"TheStreetSweeper would like to reward its loyal followers by offering them advance notice about its newest investigative report. The first story in a detailed two-part series on
Questcor has been unable to determine the exact nature of StreetSweeper.org, its ownership structure, or its revenue sources. The website, www.thestreetsweeper.org, provides no information on these topics, and standard listings about it are limited and opaque. Based on our examination to date, we believe that the website lists people that it claims are associated with it, one of whom the website and media reports identify as a felon who pled guilty to two conspiracy charges — for securities fraud and money laundering — and who later pled guilty to racketeering charges related to stock manipulation, another of whom has the same name as an individual who, according to media reports, was arrested recently for kidnapping and extortion, and another of whom has the same name as an individual who, according to media reports, has been involved in extensive litigation regarding fraud, defamation, and slander. The exact nature of the relationships between these individuals and StreetSweeper.org is unclear. It is also unclear whether the website's purpose is journalistic or to further the economic interests of short sellers without regard to accuracy (a practice referred to as "short and distort").
During the call, management stated that it would respond to the questions received on January 9th.
Questcor maintains a policy of not commenting on trading activity in its stock and does not intend to make a regular practice of engaging with short-sellers. In early 2011, Questcor had a dialog with the author of another publication that later became the basis of an article published in Barron's. Notably, on
In the current situation, the Company is concerned about the apparent tactics of StreetSweeper and its background, and believes that responding to its questions and publicly disclosing the content of the questions and answers is in the best interest of the Company's shareholders. The questions asked by StreetSweeper that it provided on
Prior to Questcor providing responses to the questions provided by StreetSweeper on
1. Is Acthar considered a first-line or a second-line treatment for MS flares? Either way, please explain.
Questcor Response: As stated in its
2. What type of MS patient does Questcor target with its drug?
Questcor Response. Questcor's marketing and sales programs attempt to educate physicians who treat MS patients about Acthar. The focus of this education effort is on how Acthar is indicated to treat acute exacerbations of multiple sclerosis in adults and how Acthar may be helpful for patients who have not had a suitable response from steroids and how the mechanism of action is unique and different from steroids. Typically, most neurologists will initially prescribe high-dose steroids for patients who are having an MS flare. Recognizing this widespread medical opinion, we also recommend that steroids be used as first line treatment. Many of those patients have an inadequate or sub-therapeutic response to the steroid treatment, have had an inadequate response to a previous treatment of steroids, have poor venous access which makes the administration of high dose steroids extremely difficult or may have other medical issues that cause the treating physician to believe that Acthar should be prescribed. Questcor attempts to educate physicians about all of these categories of patients. Clearly, it is ultimately, only the physician, in consultation with the patient, who decides whether and how Acthar is to be prescribed.
3. Over time, has Questcor changed the criteria used to determine whether MS patients look like suitable candidates for Acthar therapy? If so, please explain.
Questcor Response: Questcor does not determine whether an MS patient looks like a suitable candidate for Acthar therapy — that is the sole purview of the prescribing physician. Questcor promotes Acthar as a therapeutic alternative for MS patients who experience flares and for whom steroid treatment has been ineffective or problematic., (for example, the patient did not fully respond to steroids, the patient had side effects to steroids that are problematic, the patient has poor venous access so that inserting an IV line is problematic, etc.).
4. On average, how often does an MS patient typically relapse? Has this time span widened with advances in the medications (including powerful new or treatments) used to control the underlying disease itself?
Questcor Response. Based on publicly-available, peer-reviewed literature and information communicated by physicians, the Company believes that MS patients suffer a relapse on average every 12 to 24 months, but this can vary widely from patient to patient. Questcor believes that the number of MS patients who suffer from flares and who are incomplete responders to steroids or who have problematic side effects from steroids, is materially higher than the current annualized run rate of Acthar prescriptions currently written for MS flares. Therefore, the Company believes that a significant opportunity may exist, through the continued education of physicians who treat MS patients, to increase the awareness of and potentially the usage of Acthar to treat MS flare patients. As has been previously publicly announced, the Company currently plans to expand the number of Acthar sales representatives promoting Acthar for MS flares during 2012.
The Company does not have information sufficient to comment on the impact of recently introduced medications, though we have noted the risk of the impact on the Company of these medications in our Form 10-K for 2010, as follows:
"Over the past several years disease modifying agents have been increasingly prescribed to treat the underlying disease state of MS, and the success of these treatments could reduce the overall incidence rate of acute exacerbations for MS including acute exacerbations of MS in patients who might be candidates for being treated with Acthar."
5. How much did Questcor originally pay for the rights to Acthar?
Questcor Response: Questcor rescued Acthar in 2001 after it was abandoned by a large, internationally recognized pharmaceutical company. This other company notified the
6. How much does Questcor charge for a vial of the drug today?
Questcor Response: Questcor sells Acthar to its distributor for approximately
7. Can analysts/investors utilize the popular IMS database to track Acthar prescription trends? If not, when did this change and why?
Questcor Response: The IMS database service is one of several third-party services that track some pharmaceutical prescription trends. Questcor is not responsible for the accuracy of the information provided by any of these services. In the Summer of 2007, Questcor changed the distribution of Acthar from a traditional wholesale/retail distribution to specialty distribution. Questcor has had no communication with IMS regarding IMS reporting and cannot comment on the accuracy of IMS data with respect to Acthar prescription trends. Our general understanding is that IMS obtains more complete data for pharmaceutical products dispensed at retail pharmacies. Since Acthar has been distributed through specialty pharmacies since the Summer of 2007, IMS data may or may not reflect all Acthar sales. In any case, Questcor provides investors with periodic updates of approximate prescription trend information from analyzing prescription data received by a Questcor sponsored reimbursement support center.
One of the major reasons for the change in Questcor's Acthar distribution model in the Summer of 2007 was that patients with devastating medical conditions, such as infantile spasms which is considered a medical emergency by child neurologists, would be better able to get insurance coverage confirmed and receive Acthar quickly.
8. What percentage of U.S. neurologists and nephrologists has prescribed Acthar so far?
Questcor Response: In the third quarter ended
9. How many Acthar prescriptions do most of those doctors usually write?
Questcor Response: In the fourth quarter ended
10. How many of them have written a dozen Acthar prescriptions or more?
Questcor Response. During the 3 month period ended
11. What percentage of total Acthar prescriptions comes from this particular group?
Questcor Response: Approximately 5% of all Acthar prescriptions were written by physicians writing a dozen or more prescriptions in the quarter ended
12. Besides neurologists and nephrologists, what types of doctors prescribe the drug? What types of diseases/disorders do those doctors use Acthar to treat?
Questcor Response: Acthar is also commonly prescribed by pediatric neurologists and epileptologists, for the treatment of infantile spasms. Acthar was originally approved by
13. Do the major MS clinics use Acthar right now? If so, which ones, and how often do they prescribe the drug?
Questcor Response: Questcor does not have sufficient data to fully answer this question. Acthar is prescribed by some major clinics but we have not analyzed prescription data sufficiently to be able to provide a quantitative response to this question. The Company does not provide information to external parties regarding the prescribing activity of specific physicians or clinics.
14. Does Questcor offer any financial incentives to healthcare providers who use Acthar (such as price discounts or free samples of the drug)? If so, please explain.
Questcor Response: The Company does not provide financial incentives to doctors or other healthcare practitioners to prescribe Acthar. On rare occasions we have provided an Acthar sample to a very small number of doctors at their request. Providing product samples is of course a very common, accepted practice in the pharmaceutical industry.
15. Questcor now markets Acthar for the treatment of nephrotic syndrome as well, with the Company focusing on a specific type of NS (idiopathic membranous nephropathy) in particular. The official Acthar label actually lists a somewhat different indication, however. Has Questcor received
Questcor Response: Questcor does not promote Acthar for the treatment of nephrotic syndrome. The Company does promote Acthar for the treatment of proteinuria in nephrotic syndrome, using the specific language from its label which is: "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."
The term "nephrotic syndrome" is typically used in the nephrology field to describe a condition where a patient is losing 3.5 grams or more protein in the urine per day. Some common idiopathic type kidney disorders that can result in nephrotic syndrome include, among others, idiopathic membranous nephropathy, focal segmental glomerulosclerosis, IgA nephropathy and minimal change disease. Nephrotic syndrome can also occur due to lupus erythematosus.
The entire Acthar label, including each individual indication, went through a very detailed review by the
16. How much scientific evidence does Questcor have to support Acthar as an effective treatment for NS? Please describe any modern clinical studies (such as the Bomback case review) that have been completed in this area so far.
Questcor Response: In addition to a formal approval from
"There is limited data on the efficacy of Acthar in the treatment of nephrotic syndrome. It is unclear what amount of clinical or other data physicians will require prior to deciding whether or not to use Acthar in the treatment of nephrotic syndrome."
17. Has the Bomback study played an important role in marketing Acthar to nephrologists?
Questcor Response: Questcor's Acthar representatives typically provide reprints of this study to interested physicians as part of the information package on Acthar. Some nephrologists have told company representatives that this information has been helpful to them. However, Questcor has not interviewed physicians directly on the topic of how important this study is in their prescribing decisions.
18. Please describe any past/current financial arrangements between Questcor and Bomback.
Questcor Response: Questcor has no current financial arrangements with Dr. Bomback. As Questcor was learning about the nephrology field and beginning to speak with nephrologists about Acthar, Dr. Bomback was a consultant to the Company with financial arrangements that were within industry norms.
19. Did Questcor allow Bomback to share any details about his study before he released the official results? (Feel free to offer any comments on the controversy sparked by allegations that Bomback revealed material information about that study to a hedge fund manager, who now faces insider-trading charges as a result.)
Questcor Response: The retrospective case series publication by Bomback et al was Dr. Bomback's own evaluation initiated by him as an independent investigator and, as such, the results of Dr. Bomback's case series were not subject to Questcor control.
20. Why did Dr.
Questcor Response: All companies have some executive turnover, and Questcor does not believe that its level of turnover has been different from industry norms. Questcor does not comment on the career plans of departing executives. Dr. Zielonka's hiring and subsequent resignation were disclosed publicly via SEC Form 8-k in a timely and appropriate manner. Questcor continues to wish Dr. Zielonka the very best in his professional endeavors. At this time we do not have a CMO within Questcor. We do have one physician in the Company who is Director of Clinical Research and two physicians who are active consultants. These three physicians together fulfill the many roles in Questcor that require medical expertise. All of these individuals report to the Chief Scientific Officer.
21. Why have Questcor insiders sold so much stock in recent months?
Questcor Response: Questcor does not comment on individual trading activity in its stock. The Company has previously disclosed in
22. Has Questcor encountered additional pushback from health insurers since expanding the market for Acthar? If so, please describe any notable changes. If not, does Questcor expect to see more pushback in the future?
Questcor Response: Many health insurers subject pharmaceutical prescriptions to various requirements, such as prior authorizations; these requirements are often applied to Acthar prescriptions. Questcor has experienced a fairly steady rate of insurance approval for Acthar during the last several years with approval rates generally above 85%. The reimbursement environment remains dynamic and Questcor has noted the risk of changes in the reimbursement landscape in its most recent Form 10-K as follows:
"We believe the increasing emphasis on managed care in
At this point in the conversation,
Note: Except for the historical information contained herein, this press release 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:
You should consider the risk factors and other information contained in these documents in evaluating Questcor's prospects and future financial performance.
Questcor undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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