Questcor Pharmaceuticals, Inc. Q2 2010 Earnings Call Transcript

Questcor Pharmaceuticals, Inc. (QCOR)

Q2 2010 Earnings Call

July 28, 2010 16:30 am ET

Executives

Doug Sherk - IR, EVC Group

Don Bailey - President and CEO

Steve Cartt - EVP & CBO

Dave Medeiros – SVP, Pharmaceutical Operations

Gary Sawka - SVP of Finance and CFO

Eldon Mayer – VP, Commercial Operations

David Young - CSO

Analysts

Yale Jen - Maxim Group

Chris Holterhoff - Oppenheimer & Company

Tim Chiang - CRT Capital

Jason Aria - Java Equities

Presentation

Operator

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Questcor Second Quarter 2010 Financial Results Conference Call. During today's presentation all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, Wednesday, July 28, of 2010.

At this time, I'd like to turn the conference over to Mr. Doug Sherk with EVC Group. Please go ahead sir.

Doug Sherk

Thank you for joining us today on the Questcor Pharmaceuticals second quarter 2010 earnings conference call. This afternoon at market close, Questcor issued its second quarter earnings release. The release is posted on the company's website at www.questcor.com.

In addition, we have arranged for 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 the call. The call is being broadcast live and an archived replay will also be available. To access the webcast, go to Questcor's website at www.questcor.com.

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.

With that, let me turn the call over to Don Bailey, President and Chief Executive Officer of Questcor Pharmaceuticals.

Don Bailey

With me today are Steve Cartt, Executive Vice President and Chief Business Officer; Dave Medeiros, Senior Vice President of Pharmaceutical Operations; Gary Sawka, our CFO; Eldon Mayer, Vice President of Commercial Operations; and Dr. David Young, our Chief Scientific Officer. This afternoon, we will review Questcor's highlights for the second quarter of 2010 and discuss recent business developments. Then, we'll open up the call for your questions.

Questcor generated solid financial and operating results during the second quarter of 2010. Net sales were quarterly record of $28.3 million, up 12% from last year's second quarter. MS sales are now half of Questcor sales and are at an annual run rate of over $50 million a year. MS sales were up 145% year-over-year and 32% sequentially.

The strong sales growth and opportunities to build further sales in IS and Nephrotic Syndrome led to our decision to double our sales force in the third quarter of 2010. Steve will cover what's driving our strong MS sales growth and more about the sales force expansion in a few minutes.

Turning to IS sales, our second quarter results were within our historic levels. Back in early May, the Peripheral and Central Nervous System Drugs Advisory Committee to the FDA held a panel meeting to discuss approval for using Acthar in infantile spasm. As we have reported to you then, the meeting went exceptionally well. The panel's purpose was to advise the FDA on their opinion of whether or not Acthar should be approved by the FDA for this condition. The vote by panel members was overwhelmingly in favor of an approval for Acthar.

Since the panel meeting, the original PDUFA date of June 11 was extended to September 11. The FDA is reviewing information regarding labeling, REMS and a potential post-approval commitment that they solicited from Questcor. The process continues to move forward. If we do earn FDA approval to add IS to the Acthar label on schedule in September, we expect to launch Acthar in the treatment of IS during the Child Neurology Society Annual Meeting in October.

Moving on to Nephrotic Syndrome. During the second quarter, we have learned that several Acthar related abstracts were submitted for presentation at the American Society of Nephrology Annual Meeting in Denver in November of 2010, and one paper has been submitted to a major nephrology journal for publication early next year.

We believe that these initial reports on Acthar and its potential role in Nephrotic Syndrome will help the nation's 7,000 nephrologists better understand how Acthar might help their patients battling this difficult to treat disease.

For the second quarter of 2010, Questcor reported net income of $0.14 per share or $9.2 million. We continued to improve our balance sheet as cash has recently exceeded the $100 million mark.

During the second quarter, we decided to focus our business development efforts on identifying new uses for Acthar; new labeling, new label indications and enhancing our position as the drug's only manufacturer and marketer. We will keep you posted on how our progress goes with these initiatives.

Finally, as a result of our progress during the past year, we have revised our mission statement for Questcor. It now is, Questcor Pharmaceuticals is a biopharmaceutical company whose products help patients with serious difficult to treat medical conditions. We believe this mission statement captures all of the key elements that are important to Questcor's unique business model and provides a clear message of our direction to our investors, the industry and most importantly, our employees.

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