Questcor Pharmaceuticals' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Questcor Pharmaceuticals, Inc. (QCOR)

Q1 2012 Earnings Conference Call

April 24, 2012 4:30 pm ET


Doug Sherk – Investor Relations

Don Bailey – President and Chief Executive Officer

Steve Cartt – Chief Operating Officer

David Young – Chief Scientific Officer

Michael Mulroy – Senior Vice President, Chief Financial Officer, General Counsel and Corporate Secretary


David Amsellem – Piper Jaffray

Tim Chiang – CRT Capital Group

Mario Corso – Caris & Company

Yale Jen – Roth Capital

Steve Yoo – Leerink Swann

Christopher Holterhoff – Oppenheimer & Co

Biren Amin – Jefferies & Co

James Molloy – ThinkEquity LLC

Stephen Eubanks – Bank of America

Bernard Horn – Polaris Capital Management

Patrick Glenn – Primarius Capital



Good day ladies and gentlemen and welcome to the Questcor Pharmaceuticals Inc Q1 2012 earnings call. At this time, all participants are in a listen-only mode. Later, we’ll have a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, today’s conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Doug Sherk. Sir you may begin.

Doug Sherk

Thank you, operator and good afternoon everyone. Thank you for joining us today for the Questcor Pharmaceuticals conference call to discuss the first quarter 2012 financial results. This afternoon after market close, Questcor issued its first quarter earnings release, which is posted on the company’s website at Today’s call is also being broadcast live via the webcast, which is also 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 website at, click the Inventor Relations link and then click on Events and Presentations.

If you are listening via telephone today to the call, to review the accompanying presentation slides, navigate to the live webcast at choose the audio/slides only option to review the slides in conjunction with the live conference call.

There will be a taped replay of this call, which will be available approximately one hour after the call’s conclusion and will remained 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, management 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.

Now please let me turn the call over 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, Chief Operating Officer, Dr. David Young, Chief Scientific Officer and Mike Mulroy our Chief Financial Officer. They’ll all be making prepared remarks. Several other members of the executive team are also available to answer questions.

Questcor is unconventional, but simple business model continues to produce excellent financial results. Shift files, net sales and earnings will all up well over 100% year-over-year. We continued to expand nephrologist and neurologist awareness, our patient benefits from Acthar and as a result, pay prescriptions continue to increase.

Driving our growth in the first quarter was the strong increase in paid prescriptions written by nephrologist to treat patients with nephronic syndrome, a serious kidney ailment. After a successful pilot program, we stepped up our nephrology commercial effort last October. The expected revenues from nephrotic syndrome prescriptions are accelerating to the point that by our calculation, nephrotic syndrome script value now exceeds MS. This estimate includes not only the revenue in the first quarter for nephronic syndrome, but also the expected revenue in the next two quarters as Acthar in nephrotic syndrome prescriptions are filled over about a six months timeframe.

From a treatment perspective, the number of vials needed to treat a nephronic syndrome patient, averages over four times the number of vials needed to treat a MS patient. We expect this dynamic to continue as we more than double the size of the commercial effort for nephronic syndrome by early June and as results from various Acthar studies in nephronic syndrome become available. In fact the initial results from one study became available just as week and Steve will comment on this particular study shortly.

We believe our sales will continue to grow 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 nephrologists and neurologist prescribing Acthar while growing remains relatively small. Third, we have assembled in our expanding an excellent experience commercial team that successfully executing our straight forward growth plans.

In a few moments, Steve will review the development of that commercial team during the quarter as well as the team’s expansion plans for the remainder of 2012. The core focus of these expansion plans remains on helping patients with serious difficult-to-treat medical conditions. This quarter focus includes an emphasis on reimbursement support. While insurance coverage remains quite solid, Questcor also provides an important safety net for the needy, and has supplied $150 million of Acthar free of charge to uninsured and underinsured patients.

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