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Questcor Pharmaceuticals, Inc. (QCOR)

Q4 2011 Earnings Call

February 22, 2012; 04:30pm ET


Don Bailey - President & Chief Executive Officer

Steve Cartt - Chief Operating Office

Dr. David Young - Chief Scientific Officer

Mike Mulroy - Chief Financial Officer

Doug Sherk - EVC Group


Tim Chiang - CRT Capital

Steve Yoo - Leerink Swann

Yale Jen - Maxim Group

Chris Holterhoff - Oppenheimer & Co

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Good day ladies and gentlemen, thank you for standing by. Welcome to the Questcor fourth quarter and fiscal year 2011 earnings conference call. During today’s presentation all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions)

And I would now like to turn the conference over to Doug Sherk, EVC Group. Please go ahead sir.

Doug Sherk

Well, thank you operator. Good afternoon everyone. Thank you for joining us today for the Questcor Pharmaceuticals conference call to discuss the fourth quarter and full year 2011 financial results and earnings.

This afternoon at the market close, Questcor issued its earnings release, which is posted on the company’s website at

. Today’s call is also being broadcast live via webcast, which is available at the Questcor website. A slide presentation will accompany today’s remarks by management. To access both the webcast and the presentation slides go to Questcor’s webstie at

, click the Inventor Relations link and then click on Events and Presentation.

If you are listening via telephone to today’s call, to review the accompanying presentation slides, navigate to the live webcast as I’ve just reviewed and choose the no audio slides-only option to review the slides in conjunction with the live conference call. That should be, choose the audio slides only option.

There will be a taped replay of this call, which will be available approximately one hour after the call’s conclusion and will remain available for seven days. The operator will provide the replay instructions at the end of today’s call.

Before we get started, I’d like to remind you that during the course of this conference call, the company will make projections and forward-looking statements regarding future events. We encourage you to review the company’s past and future filings with the SEC, including without limitation the company’s Forms 10-K and 10-Q, which identify the specific factors that may cause actual results or events to differ materially from those described in these forward-looking statements. These factors include Questcor’s reliance on Acthar for substantially all of its net sales and profits.

During the question-and-answer session today, please keep your questions to two and then re-queue for any additional questions.

With those logistical items out of the way, let me turn the call over to now to Don Bailey, President and Chief Executive Officer of Questcor Pharmaceutical.

Don Bailey

Thanks Dough, good afternoon everyone. With me today are several other members of our management team, including Steve Cartt who has recently been promoted to Chief Operating Office of the company; Dr. David Young, Chief Scientific Officer and Mike Mulroy our Chief Financial Officer. Several other members of the Executive Team are available to answer questions.

During the fourth quarter our focus of helping more patients with unmet medical need led to record financial results. As an increasing number of nurologists and nephrologists believe that MS and NS patients benefit from Acthar. As a result pay prescriptions are rosining and as we reported last week, the favorable pay prescription growth trends have continued into January of this year. The growth in the number of patients using and benefiting from Acthar led to solid increases in shipment of Acthar, net sales, earnings and free cash generation.

As we look ahead to 2012 and beyond, we believe we can sustain and re-grow our business due to three key factors. First, Acthar provides benefits to many difficult-to-treat patients, not responding to other treatments. Second, our market penetration in terms of the total number of nurologist and nephrologist prescribing Acthar while growing remains relatively small and third, we have casemented and experienced commercial team to pursue our growth plan.

Our focus remains on helping patients with serious difficult-to-treat medical conditions. This focus includes continued support of our patient assistance programs. Since August 2007 this program has provided a $124 million of Acthar clear charge to uninsured or under insured patients. The program provided over $50 million in pre-Acthar to patients in need during 2011 alone.

Our financial performance is also enabling us to double our research and development budget for 2012, to further build our understating of the potential immune modulating properties of Acthar and study other inflammatory and autoimmune diseases such as lupus that are already on the Acthar label. David Young will provide an update on the studies we have underway in a few moments.

This increase in demand from nephrologists lead us to the decision in January to expend our nephrology sales force from 28 to 58 representatives. We plan on completing this effort during the second quarter of this year. We are also adding sales management, marketing and reimbursement and compliance staffing and programs. Implementation of this plan is well under way and the recruiting effort is ahead of plan.

A smaller expansion of the MS sales team is also planned and Steve will provide more detail on that plan in a few moments. To manage our continued sustainable growth plan, we recently made several well-deserved promotions. As I mentioned, Steve Cartt has been names COO and will work closely with me on all aspects of Questcor's growth strategy.

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