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| 8-K - FORM 8-K - QUESTCOR PHARMACEUTICALS INC | d301934d8k.htm |
 1
1
February 16, 2012
Leerink Swann
NASDAQ:
QCOR
NASDAQ:
QCOR
Exhibit 99.1 |
 2
Safe Harbor Statement
Except for the historical information contained herein, this presentation contains
forward-looking statements that are based on management's current expectations and
beliefs and are subject to a number of risks, uncertainties and assumptions that could
cause actual results to differ materially from those described. All such statements have been made pursuant to the
Private Securities Litigation Reform Act of 1995, as amended. These statements relate to future
events or our future financial performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "if," "should,"
"forecasts," “intends,” “exploring,” "expects,"
"plans," “appears,” “grows,” "believes," "estimates," "predicts," "potential,"
"continue" or “trends” or the negative of such terms and other comparable
terminology. These statements are only predictions. Actual events or results may differ
materially. Factors that could cause or contribute to such differences include, but are
not limited to, the following: Our reliance on Acthar for substantially all of our net sales and profits; Reductions in vials
used per prescription resulting from changes in treatment regimens by physicians or patient
compliance with physician recommendations; The complex nature of our manufacturing
process and the potential for supply disruptions or other business disruptions; The lack
of patent protection for Acthar; and the possible FDA approval and market introduction of
competitive products; Our ability to generate revenue from sales of Acthar to treat on-label
indications associated with NS, and our ability to develop other therapeutic uses for
Acthar including SLE; Research and development risks, including risks associated with
Questcor's work in the area of nephrotic syndrome and potential work in the area of SLE, and our reliance on
third-parties to conduct research and development and the ability of research and
development to generate successful results; Regulatory changes or other policy actions by
governmental authorities and other third parties in connection with U.S. health care
reform or efforts to reduce federal and state government deficits; Our ability to receive high reimbursement levels from
third party payers; An increase in the proportion of our Acthar unit sales comprised of
Medicaid-eligible patients and government entities; Our ability to estimate reserves
required for Acthar used by government entities and Medicaid-eligible patients
and the impact that unforeseen invoicing of historical Medicaid prescriptions may have upon our results; Our ability
to operate within an industry that is highly regulated at both the Federal and state level; Our
ability to effectively manage our growth, including the expansion of our NS selling
effort, and our reliance on key personnel; The impact to our business caused by economic
conditions; Our ability to protect our proprietary rights; Our ability to maintain effective controls over financial
reporting; The risk of product liability lawsuits; Unforeseen business interruptions; Volatility
in Questcor's monthly and quarterly Acthar shipments and end-user demand, as well as
volatility in our stock price; and Other risks discussed in Questcor's annual report on
Form 10-K for the year ended December 31, 2010, and other documents filed with the Securities
and Exchange Commission.
The risk factors and other information contained in these documents should be considered in
evaluating Questcor's prospects and future financial performance.
|
 3
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
A biopharmaceutical company whose
product, Acthar, helps patients with serious,
difficult-to-treat medical conditions
Questcor |
 4
Flagship Product:
Flagship Product:
•
Profitable, cash flow positive, $214M** in cash, debt-free
•
Profitable, cash flow positive, $214M** in cash, debt-free
•
19 approved indications
•
19 approved indications
Key Markets*:
Key Markets*:
•
Multiple Sclerosis, Nephrotic Syndrome, Infantile Spasms
•
Several billion dollar market opportunity
•
Multiple Sclerosis, Nephrotic Syndrome, Infantile Spasms
•
Several billion dollar market opportunity
Strategy:
Strategy:
•
Continue to grow Acthar sales in each key market
•
Develop other on-label markets for Acthar
•
Continue to grow Acthar sales in each key market
•
Develop other on-label markets for Acthar
Financials:
Financials:
*In
this
presentation,
the
terms
“Multiple
Sclerosis,”
“Nephrotic
Syndrome”
and
“Infantile
Spasms,”
and
their
abbreviations,
refer
to
the
on-label
indications
for
Acthar
associated
with
such
conditions.
Investors
should
refer
to
the
FDA
approved
Acthar
label,
which
can
be
found
at
http://www.acthar.com/files/Acthar-PI.pdf
.
**As
of
01/31/12
Questcor Overview |
 5
Questcor Strategy -
Pursue Acthar Markets
Multiple Sclerosis (MS)
Multiple Sclerosis (MS)
Nephrotic Syndrome (NS)
Nephrotic Syndrome (NS)
Infantile Spasms (IS)
Infantile Spasms (IS)
Systemic Lupus Erythematosus
Systemic Lupus Erythematosus |
 6
Acthar and Multiple Sclerosis (MS)
Potential
target for
*Nickerson, et al (2011)
ACTHAR is approved for MS exacerbations, without reference to first line or second
line use but is generally positioned as second
line
as
a
matter
of
marketing
strategy.
See
http://www.acthar.com/files/Acthar-PI.pdf
for
details.
43% get better or
43% get better or
much better
much better
27% get only a
27% get only a
little better
little better
30% stay the same
30% stay the same
or get worse
or get worse
Neurodegenerative disorder
Acute treatment for relapses
Neurodegenerative disorder
Acute treatment for relapses |
 7
Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Yellow
numbers in the bars show the number of MS sales representatives making calls for the majority of the quarter.
Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition
or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Yellow
numbers in the bars show the number of MS sales representatives making calls for the majority of the quarter.
MS Scripts-Record of Consistent Growth
77
77
30
30
38
38
Paid Rxs
78
124
141
213
231
304
323
354
508
751
886
945
Q1 '09
Q2 '09
Q3 '09
Q4 '09
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11 |
 8
Monthly MS Scripts History
Notes: Historical trend information is not necessarily indicative of future
results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. Notes:
Historical trend information is not necessarily indicative of future results. Acthar is marketed for the on-label indication of MS
exacerbations
in
adults,
though
the
chart
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions
of
the
condition or
are closely related to the medical condition which is the focus of the chart. About
5% of the prescriptions in the tables are for related conditions. 0
50
100
150
200
250
300
350
0
50
100
150
200
250
300
350
15-30
reps
30-38
reps
38-77
reps |
 9
•
Characterized by excessive spilling of protein
from the kidneys into the urine (proteinuria)
•
Can result in end-stage renal disease (ESRD),
dialysis, transplant
•
Acthar is approved “to induce a diuresis or a
remission of proteinuria in the nephrotic syndrome
without uremia of the idiopathic type or that due to
lupus erythematosus”
•
Significant unmet need
–
Few treatment options
–
Goal of therapy is the significant reduction
of proteinuria
•
Characterized by excessive spilling of protein
from the kidneys into the urine (proteinuria)
•
Can result in end-stage renal disease (ESRD),
dialysis, transplant
•
Acthar is approved “to induce a diuresis or a
remission of proteinuria in the nephrotic syndrome
without uremia of the idiopathic type or that due to
lupus erythematosus”
•
Significant unmet need
–
Few treatment options
–
Goal of therapy is the significant reduction
of proteinuria
Acthar and Nephrotic Syndrome (NS) |
 10
Paid Rxs
Paid Rxs
Yellow numbers in the bars show the number of NS sales
representatives
making
calls
for
the
majority
of
the
quarter.
Q3
‘11
included expansion and training of new sales people.
NS Scripts-Strong Q4 Growth
5
5
28
11
4
8
7
18
45
60
146
Q1 '10
Q2 '10
Q3 '10
Q4 '10
Q1 '11
Q2 '11
Q3 '11
Q4 '11
Notes: Historical trend information is not necessarily indicative of future results.
Chart includes "Related Conditions" - diagnoses that are either alternative
descriptions of the condition or are closely related to the medical condition which is the focus of the chart. |
 11
•
FDA approval 10/15/10
•
Devastating, refractory form of childhood epilepsy
•
IS not responsive to standard anti-epileptic drugs
•
Unsuccessful treatment may leave infant with permanent
developmental disabilities
•
Considered a medical emergency
•
Ultra-rare orphan disorder
•
About half of IS patients receive Acthar via Acthar patient
support programs and Medicaid
•
FDA approval 10/15/10
•
Devastating, refractory form of childhood epilepsy
•
IS not responsive to standard anti-epileptic drugs
•
Unsuccessful treatment may leave infant with permanent
developmental disabilities
•
Considered a medical emergency
•
Ultra-rare orphan disorder
•
About half of IS patients receive Acthar via Acthar patient
support programs and Medicaid
Acthar and Infantile Spasms (IS) |
 12
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
•
Significant variability in quarterly Rxs
•
Q4-2011 paid Rxs above historic range
•
Acthar currently used to treat 40-50% of IS patients
•
Targeting select institutions
•
Significant variability in quarterly Rxs
•
Q4-2011 paid Rxs above historic range
IS Scripts-Higher numbers in H2 2011 |
 13
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Multiple on-label indications for Acthar
–
Exacerbations
–
Maintenance therapy
–
Lupus nephritis
•
Large patient population
•
High unmet need; difficult to treat
•
Serious health risk if unsuccessfully treated
•
Multiple on-label indications for Acthar
–
Exacerbations
–
Maintenance therapy
–
Lupus nephritis
•
Large patient population
Systemic Lupus Erythematosus (Lupus) |
 14
Profitable
Profitable
Debt Free
Debt Free
Cash Flow Positive
Cash Flow Positive
Financials |
 15
Q3 –
2011
Q3 –
2010
Net Sales ($M)
$59.8
$31.3
Gross Margin
94%
93%
Operating Income ($M)
$33.6
$16.8
Fully Diluted, GAAP EPS
$0.35
$0.18
Q3-2011 Financial Results
•
Third quarter vials shipped: 2,910
•
Third quarter cash flow from operations: $32.6M
•
Channel inventory estimated to be within historic range
•
Medicaid reserves continue to appear adequate
•
No shares repurchased
•
Third quarter vials shipped: 2,910
•
Third quarter cash flow from operations: $32.6M
•
Channel inventory estimated to be within historic range
•
Medicaid reserves continue to appear adequate
•
No shares repurchased
Record Net Sales (up 91%) and Solid Earnings (EPS up 94%)
Record Net Sales (up 91%) and Solid Earnings (EPS up 94%) |
 16
01/31/12
Cash / ST Investments
$214M*
Accounts Receivable
$45M
Questcor is Cash Flow Positive
*After return of $78 million of cash to shareholders through share repurchases.
*After return of $78 million of cash to shareholders through share repurchases.
Debt-free balance sheet
Debt-free balance sheet |
 17
•
2.2 Million Preferred share buyback
•
13.2 Common share buyback
•
$78 million returned to shareholders in stock buybacks
•
63.6
million shares currently outstanding
•
4.3 million shares remain on buyback authorization
•
2.2 Million Preferred share buyback
•
13.2 Common share buyback
•
$78 million returned to shareholders in stock buybacks
•
63.6
million shares currently outstanding
•
4.3 million shares remain on buyback authorization
Share Repurchases: 15 Million Shares
Repurchased shares significantly improved EPS
Repurchased shares significantly improved EPS |
 18
•
3,360 Vials Shipped
•
Net sales of approximately $75 million
•
Operating expenses expected to be up
20-30% from Q3-2011
•
Operating income of approximately $41 million to $43 million
•
Paid Rxs Q4-11 and January 2012 (estimated)
•
3,360 Vials Shipped
•
Net sales of approximately $75 million
•
Operating expenses expected to be up
20-30% from Q3-2011
•
Operating income of approximately $41 million to $43 million
•
Paid Rxs Q4-11 and January 2012 (estimated)
Preliminary Q4-2011 Metrics
DX
Q4-11
January 2012
MS
945
330-345
NS
146
70-75
IS
120
45-50
Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which
is the focus of the chart. About 5% of the prescriptions in the tables are
for related conditions. Notes:
Paid
Rx
information
based
on
internal
estimates.
The
table
includes
"Related
Conditions"
-
diagnoses
that
are
either
alternative
descriptions of the condition or are closely related to the medical condition which
is the focus of the chart. About 5% of the prescriptions in the tables are
for related conditions. |
 19
How Does Acthar Work?
•
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect: Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect: Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
•
Acthar treats autoimmune conditions across a variety of organ systems (CNS,
kidney, etc.)
•
Acthar appears to modulate the immune system and associated inflammatory
response through binding to melanocortin receptors
•
The
primary
melanocortin
peptide
(ACTH)
in
Acthar
binds
to
all
5
melanocortin
receptors (MCR1-5); other active peptides are in Acthar as well
–
Indirect effect: Acthar triggers the production of cortisol and
other adrenal
compounds through binding to MCR2 receptors
–
Direct effect: Acthar acts directly at the cellular level by binding to melanocortin
receptors on immune cells and cells in the targeted tissues (e.g., kidney podocytes)
•
All the active ingredients of Acthar have yet to be fully characterized and the
mechanism of action and pharmacokinetic profile of Acthar are not fully known
|
 20
•
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
•
Difficult/impossible to reverse engineer ACTHAR
–
Not well characterized
•
Complex pharmacology
–
Not well characterized
•
Clinical trial(s) required
Biosimilar Pathway Difficult/Impossible |
 21
Market
Rx Value
Market Size
MS
$40-50K
$1B+
NS
$150-250K
$1B+
IS
$100-125K
$100M
Lupus
Unknown
Unknown
Other
Various
Unknown
Total
$2B+
Acthar Market Opportunity |
 22
Market
Approximate
Annualized Net Sales
Run Rate*
Approximate
Annualized Level of
Business**
MS
$145-160M
$145-160M
NS
$60-70M
$100-110M
IS
$40-50M
$40-50M
NS Business Already Significant
Note: Figures do not represent actual net sales ranges for the quarter or year ended December
31, 2011 *
Figures
based
on
estimates
of
vials
shipped
to
patients
within
each
therapeutic
area
in
the
quarter,
multiplied
by
4.
** Figures represent Q4-2011 new paid prescriptions times estimated vials per script over
treatment regimen, multiplied by 4. |
 23
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Develop pilot rheumatology promotion activity
•
Develop other markets for Acthar
–
Acthar is its own pipeline with many other on-label indications
and many possible other therapeutic uses
–
Further define and develop the unique characteristics of Acthar
•
No unrelated business development efforts planned
•
Expand NS promotion effort
•
Expand MS promotion effort
•
Maintain IS promotion effort
•
Develop pilot rheumatology promotion activity
•
Develop other markets for Acthar
–
Acthar is its own pipeline with many other on-label indications
and many possible other therapeutic uses
–
Further define and develop the unique characteristics of Acthar
•
No unrelated business development efforts planned
Strategic Plan-
Focus on the Embedded Pipeline in Acthar |
 24
Sales Force Expansion-
Preliminary Outlook for 2012
Possible Rheumatology
Possible Rheumatology
Sales Pilot
Sales Pilot
Neuro Hiring &
Neuro Hiring &
Training
Training
Neuro
Neuro
Sizing &
Sizing &
Alignment
Alignment
Neph Hiring &
Neph Hiring &
Training
Training
Neph Sizing &
Neph Sizing &
Alignment
Alignment
Q1-12
Q1-12
Q2
Q2
Q3
Q3
Q4
Q4
Q1-13
Q1-13 |
 25
Acthar has sustainable competitive
Acthar has sustainable competitive
advantages-without FDA approval risk
advantages-without FDA approval risk
Acthar is approved for 19 indications-many
Acthar is approved for 19 indications-many
in large markets with sizable unmet need
in large markets with sizable unmet need
Sales in MS and NS are growing rapidly,
Sales in MS and NS are growing rapidly,
yet market penetration is low
yet market penetration is low
Developing new vertical market -
Developing new vertical market -
Lupus
Lupus
High margins provide good
High margins provide good
operating leverage
operating leverage
Profitable, cash flow positive, no debt
Profitable, cash flow positive, no debt
Investment Highlights |
 26
26
February 16, 2012
Leerink Swann
February 16, 2012
Leerink Swann
NASDAQ:
QCOR
NASDAQ:
QCOR |
 27
ACTH is a Melanocortin Peptide Derived from
Pro-opiomelanocortin (POMC) in the Pituitary |
 28
MCR
Prevalent Tissue/Cells with Receptor
MC1R
Podocytes
Renal Mesangial Cells
Endothelial Cells (Glomerular, Tubular, Vascular)
Tubular Epithelial Cells
Macrophages
Melanocytes
Immune/Inflammatory Cells
Kerantinocytes
CNS
MC2R
Adrenal Cortex (Steroidogenesis), Adipocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes |
 29
MCR
Prevalent Tissue/Cells with Receptor
MC3R
CNS
Macrophages
MC4R
Podocytes
Renal Mesangial Cells (?)
Endothelial Cells (Glomerular, Tubular)
Tubular Epithelial Cells
CNS
MC5R
CNS
Exocrine Glands
Lymphocytes
Podocytes
Adapted from Gong 2011, Catania 2004, Schioth 1997
Affinity of Melanocortin Peptides and
Distribution of Receptor Subtypes |
 30
MOA of
Acthar in NS
Adapted From Gong 2011
Acthar,
Melanocortin Peptides
Acthar,
Melanocortin Peptides |