QUESTCOR PHARMACEUTICALS INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - QUESTCOR PHARMACEUTICALS INC	d537935d8k.htm

May 2013

NASDAQ:

QCOR

NASDAQ:

QCOR

Bank of America Merrill Lynch

Healthcare Conference

Don Bailey

Chief Executive Officer

Exhibit 99.1

Safe Harbor Statement

Note: Except for the historical information contained herein, this press release contains forward-looking statements that have been

made pursuant to the Private Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial

performance. In some cases, you can identify forward-looking statements by terminology such as "believes," "continue," "could,"

“ensuring,” "estimates," "expects," "growth," "may," “momentum,” "plans," "potential," "remain," "should," “start,” "substantial,"

“sustainable” or "will" 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; Our ability to

receive high reimbursement levels from third party payers; 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 continue to generate revenue from sales of Acthar to treat on-label indications

associated with NS, MS, IS or rheumatology-related conditions, and our ability to develop other therapeutic uses for Acthar; Research

and development risks, including risks associated with Questcor's work in the area of NS and Lupus, our reliance on third-parties to

conduct research and development and the ability of research and development to generate successful results; The results of any

pending or future litigation, investigations or claims, including with respect to the investigation by the United States Attorney’s Office

for the Eastern District of Pennsylvania regarding the Company’s promotional practices and litigation brought by certain shareholders

arising from the federal securities laws, currently pending in the United States District Court for the Central District of California; Our

ability to comply with federal and state regulations, including regulations relating to pharmaceutical sales and marketing practices;

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; 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 effectively manage our growth, including the expansion of our sales forces, and our reliance on key personnel;

The impact to our business caused by economic conditions; Our ability to protect our proprietary rights; The risk of product liability

lawsuits; Unforeseen business interruptions and security breaches; Volatility in Questcor's monthly and quarterly Acthar shipments,

estimated channel inventory, 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, 2012 as filed with the Securities and Exchange Commission, or SEC, on

February 27, 2013, and other documents filed with the SEC.

The risk factors and other information contained in these documents should be considered in evaluating Questcor's prospects and future

financial performance.

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

A biopharmaceutical company focused on the

treatment of patients with serious, difficult-to-

treat autoimmune and inflammatory disorders

Questcor

Flagship Product:

•

Profitable, positive cash flow, strong balance sheet

•

Profitable, positive cash flow, strong balance sheet

•

19 approved indications

•

19 approved indications

Key Therapeutic Areas:

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Rheumatology Indications

•

Significant areas of unmet need; large growth potential

•

Nephrotic Syndrome, Multiple Sclerosis Relapse, Infantile

Spasms, Rheumatology Indications

•

Significant areas of unmet need; large growth potential

Strategy:

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop Rheumatology and other on-label indications

•

Expand awareness, appropriate use of Acthar in key specialties

•

Develop Rheumatology and other on-label indications

Financials:

*In this presentation, the terms “Nephrotic Syndrome,”

“Multiple Sclerosis Relapse,”

“Rheumatology Indications,”

and

“Infantile

Spasms,”

and

their

abbreviations,

refer

on-label

indications

for

Acthar

associated

with

such

conditions.

Investors

should

refer

the

FDA

approved

Acthar

label,

which

can

found

http://www.acthar.com/files/Acthar-PI.pdf

Questcor Overview

Estimated Allocation of Acthar Business

Note: Questcor sells Acthar to a distributor and does not have complete data with

respect to end-use; allocation based on internal estimates (Q1 2013).

Infantile

Spasms

~10%

Rheumatology

Indications

~10%

Other

MS Relapse

~30%

Nephrotic

Syndrome

~50%

Nephrotic Syndrome (NS)

•

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

•

Caused by a number of underlying types of kidney

disease (eg, iMN, FSGS, IgA nephropathy, etc.)

•

Can result in end-stage renal disease (ESRD), dialysis,

transplant

•

Significant unmet need; few treatment options

•

Acthar is indicated 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

•

Characterized by excessive spilling of protein

from the kidneys into the urine (proteinuria)

•

Caused by a number of underlying types of kidney

disease (eg, iMN, FSGS, IgA nephropathy, etc.)

•

Can result in end-stage renal disease (ESRD), dialysis,

transplant

•

Significant unmet need; few treatment options

•

Acthar is indicated 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

•

A neurodegenerative disease occurring in about

400,000 patients in the US (>100,000 relapses/year)

•

Relapses range from mild to severe and can cause a

range of symptoms

–

Loss of sensation in the extremities

–

Loss of vision

–

Loss of ability to walk

•

Relapses have a measurable and sustained effect on

disability

patients

•

A neurodegenerative disease occurring in about

400,000 patients in the US (>100,000 relapses/year)

•

Relapses range from mild to severe and can cause a

range of symptoms

–

Loss of sensation in the extremities

–

Loss of vision

–

Loss of ability to walk

•

Relapses have a measurable and sustained effect on

disability

patients

Multiple Sclerosis (MS) Relapse

Lublin et al. Neurology

2003

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar is often considered the “gold standard”

and is

currently used to treat 40-50% of IS patients

•

Devastating, ultra-rare form of childhood epilepsy

•

Can cause permanent developmental disabilities,

increased mortality

•

Acthar is often considered the “gold standard”

and is

currently used to treat 40-50% of IS patients

Infantile Spasms (IS)

•

Rheumatology-related indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Rheumatoid arthritis –

short term adjunctive

–

Psoriatic arthritis –

short term adjunctive

•

Each can pose a serious health risk if not adequately

controlled

•

Some cases difficult to manage; Acthar is an FDA-

approved treatment for select patients

•

Positive initial uptake; expanded Rheum Sales Force

from 12 to 55 reps

•

Rheumatology-related indications on the Acthar label*

–

Dermatomyositis/Polymyositis (DM/PM)

–

Systemic lupus erythematosus (Lupus)

–

Rheumatoid arthritis –

short term adjunctive

–

Psoriatic arthritis –

short term adjunctive

•

Each can pose a serious health risk if not adequately

controlled

•

Some cases difficult to manage; Acthar is an FDA-

approved treatment for select patients

•

Positive initial uptake; expanded Rheum Sales Force

from 12 to 55 reps

Rheumatology

*See http://www.acthar.com/files/Acthar-PI.pdf

for specific label information.

•

Inflammatory neuromuscular diseases

that cause a loss of muscle strength and

mass

–

Significant quality of life issues; some patients

require walkers or wheelchairs

–

Can also cause significant lung impairment

–

Patients can experience acute exacerbations

(flares)

•

Commonly used DM/PM treatments

•

An estimated 30% of patients may need

an additional treatment alternative

Alternative

Needed

~20K

* Questcor sponsored market research study (2012)

~70,000 Patients (US)

Adequately

Treated

~50K

Dermatomyositis and Polymyositis (DM/PM)

Prednisone, plaquenil, methotrexate,

azathioprine, IVIG, Rituxan

Systemic Lupus Erythematosus (Lupus)

•

Chronic autoimmune disorder that can

effect virtually any area of the body

–

Patients can experience acute exacerbations

(flares)

•

Commonly used lupus treatments

•

An estimated 25% of patients may need

an additional treatment alternative

Alternative

Needed

~63K

~250K SLE Patients (US)

Adequately

Treated

~187K

Prednisone, plaquenil, methotrexate,

mycophenolate, azathioprine, Benlysta, Rituxan

* Questcor sponsored market research study (2012)

Rheumatoid Arthritis (RA)

•

Chronic autoimmune disorder that causes

inflammation of the synovial joints

–

Can be debilitating and lead to join destruction

–

Patients can experience acute exacerbations (flares)

•

Commonly used RA treatments

Prednisone, methotrexate, azathioprine, Remicade,

Humira, Rituxan

•

An estimated 5% of patients may need an

additional treatment alternative*

Alternative

Needed

~65K

* Questcor sponsored market research study, 2012

~1.3 million patients (US)

Adequately

Treated

~1.23M

Psoriatic Arthritis (PsA)

Alternative

Needed

~45K

* Questcor sponsored market research study, 2012

~900K patients (US)

•

Chronic autoimmune disorder manifesting as

both arthritis and psoriasis

–

Patients have both skin and joint manifestations

–

Patient can experience acute exacerbations (flares)

•

Commonly used PsA treatments

•

An estimated 5% of patients may need an

additional treatment alternative*

Prednisone, methotrexate, azathioprine, Remicade,

Humira

Adequately

Treated

~855K

Approved Acthar Rheumatology

Indications

1.3 Rheumatic Disorders:

As adjunctive therapy for short-term administration (to tide the

patient over an acute episode or exacerbation) in: Psoriatic

arthritis; Rheumatoid arthritis, including juvenile rheumatoid

arthritis (selected cases may require low-dose maintenance

therapy); Ankylosing spondylitis.

1.4 Collagen Diseases:

During an exacerbation or as maintenance therapy in selected

cases of: systemic lupus erythematosus, systemic

dermatomyositis (polymyositis).

How Does Acthar Work?

•

Treats variety of autoimmune/inflammatory conditions

•

Appears to modulate the immune system and associated

inflammatory response through binding to melanocortin

receptors

1,5-9

•

Activity extends beyond steroidogenesis

1,5-9

–

Binds to all 5 melanocortin receptors found on immune cells

–

Binds

cells

many

the

targeted

tissues

(e.g.,

kidney

podocytes)

–

Triggers the production of cortisol and other adrenal compounds through

binding to MC2R receptors found in the adrenal cortex

•

Acthar components have yet to be fully characterized

–

ACTH is believed to be the primary active component in Acthar, but there may be

others

•

Treats variety of autoimmune/inflammatory conditions

•

Appears to modulate the immune system and associated

inflammatory response through binding to melanocortin

receptors

1,5-9

•

Activity extends beyond steroidogenesis

1,5-9

–

Binds to all 5 melanocortin receptors found on immune cells

–

Binds

cells

many

the

targeted

tissues

(e.g.,

kidney

podocytes)

–

Triggers the production of cortisol and other adrenal compounds through

binding to MC2R receptors found in the adrenal cortex

•

Acthar components have yet to be fully characterized

–

ACTH is believed to be the primary active component in Acthar, but there may be

others

Arnason et al. Mult Sclerosis J. 2012;

Arya et al. J Child Neuro 2012;

Bomback et al. Amer J. Neph

2012;

Levine, Drug Design, Dev & Therapy, 2012.

Catania, et al. Pharmacol Rev. 2004;

Stafstrom,

et al. J Child Neuro 2011;

Manna SK, J Immunol. 1998;

Gong R. Nat Rev Nephrol. 2011;

Bohm et

al. Endocrine Reviews 2012;

H.P. Acthar Gel package insert. Questcor Pharmaceuticals, Inc., 2011.

1,3,5,6,8,9

1-4

•

Significantly increasing investment in R&D

–

Have funded or have approved funding for ~70 projects

–

Company sponsored pre-clinical and clinical studies

–

Independent physician sponsored studies

•

Gaining an understanding of the biological properties of Acthar

–

Specific biochemical pathways, cells, and tissues

–

Immunomodulation and anti-inflammatory effects

•

Expanding the body of evidence for on-label indications

•

Exploring possible new indications and targets

–

Autoimmune/inflammatory conditions

•

Significantly increasing investment in R&D

–

Have funded or have approved funding for ~70 projects

–

Company sponsored pre-clinical and clinical studies

–

Independent physician sponsored studies

•

Gaining an understanding of the biological properties of Acthar

–

Specific biochemical pathways, cells, and tissues

–

Immunomodulation and anti-inflammatory effects

•

Expanding the body of evidence for on-label indications

•

Exploring possible new indications and targets

–

Autoimmune/inflammatory conditions

Advancing Our Understanding of the

Science Behind Acthar

•

Idiopathic Membranous Nephropathy

–

Phase 4 trial ongoing

–

Refractory, non-responsive, or have relapsed on standard therapies

•

Persistently Active Lupus

–

Phase 4 trial initiated 4Q 2012

–

Daily Acthar administration over a 6-month period

•

Lupus Exacerbations (flares)

–

Prospective investigator initiated

–

Enrollment completed

–

Top line data to be published Summer 2013

•

DM/PM Studies

–

ADAPT Patient Registry currently collecting data

•

Idiopathic Membranous Nephropathy

–

Phase 4 trial ongoing

–

Refractory, non-responsive, or have relapsed on standard therapies

•

Persistently Active Lupus

–

Phase 4 trial initiated 4Q 2012

–

Daily Acthar administration over a 6-month period

•

Lupus Exacerbations (flares)

–

Prospective investigator initiated

–

Enrollment completed

–

Top line data to be published Summer 2013

•

DM/PM Studies

–

ADAPT Patient Registry currently collecting data

Ongoing Research in Approved Indications

•

Diabetic Nephropathy

–

One of the most common causes of end-stage renal disease in the U.S.

–

Phase 2 IND trial; Approx 40% enrolled

•

Amyotrophic Lateral Sclerosis (ALS)

–

Fatal neurological disease caused by progressive loss of motor neurons

in the brain and spinal cord

•

Inflammatory component to ALS contributes to disease pathology/progression

•

Mean survival time from diagnosis is 3-5 years

•

Affects ~30K people in US and ~30K in Europe; Peak incidence 40-70 years of age

–

Phase 2 IND study to be initiated in Q2 2013; site enrollment underway

–

Request for Orphan Drug Designation submitted to FDA

–

Study results could help determine whether to pursue ALS as a

potential new Acthar indication

•

Diabetic Nephropathy

–

One of the most common causes of end-stage renal disease in the U.S.

–

Phase 2 IND trial; Approx 40% enrolled

•

Amyotrophic Lateral Sclerosis (ALS)

–

Fatal neurological disease caused by progressive loss of motor neurons

in the brain and spinal cord

•

Inflammatory component to ALS contributes to disease pathology/progression

•

Mean survival time from diagnosis is 3-5 years

•

Affects ~30K people in US and ~30K in Europe; Peak incidence 40-70 years of age

–

Phase 2 IND study to be initiated in Q2 2013; site enrollment underway

–

Request for Orphan Drug Designation submitted to FDA

–

Study results could help determine whether to pursue ALS as a

potential new Acthar indication

Acthar Label Enhancement Strategy

•

Complex formulation and pharmacology, with

–

Slow release gel formulation

–

Complex and not well characterized (research is ongoing)

•

Formulation and manufacturing trade secrets inherent

with Acthar

•

Future synthetics possible, but in specific indication

–

Clinical trial(s) and other development work likely required

–

Multi-year pathway; challenging IP landscape

•

Complex formulation and pharmacology, with

–

Slow release gel formulation

–

Complex and not well characterized (research is ongoing)

•

Formulation and manufacturing trade secrets inherent

with Acthar

•

Future synthetics possible, but in specific indication

–

Clinical trial(s) and other development work likely required

–

Multi-year pathway; challenging IP landscape

Biosimilar Pathways Highly Challenging

multiple receptor binding properties

Q1 –

2013

Q1 –

2012

Net Sales ($M)

$135.1

$96.0

Fully Diluted, GAAP EPS

$0.65

$0.58

Fully Diluted, Non-GAAP EPS

$0.76

$0.61

Cash flow from operations ($M)

$41.5

$40.9

Diluted shares outstanding

60.3

66.5

Q1-2013 Financial Results

•

Identifying and expanding Acthar therapeutic role in existing

and new indications

•

Long term investment in R&D --

doubled R&D spending in 2012

•

Highly selective, strategic diversification

•

Have returned $379 million to shareholders through share

repurchases and dividends*

–

22.2 million shares repurchased

•

6.3 million shares remain available for repurchase under share

repurchase program*

•

Quarterly dividend increased to $0.25 per share during Q2-

2013

*Data as of 3/31/13

•

Identifying and expanding Acthar therapeutic role in existing

and new indications

•

Long term investment in R&D --

doubled R&D spending in 2012

•

Highly selective, strategic diversification

•

Have returned $379 million to shareholders through share

repurchases and dividends*

–

22.2 million shares repurchased

•

6.3 million shares remain available for repurchase under share

repurchase program*

•

Quarterly dividend increased to $0.25 per share during Q2-

2013

*Data as of 3/31/13

Committed to Creating Long Term Value

for Shareholders

Acthar has a unique therapeutic role and

sustainable competitive advantages

Acthar is approved for 19 indications, many

in markets with sizable unmet need

NS and MS market penetration remains

modest; Rheumatology sales increasing

rapidly

Questcor is increasing investment in R&D

Profitable, strong cash flow and balance

sheet

Investment Highlights

May 2013

NASDAQ:

QCOR

NASDAQ:

QCOR

Reconciliation of Non-GAAP Adjusted

Financial Disclosure

Three Months Ended

03/31/13

Three Months Ended

03/31/12

Adjusted

net

income

per

basic

$ 0.79

$ 0.64

Share-based compensation expense (1)

(0.07)

(0.02)

Depreciation and amortization expense (2)

(0.03)

(0.00)

Interest expense associated with contingent

consideration (3)

(0.00)

Compensation expense associated with BV Trust

Agreement (4)

(0.00)

Foreign currency transaction loss (5)

(0.01)

Tax adjustments (6)

(0.01)

Impairment of purchased technology (7)

(0.01)

Net

income

per

basic

$ 0.68

$ 0.61

Adjusted

net

income

per

diluted

$ 0.76

$ 0.61

Share-based compensation expense (1)

(0.07)

(0.02)

Depreciation and amortization expense (2)

(0.02)

(0.00)

Interest expense associated with contingent

consideration (3)

(0.00)

Compensation expense associated with BV Trust

Agreement (4)

(0.00)

Foreign currency transaction loss (5)

(0.01)

Tax adjustments (6)

(0.00)

Impairment of purchased technology (7)

(0.01)

Net

income

per

diluted

$ 0.65

$ 0.58

Net

income

per

–

basic

and

diluted

may

not

foot

due

rounding.

Use of Non-GAAP Financial Measures

items from GAAP net income:

1. Share-based compensation expense.

2. Depreciation and amortization expense

3. Interest expense associated with the net present value

adjustment of the contingent consideration.

4. Compensation expense associated with the BV Trust

agreement.

5. Foreign currency transaction loss.

6. Tax adjustments primarily relate to write-off of 1997-

2000 Federal R&D tax credits.

4. Impairment of purchased technology related to our

acquisition of Doral.

Our

“non-GAAP

adjusted

net

income”

excludes

the

following

Receptor

Prevalent Tissue/Cells with Receptor

MC1R

Podocytes, Renal Mesangial Cells,

Endothelial Cells, Tubular Epithelial Cells,

Macrophages, Melanocytes, Immune/Inflammatory

Cells, Kerantinocytes, CNS

MC2R

Adrenal Cortex (Steroidogenesis), Adipocytes

MC3R

CNS, Macrophages

MC4R

Podocytes, Renal Mesangial Cells (?)

Endothelial Cells, Tubular Epithelial Cells, CNS

MC5R

CNS, Exocrine Glands, Lymphocytes, Podocytes

Adapted from Gong 2011, Catania 2004, Schioth 1997

Acthar Binds to Melanocortin Receptors

QUESTCOR PHARMACEUTICALS INC - FORM 8-K - EX-99.1 - May 14, 2013

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QUESTCOR PHARMACEUTICALS INC Reports