This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Insys Therapeutics Continues Slide After Doctor Charged With Fraud

NEW YORK ( TheStreet) -- Shares of Insys Therapeutics (INSY)are tumbling for a second straight session following a report of a Michigan doctor being charged with allegedly prescribing the company's Subsys painkiller to people who did not need it.

WHAT'S NOTABLE: Dr. Gavin Awerbuch is alleged to have prescribed Subsys, a painkiller that is supposed to be used only by cancer patients, to individuals who did not need the drug, a website on Michigan area news,, reported last Thursday. The doctor then allegedly billed Medicare for the prescriptions, the site quoted federal authorizes as alleging. Awerbuch, who was arraigned in federal court on May 6 on charges of health care fraud and distribution of controlled substances, was said to have prescribed about 20% of the Subsys given to Medicare beneficiaries from January 2009 through February 2014, added, citing a court affidavit.

ANALYST REACTION: Although Subsys is very similar to three other painkillers that are also on the market, it obtained greater market share than the other three competing drugs at their peak levels, Bronte Capital analyst John Hempton wrote on his blog, citing a regulatory filing by the company. Additionally, Insys has noted that it incentivizes its sales force with bonuses as a means of increasing Subsys' market share, the analyst said. Reporting that Subsys is highly addictive and gets users "massively high," Hempton alleged that the drug seems to be designed to be used for inappropriate purposes.

Given the diversion of the drug to those who are not supposed to be using it and its design, as well as the company's incentive system, Insys "seems as good a candidate as any" to be closed by the government and "an okay short," Hempton contended. The blog notes that the opinions expressed are those of Hempton, who may hold long or short positions in stocks he analyzes. Conversely, Wells Fargo analyst Michael Faerm defended the stock in a note to investors earlier today.

Awerbuch's prescriptions accounted for less than 4% of the sales of Subsys from April 2012 through February 2014 and less than 2% of the drug's sales so far in 2014, mitigating the loss of future prescription volumes, Faerm contended. Moreover, the analyst added that he has no knowledge of the government making any allegations against the company. He believes that the sell-off in the stock on Friday appeared overdone, and kept an Outperform rating on the stock.

PRICE ACTION: In mid-morning trading, Insys tumbled $5.69, or 17.4%, to $27 after having declined nearly 17% on Friday. On Thursday, the stock closed at $39.31.

Reporting by Larry Ramer

The Fly provides comprehensive coverage of stock news and Street research and delivers it in real-time. The Fly breaks market-moving news and explains sudden stock movements in a rapid-fire, short-form story format. Follow @theflynews on Twitter. For a free trial, click here.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $93.24 -0.41%
FB $117.81 -0.21%
GOOG $701.43 0.82%
TSLA $211.53 -4.96%
YHOO $36.94 2.61%


Chart of I:DJI
DOW 17,660.71 +9.45 0.05%
S&P 500 2,050.63 -0.49 -0.02%
NASDAQ 4,717.0940 -8.5450 -0.18%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs