)
Infantile Spasms (IS)
Rheumatology |
 •
Characterized by excessive spilling of protein
from the kidneys into the urine (proteinuria)
•
Can result in end-stage renal disease (ESRD),
dialysis, transplant
•
Acthar is approved “to induce a diuresis or a
remission of proteinuria in the nephrotic syndrome
without uremia of the idiopathic type or that due to
lupus erythematosus”
•
Significant unmet need
–
Few treatment options
–
Goal of therapy is the significant reduction
of proteinuria
Acthar and Nephrotic Syndrome (NS)
6 |
 Paid Rxs
Paid Rxs
5
NS Scripts-Strong Continued Growth
7
28
Notes: Historical trend information is not necessarily indicative of future results. Acthar is
marketed for the on-label indication of nephrotic syndrome, though the chart includes
"Related Conditions" - diagnoses that are either alternative descriptions of the
condition or are closely related to the medical condition which is the focus of the chart. About 5% of
the prescriptions in the tables are for related conditions. Yellow numbers in the bars
show the number of NS sales representatives making calls for the majority of the quarter.Q3
‘11 included expansion and training of new sales people. |
 Neurodegenerative disorder
Acute treatment for relapses
Neurodegenerative disorder
Acute treatment for relapses
Acthar and Multiple Sclerosis (MS)
Potential
target for
8
43% get better or
much better
27% get only a
little better
30% stay the same
or get worse
ACTHAR is approved for MS exacerbations, without reference to first line or second
line use but is generally positioned as second
line
as
a
matter
of
marketing
strategy.
See
http://www.acthar.com/files/Acthar-PI.pdf
for
specific
label
information.
*Nickerson, et al (2011) |
 Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Yellow
numbers in the bars show the number of MS sales representatives making calls for the majority of the quarter.
Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Yellow
numbers in the bars show the number of MS sales representatives making calls for the majority of the quarter.
77
77
30
30
38
38
MS Scripts-Record of Consistent Growth
Paid Rxs
9 |
 •
Devastating, refractory form of childhood epilepsy
•
Unsuccessful treatment may leave infant with
permanent developmental disabilities
•
Ultra-rare orphan disorder
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
•
Devastating, refractory form of childhood epilepsy
•
Unsuccessful treatment may leave infant with
permanent developmental disabilities
•
Ultra-rare orphan disorder
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
Acthar and Infantile Spasms (IS)
10 |
 •
4 key indications on the Acthar label*
–
Systemic lupus erythematosus (Lupus)
–
Polymyositis/Dermatomyositis (PM/DM)
–
Psoriatic arthritis
–
Rheumatoid arthritis
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Significant patient population (multi $B opportunity)
•
4 key indications on the Acthar label*
–
Systemic lupus erythematosus (Lupus)
–
Polymyositis/Dermatomyositis (PM/DM)
–
Psoriatic arthritis
–
Rheumatoid arthritis
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Significant patient population (multi $B opportunity)
Rheumatology
11
*See
http://www.acthar.com/files/Acthar-PI.pdf
for
specific
label
information. |
 Profitable
Profitable
Debt Free
Debt Free
Cash Flow Positive
Cash Flow Positive
Financials
12 |
 Growth in
Shipped Vials 13
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Shipped Vials |
 Q1
– 2012
Q1 –
2011
Net Sales ($M)
$96.0
$36.8
Gross Margin
94%
95%
Operating Income ($M)
$57.3
$16.4
Fully Diluted, GAAP EPS
$0.58
$0.17
Q1-2012 Financial Results
•
First quarter vials shipped: 4,111
•
First quarter cash flow from operations: $40.9M
•
Medicaid reserves continue to appear adequate
•
798,285 shares repurchased during Q1-2012
Record Net Sales (up 161%) and Solid Earnings (EPS up 241%)
Record Net Sales (up 161%) and Solid Earnings (EPS up 241%)
14 |
 •
Paid Rxs April and May 2012 (estimated)
•
Shipped 1,560 vials in May 2012
–
Compares to 1,350 vials in April 2012 and 4,111 vials in Q1-12
–
Channel inventory level in the normal range on 5/31/2012
•
Operating expenses expected to be up about $10 million in
Q2-2012 over Q1-2012 and another $5 million in Q3-2012
•
Paid Rxs April and May 2012 (estimated)
•
Shipped 1,560 vials in May 2012
–
Compares to 1,350 vials in April 2012 and 4,111 vials in Q1-12
–
Channel inventory level in the normal range on 5/31/2012
•
Operating expenses expected to be up about $10 million in
Q2-2012 over Q1-2012 and another $5 million in Q3-2012
April-May 2012 Metrics
Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which
is the focus of the chart. About 5% of the prescriptions in the tables are
for related conditions. Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which
is the focus of the chart. About 5% of the prescriptions in the tables are
for related conditions. DX
April 2012
May 2012
NS
94
100-110
MS
339
360-370
IS
31
30-35
15 |
 •
2.2 Million Preferred share buyback
•
17.7 Common share buyback
•
$264 million returned to shareholders in stock buybacks
–
Average repurchase price per share: $13.23
•
59.6
million shares currently outstanding
•
5.0 million share added to buyback authorization
•
4.7 million shares remain on buyback authorization
•
2.2 Million Preferred share buyback
•
17.7 Common share buyback
•
$264 million returned to shareholders in stock buybacks
–
Average repurchase price per share: $13.23
•
59.6
million shares currently outstanding
•
5.0 million share added to buyback authorization
•
4.7 million shares remain on buyback authorization
Share Repurchases: 19.9 Million Shares
Note: all information as of 6/4/12
16 |
 •
4.5M shares repurchased during 2012, driven by:
–
Sales/EPS increase
–
NS market traction
–
Sales force expansion
–
Rheumatology opportunity
•
4.5M shares repurchased during 2012, driven by:
–
Sales/EPS increase
–
NS market traction
–
Sales force expansion
–
Rheumatology opportunity
2012 Repurchase Activity
Repurchased shares significantly improved EPS
Q1-2012 EPS accretion from share repurchase through 3/31/2012: 24%
17 |
 How Does Acthar
Work? •
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect: Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect: Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
•
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect: Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect: Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
18 |
 •
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
•
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
Biosimilar Pathway Difficult/Impossible
19 |
 Market
Rx Value
Market Size*
MS
$40-50K
$1B+
NS
$150-250K
$1B+
IS
$100-125K
$100M
Rheumatology
Various
$1B+
Other
Various
Unknown
Total
$3B+
Acthar Market Opportunity
*Based on company estimates
20 |
 21
Market
Approximate
Annualized Net Sales
Run Rate*
Approximate
Annualized Level of
Business**
MS
$160-175M
$160-175M
NS
$125-140M
$165-180M
IS
$40-50M
$40-50M
NS Business Already Significant
Note: Figures do not represent actual net sales ranges for the quarter ended March
31, 2012 * Figures
based
on
estimates
of
vials
shipped
to
patients
within
each
therapeutic
area
in
the
quarter,
multiplied
by
4.
** Figures represent Q1-2012 new paid prescriptions times estimated vials per
script over treatment regimen, multiplied by 4. |
 22
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Initiate pilot rheumatology promotion activity
•
Develop other markets for Acthar
•
No unrelated business development efforts planned
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Initiate pilot rheumatology promotion activity
•
Develop other markets for Acthar
•
No unrelated business development efforts planned
Strategic Plan-
Focus on the Embedded Pipeline in Acthar
–
Acthar is its own pipeline with many other on-label indications
and many possible other therapeutic uses
–
Further define and develop the unique characteristics of Acthar |
 23
Rheumatology Sales Pilot
Neuro Hiring
& Training
From 77 to
109 reps
Neuro
Sizing &
Alignment
Neph Hiring &
Training
From 28 to 58
reps
Neph Sizing &
Alignment
Sales Force Expansion-
Outlook for 2012
Q1-12
Q1-12
Q2
Q2
Q3
Q3
Q4
Q4
Q1-13
Q1-13 |
 24
•
Generating more data
for on-label indications
–
NS
–
MS
–
IS
–
Rheumatology
•
Generating more data
for on-label indications
–
NS
–
MS
–
IS
–
Rheumatology
•
Investigating Acthar in
potential new indications
–
Diabetic nephropathy
–
Autism
–
Traumatic brain injury
–
ALS
–
Migraine
•
Investigating Acthar in
potential new indications
–
Diabetic nephropathy
–
Autism
–
Traumatic brain injury
–
ALS
–
Migraine
Over 40 Acthar R&D and Investigator
Initiated Research Studies
Understanding Acthar:
Understanding Acthar:
the science of how it works
the science of how it works |
 25
Acthar has sustainable competitive
advantages-without FDA approval risk
Acthar is approved for 19 indications-many
in large markets with sizable unmet need
Sales in NS and MS are growing,
yet market penetration is low
Developing new vertical market -
Rheum
High margins provide good
operating leverage
Profitable, cash flow positive, no debt
Investment Highlights
25 |
 June 6,
2012 Jeffries
NASDAQ:
QCOR
26 |
 27
Pro-opiomelanocortin (POMC) in the Pituitary
ACTH is a Melanocortin Peptide Derived from |
 28
MCR
Prevalent Tissue/Cells with Receptor
MC1R
Podocytes
Renal Mesangial Cells
Endothelial Cells (Glomerular, Tubular, Vascular)
Tubular Epithelial Cells
Macrophages
Melanocytes
Immune/Inflammatory Cells
Kerantinocytes
CNS
MC2R
Adrenal Cortex (Steroidogenesis), Adipocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes |
 29
MCR
Prevalent Tissue/Cells with Receptor
MC3R
CNS
Macrophages
MC4R
Podocytes
Renal Mesangial Cells (?)
Endothelial Cells (Glomerular, Tubular)
Tubular Epithelial Cells
CNS
MC5R
CNS
Exocrine Glands
Lymphocytes
Podocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes |
 MOA of
Acthar in NS
Adapted From Gong 2011
Acthar,
Melanocortin Peptides
Acthar,
Melanocortin Peptides |
 31
15-30
reps
30-38
reps
38-77
reps
Monthly MS Scripts History
Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Notes:
Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. 250
300
350
400
0
50
100
150
200
250
300
350
400
0
50
100
150
200 |