Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.
What: Shares of Questcor Pharmaceuticals Inc (NASDAQ:QCOR), a specialty biopharmaceutical company, skyrocketed as much as 37% after the company announced a deal to purchase Synacthen and Synacthen Depot in the U.S. from Novartis AG (ADR) (NYSE:NVS).
So what: Under the terms of the deal, Questcor Pharmaceuticals Inc (NASDAQ:QCOR) will pay Novartis $60 million upfront for Synacthen and will make at least $75 million in additional payments over the coming years — perhaps more depending on whether it gains approval by the Food and Drug Administration and reaches certain milestones. The purchase is crucial for Questcor Pharmaceuticals Inc (NASDAQ:QCOR) because Synacthen is merely the generic version of the active ingredient in its lead drug, Acthar Gel, which is indicated for 19 different diseases. With the threat of it being introduced at a fraction of the price out of the way, and Questcor Pharmaceuticals Inc (NASDAQ:QCOR) looking to utilize Synacthen in various other disease areas, it paves the way for Acthar sales to grow unabated.
Now what: This looks like nothing more than the, “If you can’t beat them, buy them” strategy. Although there’s nothing wrong with that, I still have my fair share of concerns regarding Questcor Pharmaceuticals Inc (NASDAQ:QCOR). Acthar sales in the first quarter were disappointingly low, and there still remains an ongoing investigation with regard to its sale and marketing practices of Acthar Gel. I wasn’t much a fan of Questcor Pharmaceuticals Inc (NASDAQ:QCOR) prior to today’s move, and I’d have to say I’m even less of a fan now.
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The article Why Questcor Pharmaceuticals Shares Exploded Higher originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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